Stephen Whitaker, Head of Property Department
Email Stephen
Recently, the Conveyancing Department at Streatham has had a couple of approaches for advice on “Landbanking” – buying land without planning permission attached. The advertising blurb and the Seller’s premise is quite straightforward; if the Plot you buy “cheaply” ultimately receives Planning Permission for Development, it will benefit from an enormous boost in value – an appreciation of ten times its current value being “the norm”.
This message is persuading what we can only define as gullible investors to part with thousands of pounds, frankly with little likelihood that they will ever see a return on their money. Unfortunately, the marketing is slick with fields being given glamorous and attractive names and with artists impressions showing landscaping and access roads all carefully super-imposed on what is simply an empty field.
We have come across prices ranging from as little as £5,000 to upwards of £70,000 and more in Surrey and our feeling is that this extremely risky business needs to be regulated as a matter of urgency. As a point of information, Landbanking Schemes are not regulated by the Financial Services Authority and do not fall within the remit of the Financial Services Ombudsman so, for those who feel they have been the victim of misrepresentation, there is no place to turn to other than resorting to legal proceedings and all of the attendant risks and costs that that entails.
If you look at Landbanking Websites then, of course, there is no claim that planning permission has already been granted but there is a distinct impression that, at the very least, development is on the cards and that Planning Consent is likely, indeed some even go so far as to say a formality. Of course, some of the land is Green Belt so development is so unlikely as to be almost impossible.
We would advise anyone looking at these schemes to ask themselves the immediate question “why is the Seller selling this piece of land to me so cheaply if they are so confident of getting Planning Permission on it?” That really says it all. Even if the piece of land offered did perhaps have some long term potential, once fragmented, then it has no chance whatsoever. Landbankers typically divide their sites into Plots of around 0.1 acres a piece – i.e. enough to build a house on – but that means dozens, hundreds of owners on the same site and all Planning Authorities expect to see a comprehensive global plan incorporating roads, public spaces and infrastructure before they will even consider giving Planning Consent. It is surely foolhardy to suggest that, in this situation, the dozens or hundreds of owners on the same site could all agree to present the united front necessary for the purposes of obtaining permission.
We would urge anyone attempting to buy one of these investments to bear in mind the fact that we have not yet come across a single known example of a site divided up into small investment plots receiving Planning Permission for Development. Accordingly, we advise you to be very wary indeed of these schemes.
For further information email Stephen Whitaker or call 020 7940 4000.
