What Do Residential Developers Look for When Assessing Land?
For many landowners, it can be difficult to know whether a piece of land has genuine development potential. A site may look suitable on the surface, but before a developer can make a meaningful offer, several important factors need to be assessed.
At Whatton Developments, we are actively looking for land opportunities across the East Midlands and surrounding areas. Whether land is already allocated, has planning potential, or is at an early stage of consideration, understanding what developers look for can help landowners decide what to do next.
Below are some of the key points residential developers consider when assessing land.
1. Location and Local Demand
Location is one of the first things any developer will assess.
Developers will look at whether the site is close to existing housing, schools, shops, transport links, employment areas and local services. A site in or near an existing settlement will often be more attractive than one in an isolated rural position.
Local demand is also important. Developers need to understand what type of homes are likely to sell or rent well in that area. For example, some locations may be better suited to family housing, while others may support apartments, bungalows, affordable housing or mixed-tenure schemes.
2. Planning Potential
Planning is one of the biggest factors affecting land value.
Developers will consider whether the land is already allocated for housing, whether similar sites nearby have gained planning permission, and whether the local planning authority is likely to support residential development.
A site does not always need to have planning permission in place before a conversation with a developer. In many cases, early discussions can help establish whether a subject-to-planning agreement, option agreement or joint venture could be suitable.
Key planning points include:
Local plan status
Existing planning history
Nearby residential development
Settlement boundaries
Affordable housing requirements
Section 106 or CIL obligations
Design and density expectations
3. Access and Highways
A site may have strong planning potential, but access can quickly become a major issue.
Developers will look at whether there is safe and suitable access from the existing road network. They will also consider visibility splays, road width, pedestrian access, parking requirements and the likely impact on surrounding roads.
If access is constrained, it does not always mean development is impossible, but it may affect the type, scale or layout of the scheme.
4. Site Size, Shape and Layout
Not all land is equally developable.
The size of the site matters, but so does the shape. A long, narrow or awkwardly shaped parcel of land may be harder to develop efficiently than a more regular site. Developers will assess how many homes could realistically fit on the land while still allowing for roads, gardens, parking, drainage, landscaping and open space.
A landowner may look at a site and think only in terms of acreage, but developers need to look at the net developable area. This is the usable part of the site after constraints have been taken into account.
5. Ground Conditions and Abnormal Costs
The physical condition of the land can have a significant impact on viability.
Developers will consider whether the site may have issues such as:
Contamination
Poor ground conditions
Significant level changes
Retaining wall requirements
Flood risk
Drainage challenges
Existing buildings requiring demolition
Protected trees or ecology constraints
Utilities diversions
These are often referred to as abnormal costs. The higher the abnormal costs, the more they can affect what a developer is able to pay for the land.
6. Services and Utilities
Residential development usually requires access to key services, including water, electricity, gas, broadband and drainage.
If services are nearby and easy to connect, the site may be more straightforward to deliver. If major upgrades, long service runs or complex drainage solutions are required, this can increase costs and affect viability.
Drainage is particularly important. Developers need to understand how surface water and foul drainage can be managed, especially where sites are not already connected to existing infrastructure.
7. Environmental and Ecological Constraints
Environmental considerations are now a key part of residential development.
Developers will assess whether the land includes protected trees, hedgerows, habitats, watercourses or species that could affect development. Biodiversity net gain requirements also need to be considered as part of the planning process.
Again, these issues do not necessarily prevent development, but they need to be understood early so that the right approach can be taken.
8. Market Value and Development Viability
A developer’s offer is not based simply on how many houses could fit on a site.
Developers work backwards from the likely value of the completed homes and then factor in construction costs, professional fees, finance costs, planning risk, infrastructure, affordable housing, abnormal costs and a suitable development margin.
This process is often called a development appraisal.
If the numbers work, a developer may be able to make a strong offer. If there are significant constraints or uncertain costs, the structure of the deal may need to reflect that risk.
9. The Best Route for the Landowner
Every site is different, and so is every landowner’s situation.
Some landowners may want a straightforward sale. Others may be interested in a subject-to-planning agreement, an option agreement or a joint venture approach where there may be potential to share in the uplift created through planning and development.
The best route depends on the site, the level of planning risk, the landowner’s goals and the timescale involved.
Speak to Whatton Developments
At Whatton Developments, we are actively looking for land to develop across the East Midlands and surrounding areas.
We are interested in speaking with landowners, agents and professional advisers about sites with residential development potential, including:
Land with or without planning permission
Subject-to-planning opportunities
Brownfield and infill sites
Larger garden plots
Redundant commercial or agricultural land
Joint venture opportunities
Sites suitable for housing or mixed residential schemes
If your land aligns with any of the points discussed in this article, we would welcome the opportunity to speak with you.
Whatton Developments can offer complimentary, personalised guidance to help you understand the potential of your land and the possible routes available.
Whether you are ready to sell, exploring your options, or simply want an early view on whether your land may be suitable for development, please get in touch with our team for an initial conversation.