Investing in land has proven to be one of the best ways to create personal wealth over the years. It?s not surprising that over 20% of the UK?s top 100 richest people are landowners and have made substantial profits from land banking. Until recently though, it was hard for the smaller investor to take advantage of land banking, now a number of companies have opened up this investment to a broader audience.
Land Banking ? What is it?
What is land banking? Simply put, it?s the process of obtaining and holding unimproved real-estate. Land banking is done for a number of good reasons. Local governments can participate in it in order to preserve stretches of land or to have the choice of changing their use at some time in the future. Individuals also utilize land banking as a potentially very financially rewarding investment.
Land Banking in the UK
In 2004 alone, agricultural land in the UK appreciated in valuation between 16% and 30%, depending upon its geographical area. In fact, over the past 20 years, the average increase in UK Land has been a staggering 920%! In many instances, individuals who have bought land over the right place at the right time have exceeded these average gains. Not only has land risen in value dramatically, it has risen in a smoother upward path with less downside volatility than either stocks or real estate.
UK Demand Exceeding Supply
The UK is one of the most densely populated countries in Europe and has a growing population driven by a great influx of migrants from overseas. Two facts will illustrate the future of land banking in the UK: There is a need for up to 3,500,000 new homes over the next 15 years, rising to 4,400,000 new homes across the next Twenty years. Over the last 30 years, the demand for new homes has increased by 30%. Throughout the same period, house-building rates have dropped by over 50%. Supply must catch up with demand, and buying land in the UK therefore offers investors a great chance to make high capital gains. If you?re in Singapore, you might concerned to view this before you decide to invest into a land purchase: land banking companies in Singapore selling UK land. Do not be rush by the salesman into an uninformed decision. You could lose tens of thousands of dollars with a horrible investment.
Location is the Key!
Under developed land, such as Greenbelt, agricultural and forestry, is less expensive than land that currently enjoys planning consent. The way to make significant capital profits in land banking, entails obtaining land in specified areas over the hope of potential development. Pre-planning acquisition of green belt, agricultural and forestry land is nothing new. Astute individuals have been doing it for years. Individuals simply need to study specific areas for the likelihood of foreseeable future planning permission being granted, which will lead to an increase across the value of the plot purchased.
How to Make Huge Land Banking Capital Profits
Every developer knows that each town and city must grow outward, and the land most available is agricultural, greenbelt and forestry. Land without planning permission which is subsequently included in a local authority?s unitary development plan (UDP), will probably benefit from a great increase in price. With the approving of a change of use, a site?s price can increase substantially. However, the change of use category granted, i.e. residential, commercial recreational etc, will finally dictate the change in valuation of the plot.
Land Banking Risks
Any investor considering land banking needs to give careful consideration to site selection, and purchase sites which are within the path of progress and foreseeable future urbanization, but also have a big probability of upcoming development. Land Banking is a long-term financial commitment, as resale durations and amounts will be variable.|Many firms are using the above statistics to get speculators to buy land (normally with a significant mark up on top i.e their profit) this means that they are already at a loss and need planning permission to realize a profit from their land banking investment.|Many of these corporations then sell the concept that planning permission is ?guaranteed? or a ?formality? which if it was they would not sell the land to you! They would keep quiet and make the money from UK land financial commitment themselves but they know by appealing to greed, they can make a great profit (they have the mark up) regardless of what happens to your UK land investment.
Land banking is an investments usually recommended for those financial savvy individuals, as you have to understand a fair bit of jargons, and able to wait for a medium period of time, before your investment matures. If you enjoy the article that we wrote, we recommend that you check out our land banking resources on our website.
Source: http://www.fishingjapan.net/news/s-land-banking-really-a-sound-investmentsi/
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