Land Banking
From Wikipedia, the free encyclopedia
Land Banking is the practice of purchasing land with the intent to hold on to it until such a time as it is highly profitable to sell it on to others for substantially more than was initially paid. Land is becoming increasingly popular as an investment due to the benefit of it being a tangible asset as opposed to Shares or Bonds. This type of investment has gained such popularity it is now possible to land bank worldwide and there are several firms set up to offer opportunities to do so.
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[edit] Land banking in the US
The idea of using land as an investment came to the forefront in the US. Several self made millionaires started by purchasing large tracts in California where the development opportunities had not yet arisen. People such as Bob Hope and Donald Trump are infamous for purchasing large areas that made them a considerable return when sold.
[edit] Land banking in the UK
Land banking in the UK was previously the preserve of the landed gentry or Real estate developers. This has changed in recent times due to the changes in the Land Registration Act 2002. This act entitled companies to purchase sites and divide them into smaller plots. The company can the offer these plots for sale to investors looking to diversify their portfolio and lower their risk in investing. Since this is a relatively new practice in the UK it is not currently regulated by the Financial Services Authority so many are wary of this form of investment as it is currently untested as the lead time for returns is measured in several years.
[edit] Land banking companies in the UK
Since the changes in the land registration act a number of companies offering land as an investment have been formed. The size, location, quality and price they charge vary vastly between companies. This has lead to a lot of speculation as to which areas are feasible and likely to be taken forward through planning stages and which may be purchased by a developer at a later date.
[edit] Controversies
A 'You and Yours' documentary, first aired on BBC's Radio 4 on the 14th December 2006, criticized the services offering by many of the Land Banking companies, instead suggesting that they are scamming their customers. This scam is based on the low likelihood of many of the plots receiving planning position, and the misleading marketing tactics used by many of these companies. It also suggests how these companies target victims outside the UK, particularly Australia, as they are naive of the UK property market.
[edit] External links
[edit] See Also
- The Land
- Land Economy
- Landscape
- Landlord
- Land reform
- Promised Land
