The Diocese determined to sell the vicarage plot (with access road) in November and the development manager invited us to make an offer.
We still retained our ideas of community building and hoped that during the negotiation period we might persuade the church to hold on to their land and consider a wider community project with the Council.
We began to draw up draft Heads of Terms (HoTs) for the offer to the Church, looking up on the internet examples of HoTs, something we had never done before – basically an outline of our intended agreement.
The initial noises from the church were positive. We had an idea of what auctioneer valuation would be and we knew we needed to offer a little over but we also had to make our own minds up about the value.
Peter, worked backward from the third/third/third rule for development that sets out a third for the land, a third for build costs and a third for developer profit (most of which we wouldn’t need as we were building for ourselves).
So if a 3 bed house in North London worth £750k, and you wanted to build one as a developer, 750k would be your GDV ‘gross development value’ and you might expect the build cost to be 250k. Then various development costs (including profit margin) might add another 250k leaving a so-called ‘residual valuation’ of the land at 250k. In reality land values in London had gone up so we estimated 40% rather than the 33%.
Peter worked out we could fit two 4-5 bed houses on the plot, with the loft spaces configured as rooms. Splitting the land and building two houses we believed was affordable.
Tom McSherry of BuildStore confirmed that we could get two self build mortgages for two families on different plots if planning permission was obtained.
If we could find someone to partner with we might just be able to do it.