Would you buy off someone who has an option with no planning?

[Neil Mangan]

Hi,
I have a question for you more experienced developers .
I have done several small developments (1-15 units ) but an opportunity has come my way for a much larger site .

The potential GDV is £9.5-11 million.

There is no planning on this site, yet . It is in a very good location . We paid an independent planner to asses the site and he agreed too.
For me the only issue is for the guy who is selling. Nice guy. He is NOT the owner and has an option until Dec next year . He wants to sell the site with the option for £5.5 million. Bearing in mind nothing has been agreed with the city council for planning

I believe there is an oversupply of student and social housing in the area and we would therefore build for PRS. (350 to 400 units ).

With this in mind would any of you guys purchase the site ?

 

[nmb]

How much is the site valued at by an independent third party without planning permission?

 

[Neil Mangan]

How much is the site valued at by an independent third party without planning permission?

No one has given a clear valuation other than potential for 350 units (flats )

 

[diyhelp]

The only problem I can see is, what happens if there is a problem with planning permission? I appreciate you will need to pay a premium between the basic land value now and the potential value when complete, but I would prefer to know how much financial risk I was taking. Maybe even do a deal where you pay a basic price now and a further payment if/when planning permission is received?

 

[nmb]

I have rarely come across a building project which is finished on time and within budget - the greater the building and carrying costs at the start the more this will eat into your potential profits.