Understanding UK Land Prices
People often ask me to explain the reasons for the differences in land price. They have trouble in understanding why one green field is valued at £4,000 per acre and yet another green field is valued at £3 million per acre.
To explain some of the factors that affect the price of land I have written this article using actual adverts of land for sale on the web site (as of June 2006) to prove my points.
Wooden sheds and a mains water supply add value to the land
Animals can be kept on land with running water and shelter.
Bruton Knowles are presently marketing two adjoining lots of land at Uley, Stroud, and Gloucestershire. The lot of land with two wooden panel sheds and mains water is valued at £7,300 per acre rather than the lot of land with no water or sheds which is only valued at £5,850 per care.
Grazing land is more valuable than pastureland
The above land at Uley is described as "pastureland" (with mains water and useful buildings) because of its grass quality and its gently sloping nature.
Bruton Knowles are also marketing "grazing" land at Down Barn, The Camp, Stroud, and Gloucestershire. The land here is level, the grass is of high quality and the buildings are stables rather than barns. In addition there is mains electricity as well as water and good post and rail fencing. Because of these improvements they are able to ask for offers in excess of £25,000 per acre rather than £7,300.
Location is critical
Land for sale is scarce in the South East and close to towns and cities.
Whilst the gently sloping pastureland with sheds in a rural location of Gloucestershire (Uley, Stroud) is being marketed at £7,300 per acre, a similar piece of land in a rural location (Parthings Lane, Tower Hill, Horsham) is marketed by Monkhouse and Bannisters. Critically it is only 1 mile from the affluent town of Horsham in West Sussex. This justifies a price of £33,000 per acre.
As the towns get more crowded and back gardens get smaller, recreational land gets more sought after.
Faulkners are presently marketing Chestnut Spinney Fishery on the edge of Gerrards Cross. This 1 acre piece of land sales offers an ideal spot for fishing, waterside picnics, barbeques and other recreational activities with an abundance of wildlife. This combined with a Home Counties location allows the 1 acre of greenbelt land to be marketed for £100,000.
Adjacent to Residential areas
The housing crisis is such in England that any piece of greenfield land adjacent to existing residential areas commands a large premium. Owners of such land also often attach "overage" clauses to the land. An overage clause means that the present land owner will still profit from any development gain through future planning permission being granted on the land - even though the present land owners no longer own the land.
Flude Commercial are presently offering 1 acre of greenfield land in a hilltop location adjacent to a residential area in the village of Woodingdean. Even though the Brighton and Hove Local Plan describes the land as "Countryside", the location of the site next to a residential area allows the 1 acre of land to be marketed at £65,000 and an overage clause to be attached. The overage clause in this case means that 50% of the net increase in value resulting from any planning consent granted within the next 10 years would be paid to the present land owners. This amount reduces to 40% for the next 5 years and to 30% for a following 5 years. Only after owning the land for 20 years would the new land owners be allowed to keep all of the development gain. Sometimes land owners will sell such land without an overage clause - however the asking price they ask increases accordingly.