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Negotiating price with council who want to buy to develop

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  • Negotiating price with council who want to buy to develop

    The council is selling their land to developers to build into houses. My parents live next to this land and have been asked by the council if they'd like to sell their house too to add to the amount of land the developers have. They have been told that 4 houses would be built on the land of their property.

    My parents bought the house for just over £410k around 4 years ago, and are being offered £400k plus legal fees if they sell, on the basis that house prices have gone down where they are in the last 4 years. They've been told the expected sale date would be around a year from now.

    My parents think this is a reasonable offer but my advice to them would probably be to try to get far more money - the profit on building 4 houses on there, with what I estimate to be a sale value of around £1.4m, is huge.

    Thoughts? How much should they suggest as a counter-offer? What should they look out for and be aware of? 2013 is a long way away - should they use this 'stuck in limbo' situation to increase the price, or try to get the council to buy sooner?

    Thanks in advance for your ideas!

  • #2
    Re: Negotiating price with council who want to buy to develop

    First rule of negotiation... say no to the first offer.
    Really depends what you want to achieve... Do you want to move away? What can 400k buy you else where to live in?

    You really need to understand what they are doing.

    One way to add value is to get planning permission on your land, your self. (But means a lot of work with the planning office... but if you get good advise, Planning agents, architects etc, then it should work to your benefit).

    Then your property will be worth more to any would be developer.

    You should raise your thoughts with the developer stating that offering 400k seems low when considering the 4 houses. They may simply raise their offer... or not.

    Perhaps you could even give your property for free, in return for 2 of the 4 houses, if they will be worth more to you. (but do be careful in getting sound legal/estate agent advice before you take this route to insure 2 is really better than 1 and that they are forced to build your 2 before they can profit on the other 2 they build.)

    Kind Regards,
    Randeep Mann

    Want to Rent or Sell quickly? I can help.
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    • #3
      Re: Negotiating price with council who want to buy to develop

      There is a principle known as 'ransom' potential. If your parents hold the key to unlocking the development potential of the land in question, they may be able to extract a share of the development value (possibly as much as 50%) for their releasing their land.

      Specialist advice is recommended, good luck though.

      Castle Surveyors Limited