WHAT IS LAND ASSEMBLY?
Land assembly is the redevelopment of brownfield land to provide higher density housing. It combines multiple houses or plots of land that have no development value on their own but joined together have the potential to generate massive profits.
For example, you can acquire land on an option agreement and then get planning consent to put flats on that plot. So by demolishing two homes, you can replace with higher density housing of 25 flats.
Not only does the investor make money, the homeowner also profits from the uplift in the value of their assets. You should look to pay the owner at least 125% of the market value of their land.
But you can only offer this, if you can acquire the surrounding homes and/or land, plus obtain planning permission. Subsequently, you can develop or sell on the site at a much higher price.
WHAT IS AN OPTION AGREEMENT?
A developer can acquire properties or land via an option agreement, which gives you control of a site without having to own a property. An option agreement is different from a conditional contract as it offers more flexibility as to whether or not you will actually go through with the purchase.
You have the option to buy the property, subject to certain conditions being fulfilled. For example, once planning permission has been granted, you can serve notice on the seller to sell the site to you within the time specified in the option agreement (this can be up to 21 years).
Options are normally registered against the title of the property at the Land Registry, so other parties can see if a developer has an interest in the land.
Land assembly planning
Mapping software can help you find potential sites in your local area. It’s online, so you can access it easily. Of course, once you find a potential site for development, you need to consider the value of the land and look at issues such as overall plot size and if access will cause any problems.
How much this research will cost you will vary from deal to deal depending on complexity, but budget for about £8k. It could be more or less, your local council fees and how many reports are required will impact on your overall outlay.
However, when you’re in a position of being able to secure land for £200k that will be worth £400k with planning permission, it is usually easy to secure the funding you need to go ahead with the deal.
Encouraging brownfield development
The government released a report in February that said we need to build as many as 275,000 homes a year compared with 190,000 last year – that’s an additional 85,000 homes a year.
The government wants to see the development of high-density housing on brownfield sites wherever possible and not on greenbelt land. The report goes on to say that more action is promised to help small independent builders to enter the market through the £3 billion homebuilding fund. As well as helping small builders to get access to finance, the government is also going to make the planning process much easier, so applications will be approved faster.
This urgent need to utilise brownfield sites more efficiently makes land assembly deals a huge opportunity in the present climate with potentially vast profits to be made.
Would you like to find out more about land assembly?
Property Mastery Academy’s two-day course will show you how to make life-changing profits through land assembly.
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