Land Holding Cost Calculator
Add up the cost of holding land through a planning process: finance, taxes, security and professional fees, and the exit value needed.
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Land bought for its future permission earns nothing while it waits. Interest accrues on whatever was borrowed, taxes and insurance continue, the site needs securing, and the planning process itself costs money in surveys, drawings and fees before any decision is made.
Those costs compound into a figure the land has to exceed at exit before any profit exists. Knowing it before buying is what separates a considered land purchase from a hopeful one.
The calculation
Annual cost = interest on the borrowed amount + tax and insurance + security and upkeep. Multiply by the years held and add the one-off planning and professional costs. The break-even exit value is the purchase price plus that total.
Worked example
Land at 150,000 with 100,000 borrowed at 8% costs 8,000 of interest, 800 of tax and insurance and 600 of security each year — 9,400 a year. Over three years that is 28,200, and 25,000 of planning costs brings the total to 53,200, or 35.5% of the purchase price. The land must be worth 203,200 at exit simply to break even.
Planning takes longer than anyone plans
Determination periods slip, consultations extend, and refusals mean appeals that add a year or more. Run the calculation at double your expected timescale — if the deal only works on the fast case, it is a bet on the planning system rather than on the land.
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Create your free property pageFrequently asked questions
Is land without permission worth buying?
Only where the uplift from permission clearly exceeds the holding and planning costs and there is a realistic prospect of consent. Land bought purely on hope, without a planning strategy, is speculation rather than development.
Why is finance on land so expensive?
Because it produces no income, may be hard to sell if permission is refused, and lenders view it as high risk. Expect a higher rate, a lower loan-to-value and a shorter term than on a completed building.
What if permission is refused?
You still own the land and the holding costs continue, with the options being an appeal, a revised application, or selling at whatever the land is worth without consent — frequently less than you paid once costs are counted.
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