Singing Pig

By the number of people who have approached LPA for development potential assessments in recent years having bought a "plot" in the countryside or - worse - Green Belt from one of those companies who sell £800 worth of land for £12,000 on the strength of its (normally non-existent) future development potential, it is my view that there is a lot of interest in investing in development land, and particularly single building plots.No wonder. The cost of the plot now accounts for between a quarter and a third of the selling price of a dwelling.

Unfortunately, I have ALWAYS had to find a way to tell them as gently as I can "Sorry, but that land has NO development potential in the foreseeable future, and it is unlikely to have in your lifetime either."

Their disappointment is tragic. I don't like seeing people turned over, and I am seriously considering setting up a scheme myself to facilitate speculative investment in plots of land.

The big difference with my intended scheme will be that there will be no need for any BS about alleged future development potential, because the plots LPA will make available will ALREADY have planning permission for residential development. And WE will know all about it because we have won that planning permission.

Just a seed of an idea at present, and it will take time to set up - time I don't actually have at the moment. (Never been so damn busy, and it's supposed to be a housing slump !)

But the idea is there in the back of my head, and I reckon it will prove very popular indeed.

Hi Trevor...... I'm looking forward to your proposal once you have more time to get it off the ground,are you suggesting some sort of self build group?

Quite a while ago now,I contacted CBG Properties(shared build group that's made posts on S.P) with a view of investing but became preoccupied in another scheme.The principle of their proposal I thought was a good one but it meant that you were paying market value or thereabouts for the plot which of course takes away the cream.

My idea is this,a small group of like minded people form a co-operative with equal shares to spread the risk and purchase a parcel of land that has no P.P. but offers the potential,alternatively an agreed option with the owner could be put in place.Prior to the purchase, we engage a planning consultant such as yourself to evaluate our chances of obtaining P.P. and depending on the expert advice we either proceed or not.

This way,there are more options and bigger margins e.g.Sell on and be satisfied with the increased value once P.P. has been obtained...........Dependant on market conditions,just sit on it and wait for the right time to develop...........With only three years before works has to commence,groundworks could be carried out up to slab level and then sell on to a self builder for him to take over (I have a building background and the groundwork more often than not represents the most profitable part of the job with the least hassle).

Early days perhaps but in the coming months there could be some good deals to be made,particularly if garden plots can be identified now they are considered brownfield sites and, with owners now possibly feeling the pinch,they may well be prepared to sell. 

Thought for the day.........Bill 

Hi Bill

I didn't really have self-build specifically in mind, more simply buying land for which LPA had won planning permission and sitting on it while its value increases. But it's another idea you have produced and may be a good one.

My concept was essentially that, with the current alleged slump in the housing market, building land should be capable of purchase at a relatively low price compared to that which has prevailed of late, but it will of course rise dramatically again as soon as the housing market kicks off again. So this is probably a good time to be buying building land cheaply as an investment. (BUt one has to be careful of using that word, because a Collective Investment Scheme can be created unwittingly, and it is illegal to run one of those without a permit.)

But the main plank of my idea was that there are many companies selling "plots" to gullible people who believe them when they say the land has future development potential. And almost without fail, any such future development potential would involve the buyer copying Dr Who and being a time traveller !

On the other hand , LPA could :-

(a) provide investment land which has already achieved planning permission won by us ... OR...

(b) find land with planning permission won by others but where the permission can be improved by us (say apartments rather than semi-detached dwellings?) ... OR ....

(c) identify land with REAL development potential in the foreseeable future (rather than in our great grandchildren's lifetime ... maybe ... perhaps ... possibly ... but probably never !

 Something will no doubt develop from these ideas, and I figured that the SP forum was a good place to float them.

