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The UK is an island and has approximately 60 million acres of land in total and unlike the UAE or the Dutch; we do not plan on creating any more. This means that in the UK, land has a premium attached to it.

People acquire and control land for a multitude of reasons:

• Land is real and tangible - you can visit and walk on it
• Land is a solid and easy to understand investment
• Land is a cheap method of investment. A semi-detached house in South East England can easily cost £250,000, whereas a residential-sized plot of investment land in the same location could be bought from upwards of £10,000
• Land increases in value as demand outstrips supply and also if it gains planning permission to have houses built on it
• The UK has a housing shortage as England is a small country land is a finite resource
• Investment land has a wide range of uses; grazing animals, growing crops, building on, or simply just leaving it as is - whatever is done, the price is likely to rise
• Some people may simply look to buy land for a bespoke self-build project, as a gift, maybe to assist their adult children realise the dream of building their own first home
• Developers will always be interested in plots to redevelop into flats or houses

 

The demand for land for sale in the UK is such that the Government’s Valuation Office Agency recently reported a 23% rise in land prices. This rise comes at a time when stocks and shares are dramatically falling in price and when banks are offering rates below 5%.

For planning purposes Land roughly falls into two categories:

• Brownfield - land that has been identified for employment or commercial use that is or was occupied by a permanent structure that has become vacant or derelict and has redevelopment potential.
• Greenfield - undeveloped land, such as parks, forest and countryside.

The UK Government have agreed to build 40% of all new houses on Greenfield sites and 60% on Brownfield sites.

So where do you to find Land?

The first port of call for most people wanting to purchase land is a specialist land agent, specialist auction house or estate agent. However, it is always worth looking around and asking local developers if they have any individual plots for sale. With new home sales significantly lower than last year, many smaller developers who have over-committed themselves to projects and now unable to complete them are looking to offload parcels of land at competitive prices, just to free up cash. The internet also provides a rich source of land-buying opportunities. If buying land at auction, there is only a limited amount of time to conduct the research and legal work and therefore buying land this way carries significantly more risk.

Speculative investors are currently snapping up relatively cheap land without planning,
in the hope that the laws will have to be relaxed, allowing them to get the
permission which pushes the price up.

Exactly how much a plot of land will cost depends on several factors, its location, size, proximity to transport links and whether it benefits from any type of planning permission. Land sold with planning permission is always more expensive than that without. Building land can cost up to 40% of the price of a new home, which means it is vastly more expensive than land without planning permission. Land values are also relative to the general state of the property market, so currently prices are more competitive than, say, a year ago, however rural Greenfield land values actually increased 2006-08, bucking the trend of the general downturn.

So how do you invest - cash? mortgage? option?

Unless you have the cash to purchase the land outright, you could look into getting a mortgage. Contact a Broker to have a chat about the options open to you.

More good news surrounding land is that you don’t need to actually purchase it in order to profit from it. The other avenue currently available is called an Option Agreement. This would enable you to control the land for a predetermined time for a peppercorn amount, during which time, you can increase its value by 200 times or more by obtaining planning permission to develop it.

Land finding is actually a great opportunity. It’s the ideal way to generate income for anyone that’s willing to learn the ropes – not too dissimilar to becoming a buy-to-let landlord.

Until recently this mass of land was owned by only 6,000 or so landowners, including large institutions and the Crown. However, there has been a recent shift in ownership of land as it becomes a more attractive asset to people other than traditional land owners.
It is particularly attractive when it can be bought and sold in acreages suitable for the private investor who wants to buy land for long term speculation.

The legal process in brief

The legal procedure for buying land is generally a lot less complicated than buying and selling property, and should always be conducted by a qualified solicitor specialising in land transactions. The Solicitor should answer important questions relating to all relevant issues in order to satisfy that the purchase is a sound one. They will ascertain that the land has 'clear title' - i.e. is legitimately for sale - and to initiate searches to see if there is, or has been anything which could affect the stability of the land such as previous mining, flooding, permitted use, boundaries, footpath or other public access/rights over land issues and they will also check the legal documentation relating to the size, scale and dimensions of the site to ensure that you are buying what is being sold.