Land investment, A great opportunity
The UK population is growing quickly. There’s also a change in the nature of households – smaller families, more single occupancy. Speaking to the Institute of Public Policy Research, Gordon Brown’s former Housing Minister, Yvette Cooper MP, expressed it simply…
“The population is growing, the economy is growing, the demand for new workers is growing, and household formation is changing with an aging society and family break-up. The demand for housing is increasing.”
The result is a massive pent-up demand for new housing. What shape and form that housing takes doesn’t matter to land owners. Whether developers want to build executive houses or affordable flats for key workers, land is still needed for new homes.
Scala’s infill philosophy
With the way that towns and villages have grown, there is often undeveloped land among or adjacent to existing homes. This is the land that Scala is expert at discovering strategic land for investment where development, within government and local authority-set parameters, is entirely sensible.
Decision process
You should decide to buy land by using the same two criteria as for any investment, reward and risk. What is the potential reward? How great is the potential risk.
How great is the potential reward?
Get it right and the rewards can be exceptional. Typically, when land is redesignated for development purposes its value dramatically increases. The percentage increase varies between plots and locations, but it would be reasonable to expect a very substantial return on investment if your land is rezoned for development purposes.
And what are the risks?
There is a risk that your land investment may not be re-zoned for development for quite a number of years or at all, in which case it would not experience a dramatic increase in value. In any event, you should treat it as a long-term investment and only invest funds which you can afford to have tied-up for ten years or more.
Even if your land is not re-zoned you would still own the land, and a report by Knight Frank suggests agricultural land increased in value by 27% in 2006, but you should be aware that the value of land (and any income from it) may go down as well as up and you may not get back the original amount you invested.
Also, it may be difficult to find a buyer for your land so you may not be able to realise your investment when you want to.
You should also bear in mind that it can be difficult to value land because the valuation is generally a matter of the valuer’s opinion rather than fact.
Land investment resources
Profiting from land investment
About Scala Land
Build on the green belt, and build now – Times article
Facts on land investment
