Why should you consider land?
The average value for farmland across Great Britain increased by 12.3% during 2005. In 2004 average values increased by almost 16%.
- Savills research, Spring 2006
Savills plc recently reported that Land prices have risen 762% over the last 20 years.
Savills also state that there are strong reasons to own land; these include:
- Development potential - especially where land borders settlements.
- Lifestyle - ownership provides somewhere to live and fulfils an aspiration; 'to own a piece of England'.
- Investment performance - driven by capital growth of farmland and residential property. Quality, location and timing of purchase are important.
- Taxation advantages - land ownership potentially includes Inheritance Tax and Capital Gains Tax relief.
- Income - reasonably secure, steady income for next five to six years from the SPS with the latest environmental iniatives offering the opportunity for additional income.
The advantages of land are:
- Land is real.
- Unlike shares land is tangible - it can be visited, seen and walked on.
- There is a limited supply of land.
- England is a small country with the majority of the population wanting to live in the South East.
- It is easy to understand and seen as a solid investment.
- Land is not open to accounting scandals and it is clear when property prices are going up (or down) and the reason for this movement.
- It is a cheap way to invest in property
- A semi-detached house in the South East of England can easily cost £250,000. A residential-sized plot of land in the South East of England, close to existing residential homes, can be bought from around £15,000.
Land increases in value in two ways.
- By increasing property values (due to demand outstripping supply).
- By land gaining permission to have houses built on it.
Property expert Sarah Beeny sums up investing in land:
"An increasing number of people are now buying land as an investment. With growing demand for new housing, land with planning consent for dwelling construction has become an increasingly precious commodity.
Land prices have also rocketed in line with house prices. Gone are the days when potentially valuable plots of land lay idle for years.
Now any spare piece of land seems to be sought after by investors and developers looking to make a speculative return.
With Land prices increasing it is no longer as easy to acquire land, build a house on it and make a quick killing, since the higher cost of land will eat into the profits you would have otherwise made.
Many however, have seen land as a safer haven for their money than equity investments in recent years. People have bought it to hold for the future, for a quick sale or to build a house either for themselves or to sell on to someone else."
- At Home with Sarah Beeny
Spring 2006
