Selling Development Land In London: A Guide For Landowners

Many London landowners do not think of themselves as owning development land. It might be a large rear garden, a row of garages, a yard, a commercial building past its best, or a site that has been in the family for decades. Yet any of these can have real value to a developer if new homes can be built on it.

This guide explains how developers look at land, what you can do to prepare, and how to compare offers when you decide to sell.

What makes land “development land”?

To a developer, land is valuable when there is a realistic route to planning permission for new homes and the numbers work. That depends on:

• Planning policy: the council’s local plan, the London Plan, and any conservation area or Green Belt restrictions.
• Access: whether vehicles and services can reach the site, and whether access needs third-party land.
• Size and shape: enough room to fit homes that meet space standards, with acceptable distances to neighbours.
• Site conditions: ground conditions, contamination, flood risk, trees and existing structures.
• Legal title: restrictive covenants, rights of way, easements and any leases.

Garage blocks, infill plots between houses, and commercial buildings that could be converted or replaced are some of the most common sources of small development sites in London.

How do developers work out what to pay?

Most developers use a residual appraisal. They estimate the value of the finished homes (the gross development value, or GDV), take off all the costs of building them and their required profit, and what is left is what they can pay for the land.

That is why two developers can offer very different amounts for the same site. They may see different numbers of homes, different build costs or different risks. Our guide on how to value a building plot explains the method in more detail, and what drives land value covers the main factors.

Preparing your land for sale

You do not need to spend heavily before selling, but a little preparation can speed things up and reduce price reductions later.

• Get your title in order. Download the title register and plan from HM Land Registry and check the boundaries match what is on the ground.
• Gather what you already have. Old surveys, planning history, drainage plans, leases and any correspondence with neighbours.
• Check planning history. Look up previous applications on your site and nearby sites on the council’s planning portal. A refusal is not the end, but buyers will ask why.
• Know your vacant possession position. If there are tenants or garage licences, know the notice periods.

With or without planning permission?

Land with planning permission usually sells for more, because the biggest risk has been removed. But obtaining permission costs money and takes time, often a year or more for anything beyond a small scheme, and there is no guarantee of success.

Many landowners therefore sell with no planning, or agree a sale that is conditional on the buyer obtaining planning. The right choice depends on how quickly you want certainty, how much risk you are willing to carry, and whether you would rather have a lower price now or a potentially higher price later. Our article on deal structures for selling land to a developer compares the options.

How to compare offers

The headline price is only part of the picture. Compare:

• Conditions: is the offer subject to planning, survey, finance or board approval?
• Timing: when will contracts be exchanged and when will you be paid?
• Deposit: how much is paid on exchange, and is it refundable?
• Costs: will the buyer cover your legal and surveying fees?
• Track record: has the buyer completed similar purchases and built similar schemes?

A slightly lower offer from a buyer who can prove funds and has a record of completing is often worth more than a higher offer that falls away six months later.

Taking advice

Instruct a solicitor experienced in land transactions early, and consider an independent surveyor or land agent to advise on value. If you are selling a share of a larger property, such as part of a garden, take advice on the effect on the value of the property you keep.

Final thoughts

Selling development land well comes down to understanding what a developer sees in your site, preparing the basics, and choosing a buyer who will complete. Kisiel Group buys and develops land across London and the Home Counties, and you can read how we approach buying land from landowners.