Valuing Land For Sale


What is YOUR Land Worth?

Local Planning Considerations & Land Valuation

Local Plans Affect Land Values

The value of land changes depending on the use – or the expectations of use – to which it can be put.

For example, farm land may have high value, rich loamy fen soil that can yield possibly 2 vegetable crops per year, or it may only be stony mountainside that will barely sustain sheep.

Likewise the value of land with planning permission for a factory might be less than if it could be used for warehousing – or even vice-versa.

While land with planning permission for residential use has, in recent years, been seen as holding the top value, if it were big enough and could obtain planning permission for, say, a supermarket, then it could be several times more valuable.

Land Value Depends on Planning Permission

The point being made here is that the value of the land is NOT in the land itself, but in the use ro which it can be put.
And in the UK, what land can be used for currently depends on what planning permission has been obtained for it.

But even this is rather simplistic,
because that permission may be dependent on certain things being done to it, or in relation to its development.

For example, the planning permission for a supermarket may require new road access ways, traffic islands, pedestrian crossings, sewers, and so on before it can be built.

That permission may also be conditional on thousands, if not hundreds, of thousands of pounds being donated for local area improvements, like swimming pools, schools, affordable housing, and so on.

Development Costs Affect Land Values

Russian Buldozer

Land Development Costs Influence Selling Prices

As will be recognised, the value of the land depends not only on the use for which it is permitted to be used, but also on the costs of realising that permission.

To assess this, valuers, developers, investors and their various advisors and agents carry out what is referred to as a “Residual Value Analysis”.

It is not uncommon for such valuations to yield a negative value for the land in question.
That is to say, it will cost more to develop the land than it is will eventually be worth.
Meaning the land is worth less than nothing!

So, while simple comparisons like “the land up the road sold for ‘£x’ therefore mine must be worth the same may be relevant in establishing the comparative base value, they may prove totally misleading.