SHOULD I GET PLANNING PERMISSION BEFORE SELLING MY LAND?
Understanding whether planning permission could increase the value of your land before a sale
If you own land with potential for development, an important question is whether you should obtain planning permission before selling it or sell the land in its current condition.
There is no single answer.
Planning permission can substantially reduce uncertainty for a purchaser and may increase the value of land by establishing what can be developed. But obtaining permission takes time, costs money and carries planning risk.
In some circumstances, pursuing planning permission before a sale can unlock significant additional value. In others, it may be more sensible to establish the development potential of the land without progressing all the way to a full planning permission.
The right strategy depends on the site, the planning risk, the likely development value and your objectives as landowner.
DOES PLANNING PERMISSION INCREASE LAND VALUE?
It can do.
The value of development land is closely related to what can ultimately be built on it.
Land without planning permission contains uncertainty. A purchaser may need to establish whether development is acceptable, how much can be built and what technical or planning constraints need to be overcome.
That uncertainty represents risk and will normally influence what a purchaser is prepared to pay.
Planning permission can remove some of that uncertainty by establishing an acceptable form and scale of development.
For example, there can be a significant difference between selling:
a piece of land that might accommodate housing
and selling:
a site with planning permission for a defined residential development.
However, obtaining planning permission does not automatically maximise land value. The quality and commercial attractiveness of the consent also matter.
SHOULD I SELL LAND WITH OR WITHOUT PLANNING PERMISSION?
This depends partly on how much planning risk you are prepared to take yourself.
Selling land without planning permission can be quicker and avoids the cost of pursuing an application. However, a purchaser taking on the planning risk may reflect that uncertainty in the price they are willing to offer.
Obtaining planning permission before selling requires the landowner to invest time and money, but can create a more clearly defined development opportunity.
There is also a middle ground.
Rather than immediately pursuing a detailed planning application, it may be possible to undertake enough work to demonstrate that there is a credible development opportunity and then decide whether further planning expenditure is justified.
This is why the first question should not necessarily be:
“Should I submit a planning application?”
It should be:
“What is the most proportionate way of establishing the development potential and value of this land?”
HOW MUCH COULD PLANNING PERMISSION ADD TO THE VALUE OF LAND?
There is no standard percentage.
The difference between the value of land in its existing use and its value with development potential can be substantial, but it depends on the particular site and the development that can be achieved.
Important factors can include:
The type of development permitted
The number and size of homes
Local property values
Affordable housing and other planning obligations
Infrastructure requirements
Abnormal construction costs
Access
Site constraints
Demolition or remediation
Finance and professional costs
The strength of the local development market
Ultimately, a developer will consider what the completed development could be worth and deduct the costs, risks and required return associated with delivering it.
The resulting figure influences what can be paid for the land.
This means that more planning permission does not necessarily mean more land value.
A commercially deliverable permission can be more valuable than a larger scheme burdened by excessive costs or difficult planning requirements.
DO I NEED FULL PLANNING PERMISSION BEFORE SELLING?
Not always.
There are different ways of establishing planning certainty, and the appropriate route depends on the site.
These might include:
Planning and development feasibility
An initial assessment can identify whether there appears to be a credible development opportunity and what form of development may be appropriate.
Pre-application advice
For some sites, engaging with the local planning authority before making an application can help identify its likely response to a proposal.
Permission in Principle
For suitable sites, Permission in Principle can provide a way of establishing whether the principle of a particular amount of housing development is acceptable before progressing technical details.
Outline planning permission
Where available and appropriate, outline permission can establish the principle and certain parameters of development while leaving some detailed matters to be determined later.
Full planning permission
A detailed permission can provide greater certainty about exactly what can be developed but generally requires more design and technical work upfront.
The objective should be to obtain the level of planning certainty that makes commercial sense for the site, rather than automatically pursuing the most detailed permission possible.
WHAT SHOULD I DO BEFORE SPENDING MONEY ON A PLANNING APPLICATION?
Establish the likely development opportunity first.
Before commissioning a full package of drawings, surveys and reports, it is sensible to understand:
The planning policy position
The site's planning history
Development nearby
Access
Flood risk and drainage
Trees and ecology
Heritage considerations
The relationship with neighbouring properties
Potential development capacity
The likely planning route
This can help identify issues that could fundamentally affect the proposal before significant money is committed.
For example, there may be little value in commissioning a detailed housing scheme for a site if an unresolved access issue could prevent residential development altogether.
Equally, an initial assessment may identify a stronger development opportunity than the landowner originally anticipated.
SHOULD I DESIGN THE MAXIMUM NUMBER OF HOUSES BEFORE SELLING?
