How To Value Land In The UK

Brown Field Beside Trees

Hoping to buy a bit of that land behind your garden so you have significantly more backyard space? Wish you had a bit of acreage to do some development of your own. Maybe it’s the opposite for you. Perhaps you have lots of land and you’d rather not manage it all? Either way, a better understanding of how to put the best possible price tag on that land is key. After all, how would you know if you were paying too much for the land you hoped to add? Conversely, how would you know if you were getting the best possible selling price for the land you were hoping to get rid of? Understanding how to value land isn’t quite like understanding how to value a home. Instead, there’s quite a bit more to it than you ever imagined. Fortunately, this quick guide can help you better understand just what that plot of land is worth.

What Kinds of Land Are People Looking For?

When you consider the purchase of land, you may believe that you’re just looking at added land in urban settings. The reality for many UK buyers, though, is that more and more, the purchase of forest and woodland spaces is on the rise. While once just commercial developers and the wealthy were the only ones who could afford such purchases, that is no longer the case. Instead, many today are looking for a bit more access to green spaces. This is true for farmland as well. Today, individuals simply looking for a bit of extra space account for just over half of the purchases of farmland in the UK.

Valuing Your Land Purchase – The Factors Involved

What is the land you want or have worth? The first step is to think carefully about where the land is located and what type of land it is. That has a huge impact on its overall value. As with traditional home values, land that is in a space where it is at a premium is going to be far more expensive. For example, land located in a space like London is going to be more expensive than land in a remote location. Similarly, land in a particularly scenic area where people like to visit can be expensive, too. One other thing you’re likely to want to look out for is the development rights, planning permission, or stipulations around how a piece of land can be used. That, too, can have a fairly serious impact on its value. For example, if there’s a restrictive covenant on the land where there are conditions around things like noise levels, building requirements, ad commercial use, it could damage the value of the land. While you can get a change of use permission, it can be quite expensive to even try to do so, and given that there are no real guarantees that you will get that permission when you apply for it, it’s important that you understand what it costs and how it can impact the overall value of the land itself.

Land prices can be impacted by other factors as well. For example, the condition of the land could play a role in its overall pricing. Imagine, for example, you have a piece of land that is incredibly overgrown. It’s uneven and hard to traverse in locations, too. That could mean that it’s tough to see all of the lands, and it may even be impossible to develop that land without extensive work on it. If you wanted to sell that piece of land, it may not go for quite as much as you’d hoped because someone was hoping to buy it just to build on. As a result, you may not get quite as much out of a piece of land like that as you would a similarly located property that was in particularly good shape.

You’ll also need to account for the marriage value if the land is adjacent to other property boundaries. That’s the value added to the land with the addition of the property that could be considered an extension. It changes the value considerably, as it could be a huge factor when it comes to the marketability of the property itself.

Whether a given property includes access to some basic amenities can also affect its value. If you’re hoping to buy the property for developmental purposes, access to things like water and electricity is incredibly useful, as it can be quite costly to bring those features to the property. Likewise, if you’re working to sell the property to those looking for a beautiful setting for a brand-new home, access to those necessities is nothing short of essential.

There’s one other key amenity that may impact the value of a piece of land too – access itself. Whether it’s a woodland property, one in a more residential setting, or a commercial space, gaining access to the actual property through good roads is essential, and it can seriously change the value of the land. In a similar vein, having the ability to park near or on that piece of property is fairly important as well. If, for example, you have a property in a residential space, but car parking is almost wholly unavailable (as is the case with many London properties), you may find that property to be far less valuable than others.

Putting A Price On It

So, what is property truly worth? It depends on an extensive number of factors. In general, though, when it comes to woodland properties, those under 5 hectares in size tend to be valued slightly over £45,000 according to data from the Land Registry over the past five years. If you increase that property size to between 15 and 20 hectares, obviously the price goes up. In this case, it goes up to £145,000 if you look at the data occurring over the same general period.

