|
In 2022, Barratt Homes (now Barratt Redrow Plc) bought Land Promoter Gladman Developments.
In 2023, Bellway Homes purchased all the share capital of Rosconn Staretgic Land (a land promoter). In 2025, Persimmon Homes bought Lone Star Land, a Warwickshire-based land promoter. Landowners should always be aware that a Land Promotion Agreement is different from a Land Option Agreement. Large Plc Housebuilders tend to only utilise Option Agreements, whereas Land Promoters use a Land Promotion Agreement. You can find out about the differences between these types of agreement in this website and we welcome any landowner seeking advice on selling land to a developer or who require advice on selling land to a land promoter to contact us : John Holland Director LandSite Landsite Limited Penrose House 67 Hightown Road Banbury Oxfordshire OX16 9BE T. 01527 328401 M. 07971 389985 E. [email protected] W. www.landsite.co.uk
0 Comments
 Landowners are in for a treat in 2026 as at long last house prices will begin to move (interest rates bottoming out at 3.25% will drive new mortgages across the board) and housebuilders and land promoters are already 'gearing-up' to buy more land I think.
We have recently seen land deals having completed in the last 6-8 months at much better prices 'per plot' of £99,000 in the south-east to as much as £80,000 over in Wiltshire being paid to landowners after the develoer has got planning permission. This easily equates to around £750,000+ per acre and will undoubtedlyt increase in the coming years (Savills have just announced that they think house prices could increase by 22% to 2030, on average). Further north plot values are running between £40,000 to as much as £75,000 in good areas equating to around £300,000 to £500,000+ per acre. Do call me or email if you want straight-taking advice or guidance on how best to secure a deal with a developer, housebuilder or land promoter - that is what we specialise in doing and we can definitely help you. John Holland Director Landsite Limited Penrose House 67 Hightown Road Banbury Oxfordshire OX16 9BE T. 01527 328401 M. 07971 389985 E. [email protected] W. www.landsite.co.uk The Labour Party may be thinking about building more houses but behind the front of '1.5 Million New Homes in this term' there are various lobby organisations and firms which are seeking to seriously tax landowners.
Let's look at some of the ideas out there and why or whether they can or cannot work : a) The 'Labour Land Campaign' (labourland.org) is pushing for tax on ALL land and states : "All land should be valued and taxed according to its assessed value. As well as making it possible to reduce or abolish unfair, economically inefficient taxes, this will help repair the broken UK land market - characterised by speculation and underuse - that has deprived many citizens of secure, decent accommodation, for the benefit of a small-but-powerful, wealthy minority." Of course we have heard all this before from Labour as it may be the politics of envy at work yet again. Most tax experts agree that the introduction of such a tax would probably create another banking crisis and land values might plummet and consequently cause huge mortgage affordability/funding issues. With around 30 million parcels of land in the UK could any system cope with a proper assessment of land value increases decreases be properly and fairly assessed ? It would also no doubt result in a lot of Appeals about how much tax had been charged. b) Land Value Capture Tax - this is actually used in a number of countries already (e.g. the USA) and is in effect already in place in the UK through Section 106 ('s106') payments to Councils when planning permission is granted for new housing developments (as well as another tax call Community Infrastructure Levy ('CIL'). The development of 'BNG' (Biodiverse Net Gain) whereby other land within the site or outside it has to be improved with various ecological means to improve 'biodiversity' - essentially yet another eay to tax landowners). However, as with (a) above, if Land Value Capture Tax was implemented in full it would probably cause huge problems within days due to risks to the financial markets. This is highlighted by the 2019 report 'Land Value capture through planning and legislation' written and researched by Mark Stephens as part of a UK Housing Review, he noted that the Scottish Parliament found reasons for failure of such a scheme are that there are : "insufficient incentives for landowners to bring forward land for development; the lack of resourcing provided to agencies responsible for implementation (both administrative and, in the case of local authorities, to develop their own land banks); tensions between national agencies and local government, and the associated lack of sensitivity to local circumstances of a national scheme. Other factors were the relationship between a scheme and the economic/ property cycle, where a scheme developed during a property boom might be implemented during a downturn; and a perceived lack of fairness, exhibited for example when thresholds for development scale were set too low, so bringing in relatively trivial developments and sometimes causing hardship." Finally - Housebuilders - yes, it could be argued that housebuilders essentially 'tax' landowners by simply paying too little for their land by using Option Agreements with the dreaded 'We will issue a price notice' (i.e. THEY decide the price...not the market). Tread carefully and perhaps consider getting a deal done soon before the Government tries to gobble a good chunk of your hard won profit and your family's rightful inheritance ! The potential for a new Labour government to come to power in late 2024 is set to potentially create big changes in the supply and development of land for new housing in the UK.
