Land Investment FAQ

We thought it would be a good idea to answer some of the most common questions we get asked about investment in land.

Frequently asked questions:
Why would I want to invest in land?

Although the equities markets are recovering, some commentators predicting rises of over 10% in 2004 for the FTSE, land in general terms remains a sold investment. Residential building land market analysis from the Valuation Office Agency for January 2004 indicates that demand for land is very strong in the counties surrounding London, where land price rises are generally tied to those of house prices. So if you construct the right portfolio of land, spreading the risk according to how much financial freedom you have, you could enjoy a very healthy return.

What are the different kinds of land available?

A very basic question, but vital nonetheless. For investment purposes, some stand a better chance of giving you a good return on your money than others in the short-to-medium term. It stands to reason that there are different kinds of land because the price per acre varies enormously. For example, you could probably buy some woodland far from anywhere for £1000 or so per acre, but this wouldn’t make a very good investment because there is essentially unlikely to be any substantial demand for the product, woodland. This is certainly the case if you’re looking to make substantial returns on your investment. Investing in land closer to existing housing developments carries a higher price, up to tens or hundreds or thousands of pounds per acre, but they also probably have a higher probability of substantial rewards – this kind of land could well obtain planning permission in the medium term – and if that happened, the value of the land would skyrocket.

Where can I get independent figures on land investment returns?

There are a number of government agencies and departments that provide data on the prices of various kinds of land, together with reports on the general house-building programme, or it’s shortage thereof. The Valuation Office Agency (www.voa.gov.uk, part of the Inland Revenue) provides reports every three months on the state of the property market. The Office of the Deputy Prime Minister (www.odpm.gov.uk) also has a wide range of data available. Building societies such as the Halifax also publish periodic data on the subject.

What kind of time frame are we talking about for a ROI, and how much?

Generally, the statistics provided for the increase in the value of land show that it goes up at a sustained rate that approximately mirrors the rise in average house prices – around 24% for 2002, for example. The Land Registry figures published online can however show a more detailed breakdown of these trends by region, postcode and land use type. There are no absolute guarantees, as with any other investment, but depending on the type and location of land you choose, as well as other force majeure factors, you could see returns anywhere up to several hundred percent over twenty years or so.

How do I find decent investment land?

In many ways related to the question above, it depends on what kind of land you are looking for, and that depends on the level of risk you can afford. It’s all very much a risk vs. reward scenario. You can look in local and national press, and trade publications to find a certain amount of land. The Internet also offers an increasing number of sites, some of whom even offer interest free credit and allow you to pay online too.

Should I use legal advice / a solicitor when purchasing land?

We recommend that you use a solicitor to protect your interests.

Back to Land Articles