The value of land suitable for development is on the up in many areas of the UK as developers struggle to keep up with demand on which to build.
The increase in land values is being attributed to a shortage in suitable sites for development coming to the fore, coupled with the current high levels of demand in the housing market.
Upward pressure on land values is in particular being seen in sites suitable for 50 – 150 homes, of which there is a particular shortage. According to figures from Savills, the value of UK greenfield and urban land in this size bracket grew by 0.9% and 0.7% respectively in the first quarter of 2021.
This is a trend we are witnessing in Lancashire, with demand for sites having an impact of land values – particularly in the most popular residential areas of the county.
This is against the backdrop of continuing increases in house prices, which rose by 5.7% in the year to March, according to figures from Nationwide. Although a degree of ‘cooling off’ is anticipated as the stamp duty holiday comes to an end, forecasts estimate that house price growth will remain throughout 2021 and into 2022, with some forecasts at 4% in 2021 and 5% respectively.
Amid these figures, demand for new-build homes appears to remain high. New home completions are above pre-Covid levels, and many housebuilders are reporting high percentages of forward selling on their developments.
Whilst the confidence in the housing market is positive news for the industry, the lack of sites could be detrimental to the long-term prospects to the new build market – as land values will continue to be pushed up. Coupled with rising build costs, the profitability of developments may become too tightly squeezed for housebuilders, which may ultimately see fewer homes being built.
Currently, housebuilders are keen to access suitable sites and enter into discussions with landowners about the potential to purchase land. Lea Hough offer advice and representation to landowners that wish to investigate their options regarding the sale of their land, or those that have already been approached by a developer. Our team specialise in this area and offer advice on the preferable planning route, contractual arrangement and disposal strategy.
It is worth bearing in mind that land sales for development purposes do not happen overnight and the entire process can take several months or years. So it is worth getting in touch with us sooner rather than later so you can benefit from professional advice, and be best placed to negotiate with developers and ultimately to maximise the value of your asset.
To speak to a member of our Land and Development team, please get in touch.