One thing the land work I’ve been doing recently has really reinforced for me is how misleading GDV can be on its own. It’s an important number, but it doesn’t tell you what the land itself is worth, and I’ve seen that in a few recent appraisals where small changes to the assumptions underneath it produced very different answers.
A good chunk of my work involves looking at viability from the developer’s side, working out what a scheme can support once build costs, fees, finance and risk are factored in. Two schemes with the same GDV can land on very different residual values depending on what’s underneath them.
The Build Cost Assumption That Changes Everything
I worked recently on a small backland site – a couple of plots behind an existing property, nothing overly complicated in planning terms. The sales side was straightforward: two similar houses with a comparable local market to price against, giving a combined gross value of a little over £600,000. On paper, it looked like a site worth pursuing at the guide price being asked.
Where it got interesting was the build cost. The first pass used a fairly standard floor area assumption, and at that size the numbers came out negative. Refining that assumption – not the design, not the sales value, just a more accurate read of what was actually going to be built – turned the same site from a loss into a residual land value comfortably above the asking price.
What surprised me was how much difference that one assumption made. Nothing about the site had changed. One input, corrected, moved the answer by close to £200,000.
That’s the part that’s easy to miss. The GDV is usually the straightforward half of the calculation. It’s the build costs, fees, finance and margin underneath it where the real work and uncertainty sit.
Why More Homes Doesn’t Always Mean More Land Value
I’ve also worked on a site with planning consent already in place for a modest scheme: five houses, low risk and a known quantity. There was a case for going back in for a larger scheme instead – seven or eight units on the same footprint – which on paper pushed the gross value up by around a third. On paper, the larger scheme looked like the obvious answer.
Once I worked through the rest of it, it wasn’t quite that simple. That uplift came with a cost that doesn’t show up in a GDV figure: giving up a live consent, applying afresh, and carrying twelve to eighteen months of planning risk with no guarantee of the same outcome.
Once that risk and time were priced in, the uplift in land value was real but noticeably smaller than the uplift in GDV. The bigger scheme still came out ahead, just nowhere near a third more valuable.
Planning Certainty Is Worth More Than People Expect
The clearest example of this is smaller and simpler: a couple of self-build plots without planning permission, in a spot with genuine appeal but no consent secured.
Sold as they were, that land would have achieved a modest sum per plot. Securing outline planning consent first – costing a small fraction of the eventual uplift – roughly doubled what each plot could achieve.
Nothing about the land itself had changed. What changed was certainty. A buyer paying for a plot with consent in hand is paying to remove risk, not just to acquire ground. It’s easy to underestimate how much value sits in resolving uncertainty before you go to market, rather than after.
Why More Deals Now Get Structured, Rather Than Simply Sold
Build costs, labour and planning have all moved the wrong way for viability over the past few years, which is part of why option and promotion agreements come up in a lot of these conversations now.
Rather than a developer paying for unconsented land upfront and carrying all the planning risk alone, an option lets both sides agree the price mechanism now and complete once planning is secured. It’s often a more realistic route to a deal happening than holding out for a cash sale at a number that quietly assumes the risk away.
What This Means If You’re the One Holding the Land
None of this means land is worth less than people hope. It means the honest answer to “what’s my land worth?” is closer to “it depends what someone can build, what that costs, how much risk they’re taking on, and how sure they can be of the outcome” than a single number or a percentage of GDV.
A residual value that looks low at first pass can look very different once the assumptions behind it are tested properly, and a generous headline GDV can shrink fast once real costs and risks are priced in honestly.
If someone gives you a GDV or a development figure, it’s worth asking what’s actually been assumed underneath it: what sales values, what build costs, what planning position, and what time, risk and developer return have been factored in.
Knowing the GDV is useful. Understanding what’s assumed underneath it tells you far more about what the site can actually support.
