Investment Land Myths
With the current poor performance in the stock market, pensions, gold and other investment markets - a trend that shows no signs of abating - investors are increasingly asking where they can put their money to gain a reliable return on their investment.
Many are turning to land as an alternative investment, however, there are still many myths surrounding investment land that are putting people off taking the risk.
In an attempt to redress the balance, we will now answer some of the common myths about investment land.
- Myth: Land is land; it's all the same, so why should I pay a higher price?
Land is not just land. There are many different types of land - residential, obviously, is one, but there is also agricultural land with five different grades, woodland, land with and without planning permission to name but a few.
In a way, you could say that the price of the land is related to the demand for it and the quantity available. For example, there is very little investment land left within the M25, so prices are at a premium. You could pay up to £1,000,000 per acre or more for land in highly sought after areas and that has planning permission. By way of contrast, a plot of woodland in an isolated area of the country might cost only £1,500 per acre. Location and the quality of the land are extremely important determinants of the price of investment land.
The importance of understanding the different types of land available to make a sound investment choice cannot be overstated.
- Myth: Investment land requires a large amount of cash
The value of land with planning permission can be up to 10 times that of land without. Obviously, purchasing prime land with planning permission is very expensive, but that is good for you as an investor - because you buy the land when it is cheap and wait a while for it to become expensive land! They buy the land before it gains planning permission and wait. As the saying goes, "you don't wait to buy land, you buy land and wait". In particular, investors can obtain their land from land agents who buy large plots of land for sale (with their greater purchasing power), and then divide it up into smaller plots of land for sale suitable for sale to the private land investor.
- Myth: Land values rise slowly
According to the Land Registry, the UK government agency responsible for administering land in England, the value of land in 2002 went up by a national average of 23.8%. Rises in the prices of plots of land for sale are, in many cases, linked to the performance of the housing market, since the purpose of gaining planning permission for land is to build on it. This said, choosing plots of land for sale such as woodland that is far away from residential areas will almost certainly rise more slowly in value than prime plots of land for sale next to existing housing.
- Myth: Investing in land requires specialist knowledge and skills, making it an unrealistic option for the public
Like any investment, investment land entails some risk. Any sensible investor will obviously try to minimise the risk they are exposed to. But having said that, there is no special technical knowledge required. You don't need to know how to take soil samples, subdivide plots of land for sale, grade roads or be an expert in the building trade. If you need this kind of expertise, you can hire it. You can find out about the investment land available in your area quikcly and simply by using a land agent - with all the coverage in the national and local press on this issue at the moment, you probably already know what kind of investment land you are searching for. Knowing what kind of land is in demand in your area for building projects, how you can find it, who needs it and what can be built on is simpler than you might think.
