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How Much Is My Land Worth With Planning Permission?
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The rough capacity figure updates as you type. It is a starting point, not a valuation.
Why We Do Not Give an Instant Price Online
Two fields of the same size in the same parish can be worth very different amounts. Access, flood risk, the council's housing position, heritage, landscape, drainage and ecology all change what a housebuilder can pay. Any website that gives you an instant price per acre is guessing, and a guess that is too high can lead you to turn down a fair offer, while one that is too low can lead you to accept a poor one.
We would rather look properly and give you a figure you can rely on, with the reasoning behind it, so your own land agent can check it.
Three Kinds of Land Value
1. Existing use value
What the land is worth as farmland, grazing or an old yard, with no prospect of planning.
2. Hope value
What some buyers pay because planning might be possible one day.
3. Price agreed with you
Set above today's value, fixed before any planning work starts.
4. Value with planning permission
What a housebuilder can pay once permission is granted, after their costs and profit.
Existing Use Value
This is what the land is worth for what it is used for now, such as arable farming, grazing, equestrian use or storage, with no expectation of planning permission. It is set by comparable sales of similar land and, for farmland, by what the land can earn.
Hope Value
Some buyers will pay more than existing use value because they think planning permission might be granted one day. That premium is hope value. It can be modest or significant, depending on how realistic the prospect of planning is and how long it might take. Hope value is also why land on the edge of a village often sells for more than identical land further out.
Value With Planning Permission
Once land has permission for housing, it is worth what a housebuilder can pay for it. That is usually many times its existing use value, but it is not simply the value of the homes that will be built. The next section shows why.
How a Housebuilder Works Out What to Pay
Housebuilders use a residual valuation. They start with what the finished homes will sell for and take away every cost of delivering them. What is left is what they can pay for the land.
- Sales value of the finished homes
- £28,000,000
- Less build costs, including roads and drainage
- −£13,000,000
- Less affordable housing discount
- −£3,500,000
- Less Section 106 and infrastructure contributions
- −£1,600,000
- Less Biodiversity Net Gain
- −£300,000
- Less fees, finance and marketing
- −£2,100,000
- Less the housebuilder's profit
- −£5,000,000
- What is left to pay for the land
- £2,500,000
All figures are made up to show the method. Real figures vary widely by location, house type, council requirements and market conditions.
Two things follow from this. First, costs set by the council, such as affordable housing percentages and infrastructure contributions, come straight out of the land value, which is why they matter to you as a landowner. Second, small changes in sales values or build costs make a large difference to the residual figure, which is why land values move more sharply than house prices.
| Change to the example, everything else the same | Land value | Effect on land value |
|---|---|---|
| None | £2,500,000 | No change |
| Sales values 5% lower | £1,100,000 | Down 56% |
| Build costs 5% higher | £1,850,000 | Down 26% |
| Council contributions £500,000 higher | £2,000,000 | Down 20% |
Profit is often set as a percentage of sales, which would soften the first line a little. The point stands: land value moves far more than house prices do.
Our guides to Section 106 and CIL and Biodiversity Net Gain explain two of the biggest deductions.
Hope Value Worked Through
Hope value is what a buyer will pay today for the chance of planning later. Suppose the 80-home site above is a 10-acre field with no planning, and a buyer wants to buy it outright.
- Value with planning, from the residual valuation above
- £2,500,000
- Less existing use value: 10 acres of farmland at £10,000 an acre
- −£100,000
- Uplift if planning is granted
- £2,400,000
- Weighted for a one in four chance of success (25%)
- £600,000
- Less the buyer's cost of pursuing planning
- −£300,000
- Less an allowance for waiting six years and the buyer's return
- −£175,000
- Hope value the buyer might add to existing use value
- £125,000
Made-up figures to show the reasoning. On these numbers a buyer might pay about £225,000, or £22,500 an acre: more than double the farmland value, but less than a tenth of the value with planning. Real buyers judge the odds very differently.
