Land assembly happens when two or more adjacent pieces of land are sold together as a larger parcel of land, also known as plottage. By doing this, home owners can sell for more ro a developer.
Mark Twain said, "Buy land as they are not making more of it." Accoring to BC Statistics Canada, by 2035 there will be an increase of 765,000 people in the lower mainland which means a growth rate of 1.3 % per year.
According to Albert Said of MIT, the tighter the physical constrains such as bodies of water and land gradients correlates with higher real estate prices. Vancouver is an example- the physical constraints of the mountains in the North and ocean make it impossible to build high rise buidings.
The city of Vancouver is trying to address population growth and demand for housing options through the OCP in many communities in the lower mainland.
Land assemblies often occur along major transportation corridors. (Granville street, Oak Street, Cambie corridor and now, adjacent arteries stemming from public transportation routes.) t is not a new occurance but it is now more frequent. By selling your property as a land assembly (if it is possible), owners are able to command a higher price together rather than by selling individually.
However, it is not as easy at it looks. This type of project is exponentially more difficult as there are many more players involved.
With all land assemblies, consideration needs to be given to the following items:
- Intention of all parties in the land assembly to sell (each with a contract);
- Whether all properties in the land assembly will be treated equally, or if there are special characteristics of some properties that warrant special treatment, such as a corner lot (price may differ because of the size of the property-- not all properties are the same even on the same block);
- Formula to determine purchase price of each lot (here, land is being sold and not the improvements of the property such as renovation, upgrades, new paint, floor plan, condition of the property, appliances, new fixtures,-none of that matters.)
- Whether any of the sellers have specific needs, such as a tenanted property (what type of lease do you have with the tenant? is it a fixed lease or a month to month? This is very important when finding out when the deveopers can complete);
- The Official Community Plan for the area (This is determined by the city of Vancouver's zoning department and can be viewed on-line); and
- Whether the land assembly would be viable for redevelopment and therefore attractive to a potential buyer. (Here, the developer has to determine whether your land assembly is cost effective and feasible with rising cost for labour, materials, analysis and careful planning takes time and cost to the developer.)
In a land assembly, all parties enter into binding contracts which means each party is bound by the other party. Timelines for land assemblies are important because developers need time to develop schematics and plans to see whether or not the land assembly is cost effective given variables like cost of materials, rising price of labour, land, etc.
Due to this extended timeline, there are generally a number of deposits given throughout the process. Consideration must be given to the amount of time a property is tied up by the contract before the subject conditions are removed, since there is no guarantee the transfer will complete until subjects are removed.
Our seminar will englighten sellers who are thinking about selling their home as land assembly or for those who are just wanting more information. Our scheduled seminar is on Saturday, September 8th in Vancouver.
For more information and to find out about our upcoming seminar, venue, and to pre-register, contact Geraldine Santiago at firstname.lastname@example.org or TEXT/CALL : (604) 764-6873.