UK - Inherited a property with development potential. How to sell?

January 17, 2013 1:42 PM

I have recently inherited half of a property that has development potential and am looking for some advice on what to do next. Prior to this inheritance I have never owned a home or even managed to save a small deposit for a mortgage, so I have absolutely no experience of the property market.If all goes well, selling the property could set me and my fellow beneficiary up for life - we each hope to use our shares to buy our own homes mortgage-free! This is a once-in-a-lifetime opportunity for me and I'm anxious to get the best possible price for the sale!

About me:
So, I'm currently renting and have no assets or savings whatsoever, and a little bit of debt too. My fellow beneficiary has a mortgage with their spouse for 50% of a home - a housing-association or somesuch owns the other half. Neither of us are used to having money and are completely unprepared for this situation.

About the property:
It's a large bungalow in about an acre of land. Estate-agents value it at about £240,000 as-is, with no planning permission. However, every estate agent we have spoken to talks about "development potential". So far, only one estate agent has come up with a proposal (destroying the bungalow and applying for permission to build 6 smaller ones, upping the value of the sale to £300k - the estate agent apparently has contacts with council planning and several interested builders). Another has recommended that we contact the council planning department directly and ask them to come out to see the property and give us an idea what sort of planning permission they might allow.

So, what's the best way to proceed from here? Is it wise to talk to the council myself, or should I speak to more estate agents? Should I approach developers directly? Should I seek independent advice, and if so, from whom? I'm completely lost and desperate not to screw this up!

(Just in case I wasn't clear enough above - I'm wanting to sell the property for development, not to fund a development and sell the end product. So I think that means I want to get planning permission and sell. But I'm not sure - which is why I'm asking for help!)

Many, many thanks!

Throwaway: [e-mail]

posted by anonymous to work & money (4 answers total)

I'm thinking about something similar in connection to my mum's place at the moment.

You'll realise most money if you develop the land yourself, but it'll take a long time and you'll need to invest (or borrow) to do it.

At the other end of the scale, and as you've found, an estate agent (or other developers) may well pay more than the house is worth, either to develop it themselves, or to get the appropriate planning permissions and flip it for profit in a subsequent sale straight after.

The middle ground for you is probably to invest a small sum of money in talking with someone knowledgeable (though not one that it is also a potential purchaser I'd suggest) - perhaps an architect - about what a sensible application for planning permissions might look like - 6 houses, 4 houses, 2 houses - whatever. Do the planning application yourself (it's perfectly possible for a layman to do) - and avoid the risk discount that you will inevitably find yourself giving to a developer that sees the potential on a piece of land that doesn't yet have permissions. The estate agent will market the property appropriately for a higher sale value.

£300k for a piece of land on which 6 houses could be built sounds low by the way to me (although I'm by no means an expert). Of course it depends what part of the country you're in.
posted by bifter at 2:07 PM on January 17

I would find an agent who you feel comfortable with and then do what they suggest.

If they suggest selling the property as-is, then awesome! Do that.

If they think it's worth the investment of time and money to demolish the structure and apply for planning permission, then follow that route.

I know that one thing we can do here in the states is to have the fire department burn down structures as exercises for fire fighters. It saves on demolition costs and provides a service.

What a lovely legacy you and your fellow heir have been given.
posted by Ruthless Bunny at 2:28 PM on January 17

Have a look at your local council's planning applications for anything that looks similar to this over the past few years. Look at the plans and note which architect drew them up. Look at the other documents too and note whether permission was given. Look at the local development plans for the area your property is in (they will normally be referenced by other planning applications). Note what sort of development is being encouraged and look for information on locations and development density. Check that the current development plan is not about to be superseded. Once you have this information cross reference it to estate agent sites - see if you can find a record of what the properties sold for (either the developed properties or the land).

There are normally a small number of architects who specialise in developing knowledge and contacts in council planning offices. They are particularly good at making the right sort of proposal to get approved. They also tend to cultivate contacts with particular estate agents - usually the higher end ones who sell larger houses, farms, estates, etc. The estate agents of this type, in turn, are particularly good at dealing with property developers. Look for an estate agent who can show a track record of success in your kind of area. Consider haggling down fees - but, more importantly, look for people who seem competent and trustworthy.

I would wait until I had an architect and agent in place so that I could ask them about whether it would a good idea to talk directly to the council planners about the property. There may be some minefield issues which you would want to know about from somebody who has been there.
posted by rongorongo at 3:43 PM on January 17

I agree that if you have money and time to invest in getting a planning application approved then you should speak to a local architect that specializes in residential work in the relevant local authority. If you truly don't havery between you access to a sum between a few hundred to maybe a few thousand pounds to do this then you'll probably need to sell it as is.
posted by plonkee at 4:24 AM on January 18