Buying Land? Here Are 4 Key Questions You Need To Ask

Buying Land? Here Are 4 Key Questions You Need To Ask
In a saturated housing market, many UK property investors are turning their attention to buying land instead. Could you be tempted?

You may be an aspiring first-time buyer intent on self-building, having failed to get on the property ladder, or perhaps you’re looking to buy land for development as an alternative to investing in traditional property.

Buying a plot of land evokes romantic notions of owning a little piece of the world we live in. The purchasing process is also generally simpler than buying bricks and mortar and, crucially, it can be just as profitable. 

That said, if you’re not familiar with the market for buying and selling land, it’s easy to trip up, so here are 4 key questions you should be asking before you put your hand in your pocket.

1) What are your reasons for wanting to purchase land?

Before you go any further with your plan to purchase land, stop and ask yourself what your exact objectives are. Do you see land as a better long-term investment than other assets such as property, or stocks and shares?

Are you looking for a site for your own use, perhaps to build your own home or to become a smallholder? Or maybe you would like to take advantage of the current housing shortage and buy/sell land for development at a healthy profit?

Whatever the purpose you have for buying land, you should make sure to adapt the location and type of land accordingly.

Whatever long-term goals you are pursuing with your investment into a plot of land, they will determine the type of land and exact location you should be looking for.

For instance, the nature of (and market for) greenfield sites that have never been developed are different in character from brownfield sites that have previously been built on.

2) Have you thoroughly researched the market?

Any proposed investment strategy should be thoroughly researched for viability and profitability, in the first instance. Spend some time researching the market for land for sale in your area. You won’t be surprised to hear that there’s a large variation in land values being achieved, depending on location and quality.

Before you can make an offer for any piece of land, you need to develop a feel for the market to get a clear understanding of what is reasonable to pay.

Your next essential step is to find an experienced local land agent who routinely deals with all stakeholders in the real estate market ranging from private landowners all the way to national housebuilding companies. They will guide you through the process, using their professional expertise to ensure the best outcome for you.

“Buying land for development is a serious investment decision that should never be entered into lightly or without a thorough understanding of how this complex market operates. Most people wouldn’t dream of buying or selling their home without expert assistance, and the same applies to any property transaction, especially when there’s and additional ‘development dimension’ to be factored in” advises Bob Hilder at Land & Brand New Homes.

3) Does your chosen location have growth potential?

It is crucial to buy your land in a growing and developing area.

You’ve heard the estate agent’s mantra ‘location, location, location’ – well, it’s exactly the same for purchasing land. If you’re not familiar with the area where you are hoping to buy, spend some time getting to know the local market to see it if meets your criteria.

In particular, it’s prudent to seek out areas that are earmarked for improvements in local infrastructure and transport links, which can make a huge difference to the land value.

It’s also well worth ascertaining whether planning permission has already been granted for any building on the land you have your eye on.

Some plots are sold without planning consent, some are sold with outline planning permission, meaning you will have to finalise the details with the local authority yourself. Look out for restrictive covenants affecting land use or any other legal restrictions of the title.

4) Have you had the land checked by a land surveyor?

Before buying any piece of land, it’s important to get an accurate land survey. Just as with any property purchase, there may be hidden snags that a qualified surveyor will unearth and investigate.

From boundary and rights of way issues to ground contamination and flood risks, there can be plenty of problems that the untrained eye simply wouldn’t notice. 

Sometimes what we see is not actually the real deal. Ask a surveyor to check your land before you buy it!

When it comes to the size of the plot, make sure the boundary is clearly defined and documented. Access to the land may be an issue if the land is separate from the public highway, or there’s a small ‘ransom strip’ – this is a thin strip of privately owned land with the intention of restricting development unless a ‘ransom’ is paid.

The legal principle of caveat emptor (buyer beware) makes it highly advisable that you get a professional to check over the land before you make a financial commitment.

Buying land rather than investing in ready-built property may be a sensible financial decision as long as you’ve done your homework and know what you’re letting yourself in for.

Whether you’re looking for an opportunity to self-build, or are hoping for bigger ROIs than are currently available from traditional buy-to-lets, development land may well offer attractive long-term financial returns that you can turn to your advantage.

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