developer wants option to buy garden

In message , Robert writes

Definitely!!

They need you on board now, otherwise you could be holding them to ransom when they have their planning permission. To give away that power for nothing would be crazy.

Unless, of course, your piece of land is not a key to the scheme, or a different scheme could be created without it.

How much is the total price being offered for the land, and how much is your share of that? (After planning).

One other negotiating tactic is to suggest that all the garden owners get together and apply for permission themselves - then sell with the permission to "whoever".

Friend of mine did something similar, however they got paid for (2). Not sure how much but I think a relatively small sum, 2 or 3k I would guess. 'Your developer may well be expecting to pay something, but 'if you dont ask you dont get'.

"Robert" wrote

Of course it does. It costs the owner any potential growth above the option price during the year.

Even ignoring the planning permission/development element of the deal, the land may go up in value to more than the option price by the end of the year. If it does, then the owner has signed-away that excess increase.

If the developer can't see that, then ask *him* for several (free) options on all the pieces of land that *he* owns - see if he will agree! [If he does, then exercise every option at the end of the year where the land becomes worth more than option price, and walk away from all the other options.]

"Robert" wrote

Of course he should.

Everybody is missing the point. This is known as infill housing, the developer can build if he can get enough land, and no objections from nearby landowners (i.e everybody selling)

The important question is how much would this low value garden worth if PP is granted? Is he offering a fair return on that? He will incur substantial costs making the designs, planning application, legal fees, etc. The scheme will never happen if he cannot control the cost of the land, and I doubt prices will increase much this year, if at all.

Don't be greedy. If you want a fast buck, and are ready to lose some of your garden, go for it. All you need to ensure is that you are getting a fair share of his profit. Land should make up around 40% of the final sales price of any typical development, find out what he plans to build and how much he will sell it for.

John

Thank you all for your comments. I wonder how one would put a reasonable price on such an option.

Robert

I was in this position myself 5 years ago but with near-feverish and well-organised local conservation tensions, a poor history of successful applications and the fact that the pretty garden was one of the house's chief assets I decided not to bother. It was in my mind anyway to sell up and move on (which I did 2 years later) and I didn't relish the prospect of a then-indeterminate period of hell with my neighbours for what would have amounted to a lump-sum more-or-less equal to the loss in the value of the property sold with its garden. This was a modest but - according to the planning department with their extensive London formulae - big enough garden. With a large garden and small impact it would be a very different matter. I spoke to a local architect at the time and the impression I gained was that one wouldn't necessarily expect to get an up-front gift from the developer for this. If he already has some rapport with the local planning department then he could well succeed with a grander higher value scheme. So he's offering you that in addition to freeing you from the hassle and expense of the planning application.

At the time, it was put to me that the rule of thumb was that the option would be worth roughly a third of final sale price of the development. This was taking into account that building costs would represent another third leaving a third as profit for the developer. I've no idea whatsoever if this was/is typical but it seemed reasonable. Also, with a market that was picking up speed then there was talk of indexing the final payout to local price movements if plans+building were to take long enough to see significant changes in house-prices. At the time I felt it might be difficult to contract that in a satisfactory way but with a market that looks now to be heading for stagnation at best perhaps you shouldn't worry about that. Another thought. My house was in a bit of a state at the time, and there was talk of the developer, as additional inducement, offering to throw in a few improvements (tiny extension, some refurbishment) since his army of builders would be on site. Perhaps you could ask for your bonus that way? But don't tell your neighbours or they'll all be trying it on.

Thank you for all your comments (snipped). In my case it is pretty clear that the land would be worth more if connected to otehr bits to make a big development. That is to say, the value of the land I would lose would be more than the reduction in value of the remaining house.

However, I don't want to sell it or give/sell an option on it unless I have some independent idea of what the value is. That value depends entirely on what is permitted to be built on it. So it seems I must apply for outline planning consent in order to get a handle on the value.

Thanks to all for their comments,

Robert

or buy a short interview with a local architect high-profile architect who will certainly have an in with your planning dept. He can quickly tell you what schemes are feasible, provide you with rough building costs (applying for OPP won't get you that) and give you an idea what a fair land/costs/profit split would be today in your neck of the woods.