Why Invest In Land?

Lots of people want to live in the UK... With a shortage of houses this makes land a great investment!

I was today (20/05/2010) reading about the democratic accountability in planning on conservatives.com. It would seem they are looking to reward building more homes and return power to local communities and their elected councillors to protect their Green Belt and determine the right level of development.

Land is unlike a business that needs 24/7 management or premium bonds that may or may not cash in next month or year. Unlike a house land comes without utility bills, tenant problems or big insurance bills… All in all land is relatively cheap to buy and maintain so in my mind this makes land a great investment!

So what got me interested in land?

Well I was browsing the web and found a report showing land has increased in value over 800% over the last twenty years! This is an amazing statistic so I asked myself what will happen to the price of land over the next 5 to 10 years! Will the price of land go up or will it go down? My money is on land prices going up!

A Great Demand For Land in the UK

There is great demand for land, the majority of the United Kingdom’s population inhabit major cities as opposed to the countryside. Making land in the countryside very investable, offering potentially great returns. It is much easier to understand land investment compared to investment in shares, you can see when property prices rise or fall, you can also see why certain land prices rise and fall, such as the recent housing stories in the news. Other investments in materials such as metals are not as clear as you might think.

Land investment is one of the cheapest investments (land can be bought for just a few thousand pounds) However the value of land will never decrease because of the limited plots of land available, the demand will always outweigh the supply and once planning permission is granted by a local council houses can be built on it dramatically increasing the lands potential value. A plot of land in the south of England can be bought for around £10,000 and if planning permission is granted a semi detached house can be built and sold for upwards of £250,000 making a massive profit.

Of course investments in land are not always for property reasons, there are many other reasons and purposes for investments in land, investment can be used for farming/grazing animals or starting a business or even “sat” on for a number of years as the value or land will almost certainly increase with land, it is arguably the safest investment there is, even the house price inflation slows down.

There is a great need for land near to London and is always in the news, therefore many news houses (up to 40%) will be built on newly invested land, so land near any major cities will have great potential to offer a great return.

Before anyone invests in land they will want to learn as much as they can about it beforehand. But as land is a physical asset they can visit the land and look at the feasibility and context. As the local area to the land and what is near to the land will determine if/how much the land value could increase, for instance if there’s a nuclear power station next to the plot of land an investor may think again. Likewise if the land is near a fast expanding residential or tourist project the land value should offer excellent returns. Timing, costs and local residents feeling about the land are also crucial factors that any investor should consider before investment.