LAnd investment in the UK

Z

z106

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What do people generally think about purchasing land with the intention oif trying to get planning perission

A friend of mine is thinking of investing in this.
The land in a location 30 miles outside london in a place called hertfordshire.
It would be through a company called LPG. (As in land planning group)
LPG are HQ'd in teh isle of man and specialise in sourcing land that they feel has potential to be granted planning permission.

It will take 4 years or so before the permission would be granted.
They hope that around 350 semidetached homes will be built.

Initial investment in c. EUR30k.
THey have projected returns of nearly 400% over the course of the investment.

LPG also have included in the contract an option clause for them to buy back the land if permission is granted at the then market value should they choose.

In the prospectus there's all the usual stuff about the towns population growing etc. etc.

Has anyone had any dealings with LPG in the past?

Or has anyone gotten into this sort of thing before?

My gut instinct is that surely this can't be the besttime to be buying land in the UK ?
 
These sort of land-banking "investment" schemes give wonderful returns -- to the people running them. Avoid.

Even if you thought the underlying assets were worth a punt, the structure of the deal is wrong. As an Irish investor into an IoM company proposing to purchase UK assets - what protection does your friend have? Where are they regulated? How did they contact your friend?

If the 400% returns are so likely, why can't the developers get a bank loan to purchase the land? Why do they need Joe Public?
 
MugsGame said:
These sort of land-banking "investment" schemes give wonderful returns -- to the people running them. Avoid.

Even if you thought the underlying assets were worth a punt, the structure of the deal is wrong. As an Irish investor into an IoM company proposing to purchase UK assets - what protection do you have?

If the 400% returns are so likely, why can't the developers get a bank loan to purchase the land? Why do they need Joe Public?
Click to expand...

Why do you say avoid?
WHat do you mean the structure of the deal is wrong?

Presumably the reason they want investors is because they don't want to take on all the risk themselves.
As in - planning permission isn't guaranteed.
LPG claim that in their experience it is likely ut obviosuly not guaranteed.

That seems fair enough to me.

Also - for a bank to lend them mioney to buy it themseleves,they would obviously need a way of paying off the interest while they ae seeking planning permission - which will last a few years.

And anyway - they are not land speculators. That's not their gig. Their gig is trying to gather investors to buy land they recommend and go through the planning process on behalf of their clients.

I think that's fair enough.

They also state they personally will also be investing in it.

LEts assume permission is granted.
How lucrative are these thibngs normally in that scenario?
 
Actually - I'm just reading through more of this brochure on teh land opportunity.

In it the say the following:

"The Gross Development Value is the total, final value of a land site once all development has been completed. Housebuilders typically pay between 30-40% of a site’s Gross Development Value once it has the benefit of outline planning permission."

They then go on and take a median figure of 35% to try to calculate what value the land would be worth if permission was granted based on teh average price of a house and the number of acres on the land and the number of houses on an acre.

My question is does 35% sound right?
Is there any developers in teh kno out there?

Is this % of Gross development value used to calculate the price of a site recently given planning permission?
IS 35% too high? Or too low perhaps?
 
AAM's archive should have many discussions of this sort of "investment" - including a number of discussions among users who have lost lots of money on such deals. Avoid like the plague.

One example:
http://www.askaboutmoney.com/showthread.php?t=25419

more here

http://www.propertyscam.org.uk/
Fighting the blight of green belt land plot sales since 2004

A number of companies now offer small investors the chance to buy small plots of rural land as long term investments. This activity, commonly referred to as land banking or landbanking, is often illegal and may lead to problems for two groups of people.

This site is intended to offer some factual background to

* People considering the purchase of rural plots and
* Residents of communities blighted by subdivision of adjacent green belt land into rural plots
Click to expand...

or google "land banking scam"
 
avoid, britain has the some of the strictest planning laws in the world, they protect their green spaces with a vengance, if the conservatives get back in this will be re enforced, i think future development in britain will be on brown field sites rather than green field,
 
Qwerty

This is known as "landbanking". Do a search for this term and you will see why your friend should avoid it.

Brendan
 
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