This is the choice at the heart of selling land with potential. Sell outright now and the planning risk is priced in against you: the buyer pays for the chance of planning, not for planning itself, and keeps the uplift if it comes. Agree an option with a fixed price instead and you receive a far larger share of the value with planning, with every planning cost paid for you. If planning fails, you still have your land.
Hope value also rises as the odds improve: a field allocated in a draft local plan will attract far more than one with no planning status at all. Our comparison of option, promotion and outright sale sets out the choice.
What Raises and Lowers the Value of Your Land
| Tends to raise value | Tends to lower value |
|---|---|
| A location where new homes sell well | A weak local housing market |
| Simple road access with good visibility | Access that needs third-party land or major road works |
| Flat, well-drained land in flood zone 1 | Flood risk, poor drainage or steep slopes |
| Few ecological or heritage constraints | Protected habitats, mature hedgerows, heritage settings |
| A council that needs more housing land | A council with a new plan and strong delivery elsewhere |
| Clean title and vacant land | Title problems, tenancies or rights of way that need resolving |
None of these is decisive on its own. A site with a difficult access can still be valuable if everything else is strong, and a clean site can struggle if the council has no need for it.
Things You Can Do to Protect the Value
- Do not clear scrub, pull out hedges or plough old grassland to tidy the site up. For Biodiversity Net Gain, habitat damaged since 30 January 2020 is normally assessed as it was before the damage, so clearing it adds cost rather than saving it. Removing many countryside hedgerows also means notifying the council first.
- Find your title documents and plans, and check the boundaries on the plan match the ones on the ground.
- Note any tenancies, grazing licences, rights of way and wayleaves, and keep records of flooding, drainage or past planning applications.
- Avoid granting new long tenancies or rights over the land while you are considering offers.
How We Set the Price We Offer
- Look at the land and its constraints. Title, access, flood maps, designations, heritage, ecology and planning history, from the desk first and then on site.
- Sketch a sensible scheme. How many homes the land could realistically take, allowing for access, open space, drainage and the council's policies.
- Value the scheme with planning. A residual valuation like the one above, using local sales values and the costs the council is likely to require.
- Allow for cost, risk and time. We pay for all of the planning work, which on a larger site can run to hundreds of thousands of pounds, and we carry the risk that it fails.
- Put it in writing. Heads of terms setting out the price, the option period, any option fee and our contribution to your legal and agent fees, with the reasoning behind the figure.
Our price starts with a realistic view of what the land could be worth with planning, based on a sensible scheme, local sales values and the costs the council is likely to require. We then allow for the cost and risk of getting planning, which we carry entirely, and for the time it will take. What remains is a price we can commit to in writing, above what your land is worth today.
We explain how we reached the figure so that your land agent can test it. If you are comparing offers, look beyond the headline: check what is deducted, when you are paid, and what happens if planning takes longer than expected. Our page on option and promotion agreements shows how to compare them.
Questions About Land Value
Is there a rule of thumb for price per acre with planning?
Not one that is safe to rely on. Values per acre vary several times over between regions, and within a single district, depending on the factors above.
Will the rough capacity figure be the number of homes built?
Rarely exactly. It assumes a typical share of the site can be built on at a typical density. The real figure depends on the layout, access, open space and the council's policies.
Does my land need to be valued by a surveyor first?
No. We carry out the initial review. Your own land agent, whose fees we contribute to, can then advise on any offer we make.
Why have two buyers offered me very different figures?
Usually because they are offering different things. One may be paying hope value now, another a fixed price once planning is granted, and a third a percentage of market value after deductions. Put every offer on the same footing: how much you receive, when, and in what circumstances.
Does a local plan allocation increase what my land is worth?
Usually, because it makes planning much more likely. It does not guarantee permission, and whatever the council asks of the site, such as affordable homes or land for a school, still comes out of the residual value.
How does tax affect what I keep?
Capital Gains Tax usually applies to the gain on sale, and selling can affect inheritance tax planning. Read our guide to tax when selling land for development and speak to your accountant early.