Do you have a plot suitable for self-build?

3 April 2018 Martyn Tharratt, Custom Build Manager

Where land is concerned there are two incontestable facts; there is a huge housing shortage and available land suitable to build homes on is in short supply.

So if you have land with potential that you want to sell, how do you make sure you realise a return that reflects the best value you can achieve?

Well, you could simply advertise and sell to a developer. Simple? Well yes, except developers will have their own agenda.

They too will want to maximise their own opportunity. They will want to pay a price which will deliver their best profit on the houses they build whilst considering costs to construct their infrastructure works and the associated design and planning costs for the least risk.

They will also need to factor in the finance cost to support the process for time taken to deliver the development to market. This can result in a significant chipping away at the offer price resulting in a significant reduction on your expected return.

How about developing the land yourself?

This will involve appointing a design and planning team to gain consent, deliver a detailed design of roads, sewers and other services, as well as the house designs themselves. You will then need to find a contractor with the skills to deliver everything from the heavy infrastructure construction work to the final finishes on the house. All of this will need financing until houses are sold.

What’s the Potton alternative?

You are considered our partner customer. We seek to enable you as landowner to deliver fully serviced plots for Custom Build sale at market value by entering into an agreement whereby plot purchasers work with our self-build consultants to deliver a Potton home.

The added market value of the serviced plots less infrastructure costs delivers a significant improvement on the whole land value.

What’s more, as there is no developer in the equation, there’s room for an even better return whilst providing the self-builder with real equity on their new home.

So how does it work?

Once you have made an initial enquiry our Land Consultant will visit to discuss options. We will make an initial assessment regarding planning and offer advice on typical development costs and plot values based upon our experience and location.

Should the land owner be interested in the proposal, they enter into a Part 1 Agreement. The agreement is not legally binding but spells out the process ahead. Once signed, Potton develop a layout considering the best value return for the landowner.

Potton will produce a detailed cost plan including for all costs associated with the design, surveys, report and construction works to service the plots to sell. The cost plan will be developed, risk assessed and market tested as necessary to provide a robust appraisal and forecast return.

The Potton Partnership model works best on smaller sites of 5 to 20 homes where road and drainage works aren’t so extensive. This makes for easier delivery of infrastructure works and is more attractive to purchasers of self-build homes.

We find that these sites can be too small for developers but too large for individual self builders and therefore have little prospect of being developed in the traditional way.

Once the land owner is satisfied with the Potton development proposal we then enter into a Part 2 Agreement which enables Potton to invest our expertise and service into the land at our risk to create the opportunity of offering serviced plots for sale.

As well as supporting the development of the land, Potton also support the plot sales by working with the chosen local Estate Agent and providing sales literature explaining how easy it is to build your own home.

As plot sales are achieved, the partnership takes care of the construction of the infrastructure and serviced plots by a dedicated project manager who works with the local supply chain to complete the work required.

Whilst the site is being prepared, Potton work with individual plot purchasers to develop an individual house design to meet their needs and fit the design guide developed with the planning authority. This approach to detailed design ensures that the scheme is developed to a high standard and is assured of being granted permission to build.

What is a serviced plot?

Potton work with the landowner to complete the design and construction of the infrastructure works to provide for fully serviced plot. This includes for all roads, sewers and service connections to a suitable point within each individual plot for connection by the plot purchaser as part of their self-build process. It will also include for any landscape works to common areas.

How is the infrastructure paid for?

Landowners choose to finance the enabling works however suits them. However, we are happy to administer the Governments Home Building Fund loan, which has been introduces to support the delivery of housing projects for 5 or more dwellings.

So what is the value of my site?

In simple terms, the value of the land is established from the sales value of the serviced plots less the cost of obtaining the planning permission and providing the infrastructure. In truth, cost and values will vary, depending upon location and the features of the land itself.

Is my site suitable?

As a guide, the smallest plots suited to development are around 250–300m² and are typically suited to starter homes with high density. In theory, as long as the site can be accessed it may hold potential. Potton tend to build homes with a 500m² plot size, achieving up to 7 units per acre.

Values vary tremendously depending on location but Potton can offer advice within a couple of weeks of contact – find out more here.

Why is Custom Build by Potton so attractive?

•   The model particularly suits smaller sites that are less attractive to developers. As such, they are easier to provide the serviced plots required.

•   Sites of <10 plots do not require Section 106 agreements to be entered into. This can be a larger number depending on authority.

•   Custom-build schemes do not attract CIL contribution.

•   The Self Build and Custom House Building Act 2015 became effective in March 2016. It places a duty on local authorities to keep a register of individuals and community groups who have expressed an interest in acquiring land to deliver self-build and custom-build projects. As such they must take account of and make provision for the interests of those on such registers in developing their housing initiatives and their local plans.

•   If your site suits the custom-build model, it will be of extra interest to authorities who need to demonstrate they are making provision; providing plots for custom build. This may make the difference in whether your site gains planning consent.

And finally, do not forget the ex–developer factor. With no developer ‘cut’ or margin there’s better land values for landowners and more equity for plot purchasers and of course more houses being built which means more work for everyone else.

Let Potton appraise your site

If you think your site may have potential for multiple new homes then please get in touch with our Custom Build team

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