Today’s Residential Land Deal

The residential land market is changing. Buyers remain, but they are cautious, selective and more focused on the allocation of risk before they commit.

This was the clearest finding from a survey of development consultants at Carter Jonas, who work across major residential schemes, SME housing, mixed-use development, urban regeneration, brownfield land, greenfield land, strategic land and immediate development land.

The responses were notably consistent. 75% reported fewer residential land launches since the July 2024 general election, while 87.5% said that their regional market felt weaker.

Respondents said the market had not stalled, but had become more forensic, with buyers seeking greater reassurance in relation to every purchase.

A market that is active, but not confident

There is undoubtedly an appetite for good land, but in today’s market, interest does not always convert into bids and bids do not always convert into completed purchases.

The survey looked at different subsectors of the market, including Build to Rent (BTR), with interesting results.

James Staveley, who works across major residential, SME housing and mixed-use immediate and brownfield land in and around London, described the market as cautious. He stated that demand still exists for well-located sites, but land prices must reflect where build costs and demand now stand.

That summarises the wider position: demand has not disappeared, but it has become conditional on value, risk and timing.

The rise in conditional land sales

The strongest transactional finding is the change in deal structures. 87.5% of respondents cited more conditionality around planning, technical matters or funding, and 62.5% cited more deferred consideration. Half cited more price review mechanisms and more emphasis on deliverability evidence, including utilities, infrastructure and environmental factors.

This shows how uncertainty is being pushed into the commercial architecture of the deal. Conditional contracts, deferred payments, overage and review mechanisms allow parties to proceed, but they also show that the headline price no longer carries the same weight.

Jon Pinkerton, who works on major residential, mixed-use and urban regeneration schemes in the London area, referred to a deal for Buckinghamshire Council which had to be restructured because a Registered Provider (RP) partner could not be found, and the developer could not progress without one. This issue is increasingly common. Deals are not necessarily lost because of the absence of RPs, but they are frequently having to be restructured.

James Bainbridge in Oxford, whose work focuses on major residential strategic and immediate development land, also identified deferred consideration, an increased requirement for deliverability evidence and more conditionality. His one-word description of the market was “stuck”. For James, the issue was not only buyer caution, but plan progress, allocations and the continuing effect of local politics and consultees on certainty.

Heads of terms are no longer a quick staging post

The period between offers being accepted and heads of terms being agreed is also under pressure.

Looking at where time is now being spent, the survey found that legal drafting, technical due diligence, negotiation on overage or review mechanisms and longer viability testing of affordable housing assumptions are taking the most time. Planning risk appraisal, utilities capacity and programme and buyer approvals/investment decisions were cited less often. This is evidence of the forensic market in practice.

David Price, who works mainly on SME housing, immediate development land and greenfield sub-50 home schemes in London, linked the issue to viability pressure on smaller schemes. He felt that market sentiment is weaker, sales rates are down, values are broadly stagnant, finance costs are greater and build costs are higher. He also noted the effect of an increase in regulations, such as building safety standards and BNG: more regulations mean more cost.

This is particularly relevant to the smaller schemes David advises on because they have reduced capacity to absorb uncertainty. A modest change in sales values, build costs or technical requirements can change the land value quickly.

The re-trade tells us where the risk really sits

More than a third of respondents said that fall-through rates had increased. Where reasons were given, they pointed to re-trades and late-stage renegotiation.

Among the drivers for deals being re-traded, more than half cited ground conditions, contamination, or abnormal costs, while viability and affordable housing assumptions also ranked highly.

These responses suggest that late re-pricing is not necessarily opportunistic. More frequently, it relates to uncertain costs becoming clearer: a site that looks attractive at bid stage can look different once the buyer understands remediation, infrastructure, sales rates, affordable housing assumptions and programme risk.

Richard Lundy, based in London, described the underlying condition as “marginal viability”, with buyer prospects affected by mortgage rates, energy costs, wider living costs and reduced demand from landlord or overseas buyers.

This is why re-trades are so closely connected to the wider sales market: buyers are not only appraising land, but also the likelihood that completed homes can be sold or let at a rate which justifies the price paid for the site.

Achieved values are under pressure

The clearest pricing tension is between landowner expectations and achieved values.

A majority of respondents said that landowner price expectations had stayed broadly flat since July 2024.

All respondents selected house prices and sales rates as drivers of expectations and most also identified build costs as a strong factor. When asked what had the greatest impact on closing or widening the gap between guide prices and bids, build costs ranked highest, followed by affordable housing expectations and changes in sales values.

Guy Ingham in London, who works on urban regeneration, major residential and mixed-use brownfield schemes, used the word “polarised”, which aptly describes a market in which better sites with clearer delivery prospects can still attract attention, while more complex sites are being discounted, deferred or reshaped.

Buyer appetite is shaped by risk profile

The survey also suggests that buyer appetite is increasingly divided by risk tolerance.

This spread reflects different pressures within the market. SMEs may be more exposed to funding conditions and narrower exit options. Larger housebuilders may still be active, but increasingly selective. Institutional capital may be present, but only where income, scale and programme can withstand scrutiny.

Edward Walter, who works across major residential, SME housing, urban regeneration, strategic land and immediate development land in the Oxford area, described the market as “cautious” and pointed to fluctuating sales rates and build rates. In effect, those in the market are not only asking whether demand exists today, but whether the same assumptions will hold by the time the scheme is funded, built and brought to market.

Certainty is the new premium

When asked what had improved most in deal certainty since July 2024, planning policy clarity was a popular choice, although an equal number said that nothing had improved materially. When asked what had worsened deal certainty, a majority selected viability expectations and negotiation.

That reinforces the earlier point about the relationship between planning reform and land transactions. Policy clarity can help improve sentiment and give buyers more confidence in the planning process, but it does not remove the need to test costs, sales rates, affordable housing, utilities, remediation, and programme.

Jon Pinkerton described the difficulty as one of build cost inflation, increasing building regulations and a very slow sales market. He also made the point that the current weakness did not begin with the change of government in 2024, but with the market turn in 2022. Every time confidence appears to improve, another national or global event can unsettle it.

That is why the strongest sites in today’s market are those with the fewest unknowns: clear planning prospects, realistic landowner expectations, tested infrastructure requirements, credible viability assumptions and evidence that the scheme can be delivered.

Residential land deals are still taking place, but they are slower, more conditional, and more forensic. In today’s market, certainty is central to value.