Buying land at auction with “Hope Value”

Hope value land auctions represent a unique opportunity for buyers to acquire parcels of land with the promise of future development potential. In these auctions, the concept of “hope value” refers to the anticipation of obtaining planning permission for residential, commercial, or industrial projects, which could significantly increase the land’s value over time. As buyers vie for these properties, they enter into a competitive bidding process fuelled by optimism and speculation about the land’s future prospects. However, alongside the promise of lucrative returns, hope value land auctions also present risks and challenges that buyers must navigate with careful consideration and strategic planning. In this article, we delve into the dynamics of hope value land auctions, exploring the opportunities, risks, and strategies involved in acquiring land with the promise of future value appreciation.

Land values

The price of land varies greatly due to many factors such as geographical location, existing planning statuses, designation eg Area of Outstanding Natural Beauty, Grade 3 Pasture, Prime Arable etc all of which can have an effect on the price of the land. Typically in the UK according to Savills as of the end of 2023 agricultural land values ranged from around £5.6K per acre for pasture land to £11K for prime arable.

As for garden land The Grass People did a study and examined some 50 locations around the UK and their analysis showed that the average price for this type of land works out to a price of £1,526 per square meter. 

Other types of land include woodland that has an average price typically pitched somewhere between £3K and £12K per acre and land with planning permission that can go for anything that people are prepared to pay. Some prime building land may go for eye watering amounts of over one million pounds per acre.

Typical hope value land is usually though not always located near or adjacent to existing property. Some times it may be just a parcel of land that if bought together with the adjoining property could form the basis of a multi dwelling development. In this case the buyer would purchase the land in the hope that they could gain planning permission for several houses on the site replacing the existing dwelling and utilising the newly purchased parcel of land.

Other pieces of land that come up for auction could be set apart from existing properties and may have had varying uses over the years. Take for example the lot at Higher Bal, St Agnes which Lodge and Thomas listed on their website in April 2024

The land is listed as being designated AONB and Area of Heritage Coast. The land is described by the auctioneer as being a former vegetable garden with a one time garage that had since been removed. The listing teases out further information by stating that their had been a failed planning application made in 1990 that incorporated the adjoining garden. The listing states that the planners rejected the development application because the site was in an AONB and in the Area of Coastal Heritage. Although the AONB conservation boards, Historic England and Natural England have a say in planning applications it is the local planners who have the final word. In this instance the buyer would need to do some detailed due diligence in order to evaluate whether there was the possibility of getting planning permission for a development and by talking with the local planners. With land designated as such it may be worth getting a specialist land buyer or planning consultant involved pre purchase to evaluate any development feasibility.

Buying land at auction with “Hope Value” can present both opportunities and risks for potential buyers.

What are the merits of buying hope value land at auction

Land sold at auction with “Hope Value” often indicates that the land has development potential in the future. This could include obtaining planning permission for residential, commercial, or industrial purposes. If successful, the land could significantly increase in value over time, offering lucrative returns for the buyer.

Auctions create a competitive environment where multiple buyers may bid for the property, driving up the price. For buyers, this can create an opportunity to secure the land at a lower price than its potential market value, especially if other bidders are not fully aware of the land’s development potential.

Auctions typically offer a transparent and straightforward process for purchasing land. The terms and conditions of the sale are clearly outlined, and buyers have the opportunity to conduct due diligence before bidding. This transparency can provide assurance to buyers that they are making an informed decision.

Auction sales often involve a relatively fast transaction process compared to traditional property sales. Once the auction concludes and the winning bid is accepted, the buyer typically completes the purchase within a specified timeframe, allowing for swift ownership transfer.

What are the risks of buying hope value land

Buying land with “Hope Value” carries inherent risks, as there is no guarantee that planning permission will be granted for development. Factors such as zoning regulations, environmental concerns, and community opposition can impact the likelihood of obtaining planning approval.

Buyers may become caught up in the excitement of the auction and end up paying more for the land than its actual value. It’s essential for buyers to set a maximum bid price based on thorough research and financial considerations to avoid overpaying.

Some auction properties may have limited information available to buyers, making it challenging to assess the land’s true potential and risks. Conducting thorough due diligence, including site visits, researching local planning policies, and consulting with experts, can help mitigate this risk.

Purchasing land at auction requires a financial commitment in the form of a deposit and potential additional costs associated with the transaction. Buyers should be prepared to meet these financial obligations and understand the implications of non-completion or defaulting on the purchase.

The three “Hopes” of land auctions

In summary, buying land at auction with “Hope Value” can offer potential rewards in terms of future development opportunities and value appreciation. However there are perils that can befall you, buyers should approach these transactions with caution, conduct thorough due diligence, and carefully consider the associated risks before making a purchase decision.

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