posted 23rd November 2023
In areas where house values are relatively low and land is relatively available, the plot could be as little as 25% of the final value of the home. In high-value areas, the plot could account for around two-thirds of the final value of the home. In many areas, the land will make up one-third of the value of the eventual property and the old 'third, third, third' rule still applies. In most cases, the value of land can be calculated by working backward from the market value of the eventual home. The proposed price of the land added to the building costs, plus a margin of between 20% and 30% should add up to the eventual market value. Self-builders must learn to juggle these figures in order to arrive at the price they are prepared to offer. In some cases, if they are not planning to sell and are really only interested in getting the home they want on the plot they like, they might decide to trim or even eliminate the margin, but beware of building in negative equity. (Data source: Mayflower Mortgage).
