Myth #1 - Land is in short supply in England. Releasing land from special
protection in green belt is the only answer. Therefore buying land in
green belt locations is a good investment.
The truth - Affordable homes
are in short supply in England, often in
rural or semi-rural areas. However, where new building takes place in
these rural areas it almost invariably has one or more of the
following characteristics: It is not affordable (suitable for a first
time buyer). It is not generally built on green belt land, released
for the purpose, but on previously developed land like old farm
buildings (farm houses, barns etc).
Myth #2 - The English green belt is under threat, shrinking and government
policy regarding it will imminently change.
The truth - There is more designated green belt land in the UK now
than when the previous government came to power in 1997. Government
policy has not changed and it would require a change in primary
legislation (the Town and Country Planning Act, the Planning and Compulsory Purchase Act et al) to effect any change.
Neither the present government nor the opposition should they gain
power in the future has any plans materially to change this legislation.
There is a general presumption, enshrined in this legislation, against building
in green belt locations and this can only be varied under very special
and rare circumstances. Further, should a local authority refuse planning in a
green belt location and the prospective developer decide to appeal,
the appeal would fail at an early stage in virtually every case
because of this general presumption against planning in the green belt.
Myth #3 - A site comprising hundreds of plots owned by investors all over the
world is as attractive to a prospective builder as a similar site
owned by a single entity.
The truth - Large developers in England all have their own
substantial land banks sufficient for many years' activity. These developers will not buy investment
plot sites - they have no need to do so.
Smaller developers, while
lacking large land banks will generally try to find brownfield
(previously developed) sites or negotiate the rezoning of a single piece of
agricultural land and then buy that land in a single transaction from,
say, a farmer. They will not buy a site comprising hundreds of plots
with different owners because it is far too complex and expensive to
negotiate individual sales of small plots, some owners will not be
traceable, ownership in some cases will be disputed and some owners
may attempt to hold developers to ransom by holding out for more
If the arrangement with the land banking company includes contractual provisions intended to make onward sale of the whole site to
a developer straightforward, for example by prohibiting plot owners
from playing the ransom card, then this would be a collective
investment requiring FSA authorisation in the UK. No land banker is
currently authorised by the FSA to operate a collective investment scheme.
Myth #4 - Land plots are a proven investment.
The truth - there is no documented case of any land plot sold by a
land banker ever gaining planning permission or being built on. Land
banking has been going on in this country since c. 2000 and given
promises by some land bankers of returns in a 5-10 year time frame, we
should have seen some by now.
Myth #5 - Land prices in England are growing at more than double the rate of
the economy as a whole.
The truth - Land with permitted development
does grow in value at a healthy rate (although not so much since the latest recession) and it is this fact that land
bankers generally latch onto, without revealing that they are actually
talking about land which is either already developed or for which
permission to develop exists.
Agricultural land prices in England are
stagnant or even shrinking. The peak was in the late 70s when
agricultural land was worth up to £4,600 per acre. The typical value
of a green belt field now is c. £2,300 per acre or half what it was 30
Plot sites sold by landbankers invariably fall into the latter category.