What is your land and commercial property worth?
PUBLISHED: 09:41 25 September 2019 | UPDATED: 09:46 25 September 2019
If you are thinking of selling land or commercial property, it is inevitable that one of your primary questions will be regarding what the Market Value of your land is, and then what it will sell for.
Often, the answers to these seemingly straightforward questions are not simple. Market Value depends upon where the land is located, and what its current use, condition and access is, amongst other factors. For any land to sell in a timely way, there must usually be a willing seller and a willing buyer.
Existing Use Value
Existing Use Value is the current value of land whilst in its current use. This is usually controlled by the Local Planning Authority in categories such as Industrial, Commercial, Pub, or Distribution. It may be that the site is classified in the Local Plan as Greenfield. Each of these use classes will generate a land value based upon Income, yield and then Capital Value or Residual Value.
Alternative Use Value
Subject to planning, land could have an Alternative Use Value, and this value may be greater than the Existing Use Value. This might be the case for example, where a large industrial unit or commercial premises is reaching the end of its useful life. Its location and access may no longer be suitable, and the buildings may be approaching obsolesce without major investment. In these cases, it would be possible to realise this greater value by applying for a formal change of use to residential, for example.
Residual Land Value
If you are able to secure an Alternative Use for your site for residential, it will be vital to understand the true Residual Value. The Residual Value of a site reflects the costs incurred in creating a site that is developable. For example, to change a site use from Industrial to Residential, there may be contamination to clear up, invasive plant species such as Japanese Knotweed to eradicate or complex foundation solutions due to 'made ground' or historic mining underneath. All of these items will have a cost which ultimately needs to be deducted from the land price to some extent.
If you are thinking of selling your land, have a chat to us at Stanley Investments. It may be that we can answer your queries, give you greater clarity or arrange the purchase your land directly from you.
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