Various senior Labour politicians have stated they will significantly alter the Greenbelt rules for planning and that as many as 1,500,000 new homes are being targetted to be built within 5 years (considering that currently we build around 250,000 homes a year this would not actually be a significant rise). Great if it was an EXTRA 1.5 Million new homes - now that would make a difference ! However, without doubt the Nimby-driven, politically motivated, highly complicated and dreadfully slow planning system will probably get the overhaul it has needed for some time. This could mean that YOUR LAND may at last have a chance of gaining a planning permission and now is the time to engage with a development partner to start that process ? As interest rates drop and inflation falls, the land market (and economy) is looking much better for 2025-2026 and onwards and for some sites, getting a planning application in during 2024 or 2025 could mean you would be selling that site in a potentially very good market when the permission comes through. Selling at the right time in the land and housing market can make as much as a 50% difference in the price obtained, depending upon where in Britain the land is located. So do have another look at your field, farm or inherited land. Just saying 'Oh it'll happen one day' may no longer be the right decision. Landsite has been receiving a growing number of calls from concerned landowners who have found themselves signing into a promotion agreement with a land promoter and several years (sometimes months!) into the term of the agreement are now being approached to either change it or 'run' with a particular developer, suggested by the promoter.
This causes alarm for landowners as they will have been persuaded of the benefits of a promotion deal, only to find that a different or watered-down solution is now being offered. The reason(s) behind this appear twofold - firstly, the promoter has decided that they do not after all have the risk appetite or indeed in some cases the actual funds to obtain planning permission and progress the deal and would prefer to leave this to a well-heeled plc housebuilder and / or, secondly they have found the planning process is taking much much longer than they anticipated and perhaps they do not have the necessary experience or funds so they want to get back some of the money invested to date and take an easier route (potentially at the expense of the landowner !) Whilst Landsite has not witnessed this happening with the major land promoters (e.g. companies who are part of the LPDF (Land Promoters & Developers Federation), nevertheless, it appears to be a growing problem. Also, some land promoters have begun selling their business to plc housebuilders in recent years and it is difficult to properly establish whether these companies will now ask landowners to enter into an Option Agreement or even where the Promotion Agreement remains, whether there is genuine clarity about the site being properly and fully market-tested and thus sold to the highest bidder. The attitude I have found at most Land Promoters is one where they are 100% honed to getting planning permissions delivered and of course all they do is land. Their structures are also very 'team' like and flat which helps for a good work ethic and they seem to employ more women - who are universally better at this business than the men as they have the right approach, insight and tenacity. With a probable Labour Government in place by early 2025 and 6 months later Lisa Nandy (Shadow Secretary for the Department for Levelling Up, Housing and Communities) may possibly seek to 'punish the tory shires' and take the lid off development restricted greenbelt and land around urban areas. Or perhaps not - if we are to believe that Sir Kier Starmer will embrace middle England as well as appealing to traditional Labour voters. For landowners, the very slow and complex planning system together with the awful parish, district, county and national politics are the main enemies to successful development of their land. Best to do deals with well-funded land promoters with a good track record and who can demonstrate they can and will deliver. The land market is changing - the top of the market was around mid-summer as we were all sweltering under a blazing sun when a site for 240 houses in Surrey received bids of over £50M - that equates to over £220,000 per plot (i.e. plot for a new house with planning permission to build it). Conversely, a site for 300 houses in Suffolk was seeing bids around the £20M mark.
