Estate valuation concern

[gino]

Keeping this a little vague as not sure who’s reading.

Deceased passed in 2022.
Deceased was single and had 4 children.
Child 1,2 and 3 survive. 4th child died before deceased. Child 4 had 2 children who survive.
Will leaves deceased estate equally between the 3 surviving children and the 4^th’s share to the 2 surviving grandchildren.

Property in estate has substantial land.
House/garden value c.£500k and additional land value could (depending on usage) be worth another £500k.
Child 1 wants to purchase property inclusive of land at the lower figure.

Whats the situation with the theoretical value of the land?
It’s a large plot which would easily get planning for infill and then be sold for £500k. if kept as gardens and house/land sold as one plot it might only make the house/gardens worth c.£500-600k.

I’m child 3 (slightly estanged from my siblings, child 1 and 2), with my own 4 children. My siblings, child 1+ 2 are in the driving seat at sorting out estate. I’m concerned there could be lost value for myself, children and the other beneficiaries if the land value is not realised now, but could with a bit architects and planning be easily realised in the future.

Would like guidance on whether to apply for planning on the land to force current value up, or attempt surveyor valuations to factor in land value?
Concerned my children could be loosing out on my share of the unrealised land value if this does ultimately get bought by my sibling.
TIA.

[atticus]

Tia - have you looked into the time and cost of a planning application?

Obviously the present value is the value of the house and land as it presently is. If planning permission might increase that value significantly, then you should discuss it with your siblings, as surely all will benefit from an uplift in value.

I am pleased to see that you are only slightly estranged. Building the necessary bridges should not be too hard.

[gino]

Thank you Atticus. Planning app is reasonable and outline could be achieved within couple of months running alongside probate. Problem is i think the sibling wants the house at a bargin price and wouldn't put it past them to flog off some or all the land for development as soon as they have it. Plot size would easily hold 6-8 houses.

[Pezza54]

The Inheritance Act 1984 provides that the value of a gift on death is the market value at the date of death. The Act defines market value as the price the property would be reasonably expected to fetch at the date of death.

In a 2019 case, Foster v Revenue and Customs Commissioners, a valuer valued a plot of land in the deceased's will that did not have planning permission, at a significantly lower figure than the Value Office Agency acting on behalf of HMRC The Upper Tribunal decided that the land should be valued as if it had planning permission and deductions then made on that value for the risk in achieving planning permission

In Gino's case, if outline planning permission is granted whilst probate is ongoing, HMRC will want any extra IHT due to the increased value of the property..

[gino]

Thank you Pezza54. Very good to know. I assumed that the IHT would be based on the value of the property at death - ie without the P/P. I might need to think and move forward carefully as potentially getting the PP could push us into IHT terriority, so will need to weigh up pros and cons.

Theorectically...could one beneficiary of the estate insist on an overage agreement being put onto the land element of the property before sale, or would all benefiticaries of the estate need to agree to it? Just thinking if the sibling (as i suspect) will attempt to develop the land as soon as they own it - it might make it less attractive if all the beneficiaries get a slice of the future uplift in development value.

[atticus]

Speak to your siblings!

[Pezza54]

Interesting that HMRC requires executors to keep records of estate valuations for 20 years! If 15 years down the line planning permission to build is granted would HMRC really claim that the land was undervalued at the time of death