Farmland has increased quite a bit in price over the last five years, so it’s become one of the most expensive types of property you can buy. The price increase there has been to nearly £7,320 per acre. That fact is that there’s a fairly limited supply of farmland, and that makes the purchase itself far more expensive because it’s in greater demand.

How To Buy Property In The UK

If you think you’ve found a piece of property that meets your needs, the next step is to purchase it. Fortunately, the process is quite similar to purchasing a home. If you know what type of property you’d like to buy, your best first step is to contact an agent that specialises in that kind of property. When you reach out, try to be as specific as possible. You’ll want to let them know whether you’re looking for commercial land, something more residential, or something wooded. If you don’t currently know an estate agent, you may want to look online to get a few recommendations before you reach out to one. You want to connect with an estate agent who not only specialises in the type of property you want but also one who works within your chosen area. Estate agents who know the area well tend to offer the best advice on properties that fit your needs and your budget.

If you have a small budget, it’s best to figure out what that is, then start by identifying the area in which you want to live. From there, you can start speaking to estate agents or even the local council so you can register your interest in any available land that may come up shortly. That will help you increase your chances of getting a plot of land that fits into your budget.

Once you find a property you’re happy with, you’ll want to start by placing a bid on the property. You can typically do that through the estate agent. If the party selling the property is happy with your bid, they’ll let you know. If, on the other hand, you’ve bid too low, they may reject that offer, and then you can come back with a counteroffer if you like.

Next, you’ll want to connect with a surveyor to produce a valuation report on that property. That will tell you exactly what you should pay for the property. While you can likely come up with a rough estimate of what you should pay on your own, you will need to hire a surveyor, particularly if you intend to use a lender to finance your purchase. They will require that for purchase, and your valuation will help you get a much better sense of what the land is worth for your purposes. While it may seem costly – valuation reports can run about £500 on average, it’s certainly worth the cost.

The next step is to get your finances in order. If you don’t have the cash on hand you need to purchase the property, you’ll need to apply with a lender for the financing you need. It’s important to note here that you’ll likely need a very good credit rating to apply for a loan that is being used for land. These kinds of loans tend to be far riskier for lenders than traditional mortgages because if something were to happen and you were to default on your loan, they’d be less likely to be able to recover the money on a simple piece of property. You can work through a mortgage broker for this kind of loan, but not always, so be sure you let them know before you apply for a loan with them.

Along with taking these steps, you’ll also need to hire a conveyancing solicitor, just as you would if you were purchasing a home. This is the professional who will handle all of the legal paperwork involved in transferring the title of the property from the previous owner’s name to your name. That typically takes a couple of weeks of work, so you’ll want to start the process of finding a conveyancing solicitor almost as soon as you start looking for property. Once the offer is accepted, your solicitor will need to get to work as soon as possible.

When you reach the day of completion, you will ensure your solicitor transfers the money for the purchase of the property to the current owner. At that point, you will need to be sure your solicitor registers the property in your name. You will also need to calculate and pay your Stamp Duty land tax, as it is due shortly after your property purchase. This tax is typically about 1% of the purchase price. If you struggle with the numbers, your solicitor can typically help you figure up what you owe, and then help you submit it.

The Bottom Line

As you think about property prices, if you’re looking for real numbers that take everything into account, the only way to get an accurate valuation is to work with an estate agent or a chartered surveyor. You’ll want to coordinate with one, however, who has a solid working knowledge of the area itself and land values in the area, as property prices in different spaces vary considerably. Working with a knowledgeable professional who truly knows the area and what property might be worth in that area is essential. They’ll not only compare what similar properties have sold for locally along with the amenities you can offer, but they’ll also adjust their figures based on marketing conditions and what that piece of property truly has to offer buyers.

Property can be a good investment for many different reasons, but understanding exactly how to value it is essential before you make a purchase.

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