- Land Investment Guidelines
- Region of high housing demand
- Sustainability study prior to acquisition
- Transport and road access
- Amenities for new developments
- Successful land track-record
- Land site holding
- Funding the planning work
- Overage payment on the land
- Title deeds and site access
- Legal advise prior to commitment
- Land investment time scales
- The buy-back stage
THIS IS NOT A LAND BANKING WEBSITE. This is an educational tool which will reveal the opportunities and pitfalls in Land Investment.
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Investment Guidelines
The buy-back stage
Is the investment land independently valued at the buy-back stage?
In most land investment projects (but not self-build or ‘speculative’ land investments), UK land is sold with a buy-back agreement. This simply means that the land investment provider has the right to re-acquire the plots of investment land from project investors once the land investment site has attracted a planning award. This is precisely the mechanism through which those investing in land realise their profits. But for those buying land there is an important question to ask here of their land investment provider: how and more to the point by whom is the investment land valued at the outline planning stage?
There is clearly a risk of conflict of interest on the part of the land investment provider for this simple reason: on one hand they have a duty to pay full and fair value when buying-back portions of the investment land site; on the other hand, land investment providers have an interest in re-acquiring any UK land with outline planning permission at the lowest possible price to maximise their own profits. And as anyone with a propensity for proverbs will tell you: trying to serve two masters makes for an impossible job.
There is only one way to avoid this potential conflict of interest, to wit, the investment land must be valued independently at the outline planning stage. The independence of the organisation valuing the investment land must be beyond doubt (ie a professional, regulated body). Moreover, the commitment to independent valuation must be reflected in the legal contracts governing the entire land investment project.
In most land investment projects (but not self-build or ‘speculative’ land investments), UK land is sold with a buy-back agreement. This simply means that the land investment provider has the right to re-acquire the plots of investment land from project investors once the land investment site has attracted a planning award. This is precisely the mechanism through which those investing in land realise their profits. But for those buying land there is an important question to ask here of their land investment provider: how and more to the point by whom is the investment land valued at the outline planning stage?
There is clearly a risk of conflict of interest on the part of the land investment provider for this simple reason: on one hand they have a duty to pay full and fair value when buying-back portions of the investment land site; on the other hand, land investment providers have an interest in re-acquiring any UK land with outline planning permission at the lowest possible price to maximise their own profits. And as anyone with a propensity for proverbs will tell you: trying to serve two masters makes for an impossible job.
There is only one way to avoid this potential conflict of interest, to wit, the investment land must be valued independently at the outline planning stage. The independence of the organisation valuing the investment land must be beyond doubt (ie a professional, regulated body). Moreover, the commitment to independent valuation must be reflected in the legal contracts governing the entire land investment project.