Not necessarily.
If the objective is to increase the value of the land, it can be tempting to maximise the number of homes proposed.
But the highest number of units is not automatically the most valuable or most deliverable scheme.
A larger development might create:
Greater infrastructure requirements
More significant highway impacts
Increased planning obligations
More difficult relationships with neighbours
Additional technical requirements
Higher construction costs
A longer or riskier planning process
Sometimes a slightly smaller scheme can provide a clearer planning route and a stronger commercial proposition.
The appropriate development capacity should therefore be considered from both a planning and development perspective.
ARE THERE ALTERNATIVES TO GETTING PLANNING PERMISSION MYSELF?
Yes.
A landowner does not always have to fund and manage the entire planning process before selling.
Depending on the circumstances, land transactions can be structured in different ways.
For example, a purchaser or developer might agree to acquire the land subject to obtaining planning permission.
Alternatively, an option agreement can give a developer the right to purchase the land if an agreed planning outcome is achieved.
A promotion agreement can involve a specialist promoter pursuing planning permission and marketing the land, with the proceeds ultimately shared in accordance with the agreement.
There are also conditional contracts and joint venture arrangements that may be appropriate in some circumstances.
Each approach allocates cost, control, risk and potential upside differently.
Landowners considering these structures should obtain appropriate legal and valuation advice before entering into an agreement.
SHOULD I ACCEPT AN OFFER FROM A DEVELOPER BEFORE GETTING PLANNING PERMISSION?
An unsolicited approach from a developer can be an indication that the land has potential, but it does not necessarily establish its full value.
Before agreeing a sale or option, it can be sensible to understand independently:
what development might be possible,
what planning strategy could establish it,
and
what the land might be worth if that development were achieved.
Without that information, it can be difficult for a landowner to judge the commercial significance of an offer.
This does not necessarily mean pursuing planning permission yourself.
Even a relatively early planning and development assessment can put a landowner in a better position to make an informed decision about whether to sell, pursue planning or negotiate with a developer.
WHEN DOES IT MAKE SENSE TO GET PLANNING PERMISSION BEFORE SELLING?
It may be worth considering where:
There appears to be a credible development opportunity
The potential increase in land value justifies the planning expenditure
The principal constraints appear capable of being resolved
You are comfortable funding the planning process
You are not under pressure to sell immediately
Greater planning certainty is likely to make the site more attractive to purchasers
Conversely, pursuing a full permission may be less attractive where the planning risk is unusually high, substantial technical expenditure is required, or the landowner prioritises an earlier sale over maximising potential value.
The decision should therefore be based on the risk-adjusted opportunity, not simply on the assumption that planning permission is always better.
HOW SHOULD I SELL LAND WITH DEVELOPMENT POTENTIAL?
Once the planning position has been established, the method of sale also matters.
A site with genuine development potential may attract interest from local builders, regional housebuilders, specialist developers, self-builders or land promoters depending on its scale and characteristics.
Providing purchasers with clear information about the site and its planning position can help them understand the opportunity.
Where planning permission has been obtained, the planning decision, approved drawings and relevant technical information can form part of the sales material.
Where permission has not been obtained, a credible feasibility assessment or planning strategy can still help explain the development opportunity.
Specialist land agents and valuers can advise on marketing and sale strategy.
WHAT IS THE BEST ROUTE FOR MY LAND?
There is no reason to decide between “sell now” and “get full planning permission” before understanding the site.
A more useful sequence is often:
Understand the development potential
↓
Identify the principal planning and technical risks
↓
Estimate what development may realistically be achievable
↓
Consider the potential value uplift
↓
Decide how much planning certainty is worth pursuing
↓
Choose the appropriate planning and disposal strategy
This allows the decision about planning expenditure to be made with a much better understanding of the potential reward.
SWAP VIEW
For a landowner considering a sale, we would normally look at planning and value together.
The question is not simply:
“Can we get planning permission?”
It is:
“What planning work is likely to create enough additional certainty or value to justify its cost and risk?”
On some sites, obtaining planning permission before selling could materially improve the landowner's position.
On others, the sensible approach may be to establish the planning opportunity and allow a purchaser or development partner to take the project forward.
The aim is to spend proportionately while protecting as much of the potential development value as possible.
THINKING ABOUT SELLING LAND WITH DEVELOPMENT POTENTIAL?
If you own land and are considering whether to sell it now or pursue planning permission first, SWAP can help assess the development opportunity before you commit to a particular route.
We combine planning, architecture and development experience to consider what could realistically be achieved, the appropriate level of planning work and the potential implications for the site's development proposition.
Send us the site address or location, a plan if you have one, and details of any approaches or proposals you've received.