Trevor.........I have no sympathy  for those people who have purchased plots from the likes of Property Spy,it just reflects that not only were they "gullible" but lazy also.I can only assume the money they parted with came easy,otherwise they would have had more respect for it and done their due diligence and invested wisely.Information is readily available at council offices and the web of proposed plans and policies for the future of every borough, together with free advice from planners,so there is no real excuse.The same of course applies to those who laid out thousands to the likes of Inside Track,buying off plan in areas already saturated with undesirable unsold properties,yet prepared to invest for more of them to be built!!

For a lazy person, I think to invest in land with P.P. at the right price in todays market could be a good one but although comparatively a fair bit cheaper than that of let's say a couple of years ago,it would still be a large capital sum to speculate with.In my area,a single building plot for a 4bed detached would be circa £200K,if you could find one that is.

Your idea of exploiting an already approved development to the its full potential is spot on,over the years I've created two blocks of 4flats from 3bed semis which I still own and for the last two years have been trying for P.P. on a remaining rear plot for two dwellings.I've engaged a planning barrister to carry out the consultancy which so far has cost me in excess of £10K,peanuts if successful but a kick in the balls if I don't but then again,it's only a calculated risk based on an experts judgement and my willingness to speculate.

In other words,experts like yourself are worth every penny and more but, people who are influenced by smooth talk and part with huge sums just beggars belief.

Bill 

Nothing there that I could possibly disagree with Bill.

Business profits are almost invariably the reward for risk-taking. In fact, taking risks is the only real justification for making the profits. As you indicate, it is a matter of reducing the risk as far as it can be reduced, and then balancing the remaining risk with the potential rewards.

But people are not always ratiional in their approach to risk, as witness the large number of people getting taken for a ride on land speculation and paying stupid prices for "plots" based on non-existent future development potential.

And yes, I am constantly as amazed as you are by their naive actions in buying these plots on the SELLER'S assurance of future potential.

 But let's face it, the SELLER must be trustworthy.  He has no incentive to mislead the buyer does he - after all, he's only persuading him to pay 15 times as much as the land cost and is worth !

P.S. £10 grand just to pursue planning permission sounds a helluva lot of money to me, with nothing delivered. Our normal success fee for a single building plot may be £7,500 upwards, but that isn't payable on our No Win No Fee terms until after we've delivered the planning permission. So clients perceive that they are paying us out of money WE have just made for them.

Trevor.....I checked today and although I've spent over £10k so far just £7.5K with the barrister and that's without last months fee.

The first application was refused under delegated powers some two years ago,albeit the case planning officer said that she wouldn't determine before my barrister returned from holiday but reneged,leaving no time for the matter to be called into committee.On our pre-application visit, she never mentioned likely reasons for refusal which she made in her determination.

This is not a straightforward case in that the site is considered back land development,in a village of O.N.Beauty and washed over as green belt.The planning policy is for small scale development for which a local need has to be proven but planners interpretation of this is that it should be for affordable housing only.Also,they said that by allowing my scheme to go ahead it would prevent access to a larger scheme of the council's coming forward.

Further delay was caused because we didn't have a ward councilor until the elections last year,now elected he is in support of my proposal and arranged a meeting with the head of planning,the team leader,my barrister and myself with him in attendance also.The planners raised certain concerns i.e.evidence of need,highway issues and housing's intentions for their own land but, now we have all their answers, it's was suggested this week by the team leader the matter should be dealt with by the original case officer.

If I hadn't been involved with a lot of the leg work then I dread to think what the barrister's fees would have been so far but when you consider the meetings we've had and time he's put in,I'm quite happy.A long time ago I resigned myself to accepting the matter would finish up at appeal,at the same time respecting the barrister's strategy by questioning planners on their policies because at the end of the day,I'm sure the inspector will take a dim view of the planner's behaviour.

The barrister lives local and works in Westminster for a large firm but does his own thing on the side charging £140 p.h. which by solicitor's fees is cheap.When I did a name search on Google his background spoke for itself.

I'm reasonably confident that one day we'll get there but as you know "it's a funny old game".

Bill