While there are various methods available for determining the value of your home, if you have received an offer to sell a portion of your garden or are considering purchasing land from your neighbour, you may be curious about how to accurately assess its worth. In this article, we will explore the factors that come into play when dealing with the acquisition of garden land. Plus we will explain two approaches to calculating its price. Additionally, we will examine the potential implications for homeowners, including their mortgages, particularly if the plot is adjacent to their property.
Gov.uk, provide average land values based on local authority areas, but it is essential to note that this data is intended solely for survey purposes and should not be relied upon for commercial transactions’ valuations. The figures are primarily used for assessing public policy related to agricultural and industrial land usage across different local authorities in England. The latest available data, as of writing, is from 2019, published in August 2020.
Moreover, the Gov.uk analysis emphasizes that land value is highly sensitive to specific variations in each plot. Therefore, whether you are selling or buying a plot of land, its true value depends on several critical factors:
For owner-occupiers who have a mortgage and wish to sell a portion of their property’s surrounding garden land, obtaining consent from their mortgage lender is the first step, and they might need to consider remortgaging. Releasing and discharging the plot of land may require a partial repayment of the initial amount borrowed (capital sum) to the bank, building society, or mortgage lender. Similarly, if you plan to expand the size of your property’s land by purchasing adjacent land, it’s crucial to inform your mortgage provider. Especially if you intend to include the purchase price in your existing mortgage.
When it comes to valuing garden land, there are generally two main approaches. The first method is the comparable method. This involves examining sales of similar plots and adjusting the figure based on factors like scarcity, plot size, and location.
The second approach is the marriage value method. This is where the value of the land is calculated by assessing how much it would enhance the value of any property it merges with. Typically, a fraction of this sum, usually half, is considered as the land’s value. Additionally, it may be prudent to take into account any corresponding reduction in the value of the seller’s property.
Although these valuation concepts seem straightforward, in practice, they can be more complex. One of the challenges lies in finding enough reliable evidence of land sales. While data on house sales is well-reported, land sale agreements are often more private. They tend to involve negotiations between two individuals and without public advertising. As a result, the agreed-upon sums between buyers and sellers may be more influenced by individual affordability rather than broader market factors.
In addition to considering the previously mentioned points when valuing a plot of garden land, it is essential to assess its appeal to potential buyers. For instance, plots surrounded by neighbouring properties might not be as valuable as similarly sized land that benefits from a separate, unobstructed access route.
Furthermore, the circumstances and timelines of the sale could also influence the agreed-upon amount. Executors selling an asset may have different priorities compared to neighbouring landowners who were not actively looking to sell until approached. Thus, their willingness to negotiate could vary.
The potential for planning issues and changes in the intended land use, can also impact the selling price. Notably, garden land typically commands a higher value compared to some farmland, which might be subject to VAT.
As any surveyor or architect would confirm, land with existing planning permission generally fetches higher prices compared to terrain without such pre-approval.
To facilitate the transfer of ownership, engaging a solicitor or conveyancer is necessary. During the preparation of the appropriate contract for buying or selling garden land, it is crucial to take into account any restrictive covenants that may apply. These covenants often aim to prevent noise nuisance from the plot or any inconvenience caused by potential future construction work.
In some instances, additional clauses might come into play. For example, overage provisions could entitle the land seller to receive a payment if the buyer secures planning permission for the land after the transfer, within a predetermined period.
Furthermore, depending on the location, the seller might wish to retain mineral and subsoil rights or include clauses concerning sporting rights and even airspace. These factors should be addressed and outlined in the contract to ensure a clear and comprehensive agreement.
In summary, there are numerous factors that influence garden land prices, making the valuation process complex and diverse. To ensure arriving at a fair and accurate price, seeking guidance from an experienced professional is often beneficial. Why not contact our expert team today to discuss this opportunity and how we can help you.