What development obstacles do large landowners face and what advantages do Strategic Land Consultants have?

To meet the multitude of housing needs in the UK, local planning authorities are almost forced to increase the housing stock in their jurisdictions. About half of towns and cities are slow to lay out plans to indicate how they will do it, indicating both how much remains to be spent on development and the fact that many planners may still be influenced as to where construction should take place.

The opportunity for landowners to make money is strong. But in most cases, they shouldn’t assume they can do it alone, nor can they profit from development in a clean and simple deal. The Town and Country Planning Association, pointing out that since the Town and Country Planning Act 1947 landlords have not been able to develop land without planning permission, says that while agricultural use property could sell for £3,000 to £ 10,000 per hectare, the value can rise to as much as £2 million per hectare in ‘higher demand areas’.

Sounds like winning the lottery, doesn’t it? Well, not anytime soon. A planning gain supplement, known as a Section 106 Settlement, is essentially a tax on those who experience a significant gain in value from the sale of land. The obligation this imposes, negotiated between the developer and the local planning council, is intended to cover the costs of increased infrastructure (schools, roads, hospitals, sewage, etc.) driven by new residents or commercial development. Another form of this is the community infrastructure levy, which is used in some jurisdictions. In any case, the large profit to be obtained will be significantly diminished by this obligation.

And the negotiation of these charges is simply one aspect of the development process, which requires an expert sense of local economics and politics. But the reason investor-developers, such as property fund partners, not original owners, more typically arrange for the conversion of raw land to housing is due to the wide range of skills and experience required to complete the process. . Those include:

• Feasibility evaluations, to determine the suitability of the land for development, as well as profitability evaluations (called threshold value).
• Site assembly (plans for how it will be developed, to appease planning authorities)
• Access works (costs in road construction, for example)
• Remediation (more typical of brownfield development, where toxins must be removed)
• Abnormal groundwork (handling geological issues, such as bedrock outcrops or floodplain remediation)
• Relocation and purchase costs of existing residents (if applicable)

Some developers may work with their own construction company to build roads and utilities, as well as the houses themselves. But many now contract or sell parcels directly to homebuilders and focus solely on road and utility construction. This can decrease your profits, but also turn the land over to parties who can focus their efforts on their skill set, designing and building suitable homes for the prospective buyer.

Individual investors with no real estate experience very often make up a part of the investment pool. They can work with as little as £10,000 to participate in a fund; Such investors are strongly encouraged to work with an independent financial adviser to select investments that are appropriate for their personal wealth risk profile.