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p>It's that time of year again with Halloween and bonfire night tonight, a time when you traipse around your estate and actually meet your neighbours and bear the cold for a lovely family outing ending in sugar fuelled children.
This year I got a little more involved in the Halloween spirit (no pun intended) than ever. A group of us took a trip up to Ormskirk and took in an evening of horror and zombie apocalypse at 'Farmageddon'. I can assure you this isn't for small children or come to think about it, 37-year-old overweight sales managers either! We had a 'scream' running and hiding from zombies whilst making our way through a course of fields, converted barns and outbuildings. I can certainly recommend the experience if you like this kind of thing and I'm not surprised it is sold out until 2014. But personally I prefer a sedate meander around my housing estate collecting Haribo and mini celebrations.
This week, I have booked in a visit to a local farm which is having a bonfire party and 'Maize Maze'. Like most businesses in the last few years, this local farm has been struggling due to the current economic outlook and in recent years they have diversified from a sole working farm to holding varied events within their grounds. This is the flexibility of land and its ability to change use from typical arable and crop to other uses for various forms of revenue.
There are many different types of land throughout the UK and many of these spaces can be utilised for different purposes such as property development or revenue generation through rental, providing the change of use can be achieved.
The types of land available in the UK are as follows:
- Brownfield land is land that has been previously used for industrial or commercial purposes and has now ceased. As such the government are openly supportive of its change of use.
- Greenfield land has no previous development history and can be difficult to gain permission, unless it fits in with long term Government plans for infrastructure or housing development.
- Green Belt land is where priority is on its preservation so developments are not allowed at all, unless it is part of Government requirements.
- Replacement plots are where a building is either substandard in construction terms or is not reaching its full potential. Therefore, it presents a good opportunity to replace the existing property with something better.
Once the land has been identified the plans for it must be decided and that is where the value comes from; this can be obtained with or without planning permission. It obviously depends on the type of land that is available but there are many ways that the potential value can be maximised and they are not necessarily focused solely on property.
Land in its existing state (or with very little modification) can have value, such as that used for agricultural purposes; either the growing of crops or the grazing of livestock. Another idea, one that has grown as a result of the government’s ‘green deal’, is to rent out the land in order for renewable energy developments to take place – we have all seen the evidence of this with wind farms that currently have their home across the beautiful British countryside. Finally, an efficient way to receive a return on your investment is to ‘bank’ the land. Simply hold on to the land until someone makes you an offer - and with the price of land on the increase (after all we are an island and we are not making anymore of it) this is a popular option. Of course you can increase the value of the land yourself by acquiring planning permission and using that as a selling point down the line.
It is also quite common for owners to rent out the land for leisure use – adventure races, quad biking, paintballing and shooting – all standard affairs for birthdays and corporate events around the country. However, a balance must be struck between isolation (due to noise levels) and accessibility to the public. The only thing to remember is that in most cases, permanent structures cannot be built on this type of land. Land for leisure activities can also be used for camping but you are typically limited to just 28 days per year.
The other option is to add further value to the land via change of use. While all the options mentioned previously keep the land the same and adapt the project around that, change of use adapts the land around the project; residential and commercial developments are two that will instantly come to mind. The only potential road block in this plan is the need to acquire planning permission to begin the project.
At Lancashire Mortgage Corporation we are one of the few lenders which lend on land itself on a long term or a short term basis, regardless of it having residential or commercial use. Our view on underwriting is that because land has many uses and many ways to realise its value and income potential, it makes sense as an acceptable security type.
Well that's it for this week; however, next week sees us set to launch our own company fireworks as our new lending criteria changes across the long and short term commercial and residential product ranges at the Financial Professional Show on 6th November. Why don't you come over and join us on stand G01 and we can discuss the spooktacular improvements!
It's that time of year again with Halloween and bonfire night tonight, a time when you traipse around your estate and actually meet your neighbours and bear the cold for a lovely family outing....
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