Land Investment

Land investment is an increasingly popular alternative to more traditional forms of investment and a more accessible entry point into the world of property investment.

The price of land in the UK has increased considerably of the last few years and a recent report by the Royal Institute of Chartered Surveyors stated that in general land prices have risen by up to 30% in 12 months and 130% since the early 1990s. In a survey undertaken by Halifax it has also been reported that residential land prices have risen an unprecedented 8 fold over the past 20 years.

To compare land investment against property investment, it was reported that in the same period the average UK house price has risen only three fold.

The alarming housing shortage in the UK has received plenty of media coverage, which in turn has further driven up property and land prices as investors have become increasingly aware of the potential profits to be made. The simple fact is that land in the UK is scarce and investors now realise that they stand to make substantial returns on land investment.

The most significant development in recent years is that undeveloped land, long protected by local and central government, can now be released for development if councils fail to meet their housing targets. In early 2004 Prime Minister Tony Blair stated:

"The demand for new homes is so great it would be irresponsible to rule out specific tracts of land for development. There is a requirement for additional housing, and if we don’t face up to decisions on that, the people who will suffer will be generations to come, particularly first time buyers."

Greenbelt and greenfield land is being sold without planning permission as a long-term speculative land investment and planning permission is never guaranteed. While the phrase ‘no planning permission’ might send a shiver down the spine of an investment property newcomer, most seasoned investors will agree that in real terms buying such land no more risky than any other speculative investment.

However, what makes the offer so appealing is that, should planning permission be granted, the potential returns are enormous and far higher than those produced by other investments. The price of land with planning permission, in areas of high housing need, can often be ten times the price of a similar sized plot of land without planning permission.

Buying land with planning permission is obviously far more costly than without but it does ensure an element of security. The planning permission may range from outline planning permission to detailed planning permission. The degree of planning permission granted is reflected in the price.

There are a multitude of land agents or land bankers offering investment property for sale in the UK. These companies purchase large plots of land, divide them into smaller plots and then sell these to individual investors. In effect these companies have now made it possible for smaller investors to purchase investment land – something that until quite recently was almost unheard of.

As greenbelt and greenfield land looks increasingly likely to be developed, investors are becoming more excited about the potential windfalls they may receive. In order to maximise the likelihood that the land will gain planning permission in the future, superior land agents only deal with investment land that is located in areas of high housing need, close to existing development and well serviced by local amenities and transport networks.