Buying Land: How To Do It Successfully
Published by The Landsite on 27th December 2020 -
Even if you’re an experienced property buyer, whether that’s residential, commercial or both, buying land requires a totally different mindset.
And in order to buy land and make a success of doing so, there are several key things you should consider:
1. Consider if buying land is a good investment
2. Ask yourself why you’re buying land
3. Consider different types of land
4. Research land
5. Think outside the box
6. Consider location
7. Explore planning permission
8. Get a survey done
9. Think of the long term
1. Is buying land a good investment?
In its simplest terms, buying land can be a great investment.
Like property, investment in land can be lucrative when done well.
And that means taking time to consider the pros and cons before taking the plunge.
The UK population is growing all the time and with that growth comes an increasing demand for both residential and commercial property.
But land investment without a long-term strategy can simply be dead money, so research into areas like planning, development and infrastructure is absolutely crucial.
2. Why do you want to buy land?
If you’re considering investing in a piece of land then there’s a chance you have other investment opportunities on the table, too. Any kind of investment requires clarity and sound reasoning behind it, so ask yourself why land is the right option for you. Perhaps you’re looking to build a new home on a piece of land, or maybe you’re keen to build a residential or commercial building that will generate an income.
Be clear on your reasons for buying land and put a long-term strategy in place.
3. Different types of land
There are two main types of land available to buy in the UK, brownfield land and greenfield land.
Brownfield land is usually either abandoned land or under-used land, which has been used in the past for industry.
With demand for new homes in the UK increasing all the time, the use of brownfield sites for residential development is on the up – particularly in towns and cities where regeneration is taking place.
Greenfield sites are those that have never been built on and these include Greenbelt land in the UK.
The greenbelt was designated as such to protect the UK from unrestricted urban development and to halt towns and cities from merging into one another.
However, due to the UK’s housing shortage, there is now far more pressure on this type of land for development.
It’s a common assumption that greenbelt land is completely protected, but this isn’t the case.
While a large housing development springing up on greenbelt land would be rare, there are often other types of development that are approved by planners.
Within brownfield and greenbelt land, there are also some key subcategories – one of which is agricultural land.
Like housing, the demand for farmland and grazing land in the UK is also on the increase.
This makes it a great potential option for investors.
Falling under brownfield land, contaminated land is land that has been damaged by industrial use, waste disposal or spillages.
Investors often consider contaminated land to offer good investment value, but, of course, the land needs to be cleaned up to exacting standards before development can take place – and this can be costly.
4. Do your research
The first thing to do when undertaking research into land investment is to look at the market as a whole.
Is there strong demand for land from investors generally across the UK? If so, that strong demand could drive up prices.
If demand is low, that’s when there could be a great deal to be found.
5. Think differently to other investors
While most investors will start their land search through a land agent, there are often deals to be found elsewhere.
A good place to start is always online, so check out the land for sale listings and explore what’s available and where.
Land auctions can be another option, but only if your finance is in place and you can move quickly. An untapped resource for land investment, though, is often good old fashioned word of mouth, so try to network and make connections in areas you’re keen to invest in.
6. Location, location, location
Whether you’re buying land or purchasing residential or commercial property as an investment, location will always be key. When it comes to buying land, thoroughly researching your proposed investment area is more than key – it’s crucial.
Look at things like infrastructure and transport links and try to find out how these may change in the future. Is there a planned period of regeneration close to your chosen plot?
Spend time in the area and get to know it. If it doesn’t match your aims for the land you’re looking to buy, move on.
7. Planning permission
Planning permission is often considered the difference between a good land deal and a bad one. Many land plots in the UK are sold with planning permission in place. However, this is often only Outline Planning Permission (OPP), which means that full permission still needs to be achieved within three years of the date OPP was granted.
Even Detailed Planning Permission (DPP) doesn’t guarantee that a plot can be built on, as there are often restrictive covenants in place.
Having an experienced lawyer in place can help you here.
Land for sale with no planning permission in place should be carefully examined. The first question to ask is why the land has no planning permission attached to it. Has it been refused in the past, or has a previous OPP simply expired?
8. Have the land surveyed
Even if you’re considering buying a plot of land with little or nothing surrounding it, you should always have a survey done.
Boundaries, rights of way and flood assessments should all be looked at by a professional, who will also undertake a feasibility study and environmental impact assessment.
A good survey should eliminate any doubt you have about the piece of land you’re considering buying – if it doesn’t, it could be a better decision to walk away.
9. Always invest in the long term
Many inexperienced property or land investors go into their purchases with a ‘get rich quick’ mentality.
This is a mistake.
Commercial property and land, more than residential property, should be purchased with the long game in mind. If you’re buying land, it’s unlikely to generate you an instant income unless it has DPP and you can build on it right away.
Obtaining full planning permission for land that only has OPP can take time, too.
Land, as an investment, is extremely passive and investors with a long term view can reap the benefits of buying when buyer demand is low and selling when that demand is on the up.
Read more from The Landsite here on property professionals who can help you invest in commercial property and building connections in the construction industry.