Obviously Surrey (certain parts of it) are very exclusive and expensive but across the south-east and south of the country since Michael Gove ridiculously announced that the Government would not expect Councils to stick to the 'stalinist' housing targets which Liz Truss wanted to be rid of, the combined effect of the economic downturn, Ukraine and this new 'policy' has had a dramatic impact on the large plc housebuilders such as Taylor Wimpey, Barratt Homes, Bellway, Persimmon and others. There is now a real pull-back on land values and land acquisition. Think about it - if the papers are saying there will be a fall in house prices then potential buyers want to wait for house prices to fall. Others panic and put their house on the market and with too many sellers and too few buyers the price falls and then people lose their jobs because the economy is shrinking and the country has talked itself into a recession. So how does a landowner deal with this ? Well the first thing to bear in mind that recessions usually last perhaps 2 years at worst, maybe 3 and given the slow and difficult nature of obtaining planning permission it will take a developer or land promoter at least 2-3 years to obtain the planning permission they want. So actually doing a deal with a company now is not such a bad thing (2023) as by the time the site gets planning and you will be getting paid the 'recession' will almost certainly have passed. Most of the larger plc companies we deal with expect 2023 to be very tough but feel that the housing market will rebound in 2024. The alternative of course is for you to 'hold fire' and wait until the storm has passed - though personally I am a great fan of getting your horse in the race as soon as possible (with the right choice of jockey of course !). Land is land and will always have value. Putting your site out to the market via Landsite or any established land agent is something only YOU, as the landowner need decide. Do not be rushed into a quick decision and make sure that no only does the agent follow your wishes as much as possible but they are hard working and capable. We understand that the larger plc housebuilders were valuing 'plots' for houses in the south/south-east (e.g. a site with planning for 100 new houses has 100 'plots') at around £100,000 apiece in 2022 so at roughly 12 houses (plots) to the acre that gives you a good idea of the value of your site (but bear in mind to knock off say 10-15% as the 'gross' area of a site is less than the 'net' area actually developed for housing. In other parts of the UK land for housing development is probably closer to £50,000 per 'plot'. So - (say) £1,000,000 + an acre in the 'top' places and more like £500,000+ an acre in the areas which are not as 'hot'. An interesting article posted on the well-respected 'Construction Index' website recently highlighted the fact that the top positions of the plc housebuilders have been changing places in recent years as they deal with Coronavirus, increased costs and the ever-present challenge of developing more 'greenfield' sites to meet the demand for houses rather than flats - 'trapped in a flat with higher insurance costs, no garden and the fear of fire..' - well buy a new home on an estate in the countryside and enjoy garden, fresh air and space..'
The Construction Index analysis showed that 10 of the top twenty companies saw profits decline last year. With new blood (ex-Persimmon boss Jeff Fairburn invigorating housebuilder Avant Homes, the huge rise of the land promotion companies in the last 10 years and the changes which have already started in terms of how new homes are physically built (or should we say delivered on a truck nowadays) and it is clear that the industry is going through some interesting changes. Watch out for the regional family firms - the Davidsons Homes and Hill Homes, the growing capacity of the 'old' Housing Associations who are now full-stream private and social developers (the Keepmoat, Catalyst, Kier and Orbit of this world) together with the growth of companies like Legal & General Homes (L&G). It seems highly likely that if L&G make a great success of their homes business then more of the large financial institutions may follow and sooner or later some of the large US or Middle-East based capital houses will start injecting money into the sector if profits continue. Well, until a Labour Government brings in new taxes on land sales. https://www.theconstructionindex.co.uk/news/view/house-builders-start-to-struggle Industry sources which Landsite has recently been speaking to are saying that land with planning for residential development is being competitively priced as the Coronavirus 'lockdown' eases.
Two major plc housebuilder Land Directors have separately told Landsite that they have witnessed sites being sold for record prices in recent weeks and one Managing Director has confirmed that he has been informed by colleagues in charge of other Regional Offices that they think land prices are rising as competition for the best sites increases. Se this against the slow, slow world of planning and the restrictions of the greenbelt and it is no surprise that the housing land supply for a growing number of District and Borough Councils is falling below the important 5-year supply deadline/requirement. Land prices per acre which may be currently around £750,000 per acre (with planning) may therefore begin to edge towards the magic one million pounds per acre mark soon. For some latest news on prices see : www.housingtoday.co.uk/news/residential-land-value-grew-in-fourth-quarter-of-2020/5110122.article https://mspcapital.co.uk/land-development-prices-on-the-rise/ www.savills.com/research_articles/255800/310310-0 What does this mean for prospective landowners who have land with potential for residential development ? Well good news in that not only will land values keep rising for land with planning permission but the offers to enter into Option Agreements of Promotion Agreements with the Land Promoters, housebuilders and developers will be ever more generous and competitive in order to persuade landowners to run with their company rather than another. There are probably over 150 land promotion companies in the UK today varying in size from large, plc-backed firms employing perhaps 30+ specialist staff to smaller one-man businesses with some family or private funding behind them. The surface area of the United Kingdom which is is covered by almost 6% of built development (which includes airports, roads, retail, industrial and all other surfaced or developed areas. A further 3% is classed as gardens and urban parks (BBC survey data).
