Land Ahoy …
Is ‘green’ the new ‘brown’? Whatever the label, and wherever the geographical location, land is a precious commodity in the UK today, commanding respect and creating bidding wars as developers, private builders and aspiring landowners battle it out for their own personal footprint.
The price of residential land for sale has risen eight-fold over the last 20 years A shortage of residential building land for sale, combined with buoyant demand for new properties lies behind rising prices.
So, what’s in and what’s out this season?
Garden Grabbing: As the Government insists that more than a million new homes are built in Britain over the next decade, developers are creating a new trend called ‘garden grabbing’ where they boost their profits by buying up houses with gardens, knock down the existing building and build two or three homes on the same site. A quick profit for the vendor and the developer, but at a cost to the environment.
Trust In Me: The budget changes to trust law have encouraged many investors to search around for alternative means of inheritance tax mitigation. Investing in agricultural land and forestry has many tax advantages. Owners of agricultural land and forestry pay no inheritance tax, provided the land has been held for at least 2 years prior to death.
‘When one jumps over the edge one is bound to land somewhere’ : This quote by DH Lawrence holds true today, and that‘somewhere’ will need to be researched carefully if a profit is to be made:
Regional Variations: The value of land for sale is directly related to the housing market, therefore it follows that land in the south demands more per acre than its counterpart ‘up north’.
Canny investors who know that sex sells are turning to seaside towns such as Rock in Cornwall, where Gulf style extravagance has replaced the traditional British seaside image. Here, one buyer paid £1.5M for a holiday home which he intends to turn into a car park whilst a private developer is building holiday homes for the rich and famous that are selling for over a £1M each.
Surprise contenders for the hot spot of 2007 included East Anglia where record increases in land prices have been recorded. Cambridgeshire has seen a rise in the sale of new homes on a modern settlement which has pushed land prices up correspondingly.
Investors and house builders are acquiring agricultural land around motorway and rail links and in greenbelt areas around conurbations, hoping to realize development potential in the medium to long term. Oxfordshire, west Berkshire, the M40 corridor and the M3/M4 corridor have seen the strongest price rises recently.
Transport Links: The country idyll, although a dream for many is in reality not the practical option, therefore land prices close to main commuter links such as highways, motorways and rail transport links are much more popular than countryside plots. In addition, land that is situated close to a rapidly expanding village or town will command a higher price in expectation of its future building potential.
Planning Permission: The price of land for sale with planning permission already in place is a nugget of gold that won’t lie around for long. Private individuals can make handsome profits by identifying and purchasing land that does not yet have the necessary planning in place but which shows promising signs of gaining it in the future.
The value of a particular plot is also dependent on other factors:
- The topography of the land : Sloping foothill land is inefficient for farming but desirable for high-priced homes with attractive views.
- The costs of building a house : Will the house require expensive foundations on an “infill” site or if it is on a hill. If the house is remote, will the services be expensive to strConect?
- Timing: Shrewd investors will follow the lie of the land and know when to buy and how long to hold onto the land to realize its full potential. The ‘holding’ period may involve cash expenditures for mortgage payments, property taxes and improvements to the land. Unless the property can be leased for some income-generating activity, vacant land requires constant financial support during its investment life.
- Utility Services: The future value of self build land often depends greatly on the availability of gas, electricity and sewer services.
- Value of the finished home: Investigating the local estate agents and Internet sites such as upmystreet.co.uk will show what sale price a newly built home can command.
However, It’s not all bricks and mortar as parcels of land suitable for pony paddocks, agricultural investment, woodland or recreational purposes are all commanding high premiums as country folk cotton on to the fact that terra firma is their most precious money spinner.
source: Anna Donaldson