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 money.

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 years ago.

Plot sites sold by landbankers invariably fall into the latter category.



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