The Greenbelt in 2019 was estimated as being 1,621,150 hectares of land which is about 12.4% of the total area. TWICE as much land is classified as Greenbelt than existing developed land and yet most of that Greenbelt is located around our most prosperous and sought-after towns like London, Oxford and Cambridge. These are exactly the places where people wish to live and work. And the sad fact is that some of the Greenbelt land which could solve the housing crisis if it were to be developed is actually intensively farmed land or poor quality land. Another myth is if we cannot build on Greenbelt land then we should build new homes on brownfield sites. There are still plenty of brownfield sites in some of the old traditional industrial towns located in the Midlands or North of England and in less accessible areas of the country but again, this is not where the work is and not where people wish to live. The old garages, tyre centres, industrial fasteners, timber yards, dilapidated snooker halls, slaughterhouses and industrial premises which were once a feature of our towns and cities have now been re-developed for the wave of cheap Aldi, Lidl and discount stores, failing that then the specialist retirement market has hoovered up the remainder. There are NO brownfield sites left in the locations where demand for new housing is at its highest. After the economic recession of 2008-2020, the Grenfell Tower disaster and more recently Coronavirus potential house owners are seeking traditional houses with a garden and garage (if not to use for the car then for a 'home office') - this takes LAND and lots of it. There simply is not the available space, opportunity or availability of land for this type of development in many of the cities and larger towns so the new houses have to be built on the outskirts - often required exactly where the Greenbelt has been allocated. Of course there is a solution which surprisingly, a Labour Government tried to introduce and would have worked if they had properly incentivised the scheme. This was know as the 'Flat Conversion Allowance' and was introduced in the Finance Act in 2001 but take-up has been poor. If the property owners of retail buildings in (e.g.) anywhere from London, Birmingham, Cheltenham to Swansea were properly incentivised through council tax relief, serious government grants and even some attractive tax breaks, then this could witness a revolution in the number of new homes created in cities - safe (they are often only 2-3 storey so no high storey fire risk issues), larger (older buildings are usually more generous with room sizes) and excellently located for local services and green commutes to workplaces. A social benefit of this approach would be for new, vibrant communities to re-inhabit our city centres, invigorating the local shopping and community facilities and ensuring that their neighbourhoods were more connected and secure. An idyllic vision which will be unlikely to see fruition - and just for the record not all former Debenhams, BHS and John Lewis stores can be easily converted to apartments. Some can but most are just not in play for the planners and developers. The whole idea of 're-developing' city or town centres is sadly flawed unless there is a huge change in how homeowners wish to live and how Councils and Government resource, incentivise and fund such a change. The Greenbelt remains and will continue to remain the battleground for some time to come. 4 ways farmers can sell land for development - Farmers Weekly
https://www.fwi.co.uk/business/markets-and-trends/land-markets/4-ways-farmers-can-sell-land-development The Alternatives For Selling or Developing Your Land https://www.linkedin.com/pulse/2021-alternatives-selling-your-land-landsite-land-consultancy/?trackingId=jZFAxTBFTFG49%2F%2F5B5ss0w%3D%3D Regenerative Farming More than just a buzzword - Farmers Weekly https://www.fwi.co.uk/news/opinion-regenerative-farming-is-more-than-just-a-buzzword |
About this Blog :Some useful articles & links to resources which landowners can read and connect with to assist them with learning more about the process, pitfalls, challenges and positive outcomes for selling their land. Archives
April 2024
Categories |
RSS Feed
Landsite Limited
Registered office : Penrose House, 67 Hightown Road, Banbury, Oxfordshire OX16 9BE
Telephone : 01527 328401 Mobile : 07971 389985
E-Mail : [email protected] Web. www.landsite.co.uk
Please Note / Important : The views and opinions expressed on this website are the personal opinion of the author and do not represent the policies, views or opinions of the company. ALL information provided is for general guidance only and any actions or decisions the reader or user may take based upon content, information or opinion(s) expressed in this website is entirely at their own risk and liability. The information contained in this website cannot be legally relied upon at a later date and it is provided on a 'without prejudice' basis. Landsite Limited has no affiliation with any other company, website or organisation and it accepts no legal liabilities arising from use, misuse or mis-interptretation of the data and information contained within this website.
Proudly powered by Weebly