Does extra land raise the value of a property?
Many homeowners believe that it's the physical characteristics of a property that determine its value. If you carry out a programme of home improvements, install a new kitchen or bathroom and turn a tired old property into something modern and desirable, it's likely to sell for more than you paid for it.
This is usually true, but another factor is how much land your property has; additional land can also add value. If land becomes available adjacent to your property is buying it a smart investment?
Land is a sparse commodity
Anyone who wants to buy or sell land soon finds out that it very rarely depreciates in price. Unlike the housing stock which can be increased, the amount of available land in the UK is fixed by geography. This means that there is always upward pressure on its value. If you own land over a reasonable time period, when you come to sell land to a developer or a neighbour, you'll likely find that it's increased in value since you purchased it.
Land value determines the price of the property
The most significant factor when it comes to the overall value of your property is the price of the land on which it sits. Land has consistently increased in value across the UK even during sharp recessions when other asset classes have depreciated considerably. During times of economic hardship, land value may not increase particularly fast, but it will hold its value when other types of property are decreasing.
That's why companies, institutions and individuals with large landholdings are able to withstand economic downturns without taking a significant hit to their wealth.
Buying more land is likely to increase the value of your home
A finite supply of land in the UK does means that purchasing more land is likely to increase the value of your property overall. A home with a fifty-foot garden next to an identical home with an acre of land attached will likely sell for less but the differences will depend a great deal on where you are.
If, for instance, your property is located in a sparsely populated area where land is reasonably plentiful, then the differences will be smaller than if it's located in a city centre. In the latter, developers will be very interested in any land your property has. Also, properties with decent sized gardens in urban centres are fewer in number and in high demand with buyers.
How much is land worth to a property?
Although acquiring extra land for your property is likely to increase its value, the size of this increase can vary considerably. If you acquire extra land in a densely populated urban area you will begin by paying more for the land, but it may see a more significant increase over time. Purchasing extra land in a rural area may be cheaper, but is likely to rise in value at a slower rate.
Before you consider purchasing extra land it's important to consider what you want the land for and what kind of return you expect. If land becomes available adjacent to your urban property, purchasing it may be a smart investment. The same in a rural area might need a little more consideration.
Should I gain planning permission on my land?
Having planning permission can add a premium to the overall value of your property as it gives you permission to build new property, which can be developed and sold. However, the process is complicated, stressful and expensive. For this reason, we generally don't advise people to apply for planning permission for their land. Securing planning permission is complicated, lengthy and risky. It is by no means always straightforward and you could find yourself involved in an extended process, incurring significant costs and then not gain planning permission at the end of the process. Planning permission isn't always guaranteed to add significant value to your home. The location of the plot, the type of development the permission allows and when the permission was obtained will impact the value it might add. Generally, planning permission in urban areas is worth more to developers than less densely populated areas.
Get expert help
If you own land that you're considering selling or would like further advice about land value, planning permission and the buying and selling process, then our experienced team is on hand to answer your questions. Contact us today for no-obligation advice.