Clawback
A Clawback is the percentage of the increase in value of your land that the vendor is due on resale after your land gets developed. A Clawback often scares people new to land buying. Do not worry it is common practice in the trade. One should get worried if the land does not have a Clawback – it usually signifies that the vendor has so little faith in the land gaining planning permission that he does not want to pay the solicitor’s fees to insert this clause. Be suspicious of land for sale that does not have a Clawback. But walk away from land that has a Clawback of over 20% – vendors are only due a SMALL share of your profits!
A wealth of the local area
No one wants to buy land in a deprived area. Houses tend to be built in the more affluent areas as this is where housing demand is (hence pushing house prices up). In the North, Councils demolish housing estates whilst in the South the housing demand is such that Key workers cannot afford to buy the most basic of houses.
The wealth of the population and the average house prices can be found on the web on sites such as upmystreet.co.uk. By keying in the local postcode one will be informed of the “type” of house occupant in the locality, the crime rate, local MP, and local school results.
Detached house prices
Investment land for sale can generally be thought to be worth one-third of your house price. The higher the prices of detached houses the higher the value of your land when planning permission is granted.
Does land in the locality sell well?
Most investors will take their profits and sell their land to builders on gaining outline planning permission. You should ensure that there will be a market for your investment land once it gains planning permission.
How long before Planning Permission is granted?
The first thing to say is that one cannot guarantee that planning permission will be granted at any point in the future – even when British blue-chip corporate giant Vodafone built their HQ on green belt land in Newbury – they were not sure that they would gain the planning permission for the development. Determining the length of time it will take for a plot of land to get planning permission is more of an art than a science because it depends on the opinions of those in planning authorities. That said, you can gain a general feel for the timing based upon your experience – but because of the political dimension there is always an uncertainty factor, as other factors rise and fall in importance in the mind of the politicians.
Telephone any local planning office and they will insist that the green field land you are considering purchasing does not stand the remotest chance of being built upon. It may, therefore, come as a surprise that the Deputy Prime Minister, John Prescott, allows 40% of all new buildings to be constructed on these supposedly sacred Greenfield sites!
Remember that your local planning department is a Council body – and they want the public’s vote. They are pragmatic, and will therefore only contemplate and carry out acts that serve their survival. Admitting to the public that they intend to build on green belt land for sale at a time close to any local elections is not very politically expedient for them!
Allowing new houses on Greenfield sites is a surefire way of losing votes – hence all councils are publicly against the building of new houses on greenfields – yet tens of thousands of houses get built on greenfields each year.