We all know that the golden rule in property is “location, location, location” there’s no argument from me there!
But, most property investments have to be viewed as a long-term investment, where the aim is to achieve a capital gain over a long period of time and also achieve a yield on the investment from rental income.
It’s also quite normal to have a loan or % of debt against the property.
These type’s of property investment, however, are not without some risk!
There is always a risk of a rise in the cost of borrowing, meaning monthly mortgage payments can go up as we may move away from these historically low interest rates. This can considerably lower the yield on your investment.
There’s also a risk that the property is vacant for a period. With no tenant in place there is no income generating to help fund the monthly mortgage repayments.
And of course, there’s always wear & tear which reduces the yield on your investment further, as landlords are responsible for the upkeep of the property and have to pay for the repairs to water heaters, boilers, fences or driveways, etc.
Finally, Tax incentives for buy to let homeowners have now all but gone, meaning that all income is taxed in the UK.
So what does this leave your real net yield return and is there an alternative?
Yes, now there is an alternative UK property class with a much shorter investment term of only 12 to 24 months and an average return of 20% per annum.
It’s asset-backed which means that you directly own all or a share of the asset itself which has real market value.
In addition, the investment itself is supported by the UK National Government through its latest housing policies.
So what is this UK Property Investment?
It’s “planning gain on UK allocated or brownfield land”.
Let me explain this further!
There are many categories of land and its usage in the UK, but to simplify things, let’s group them into just 4 categories for residential planning purposes.
- Green Belt: This is heavily restricted land that cannot really be built on at any time in the near future without exceptional circumstances or reasons.
- Greenfield: This is generally edge of town land that may at some point be deemed suitable for development but not necessarily in the near term.
- Allocated land: This is land that has already been identified by the local council as suitable for future development in the near term.
- Brownfield Land: This is land that had previously had some form of structure or building on it, and it offers great potential for future development either through a change of use. For example from an office to flats, or complete redevelopment of the site.
Now add to this that the UK has a national housing shortage that has come about from the lack of housing supply keeping up with the housing demand.
The ever-growing aging population is living longer so, their houses are NOT coming onto the housing market.
Regional councils are selling their council housing stock under the right to buy schemes and these houses are not being replaced.
Did you know that local councils have to demonstrate to National Government that they have a 5-year ongoing housing supply?
Did you also know that NEARLY 50% of UK councils fail to do so?
And this is where the opportunity to profit from planning gain begins.
Councils allocate land within their area as ‘suitable for future development’ and this, then makes up a part of their 5 year housing supply,
This increases the value of that land from outset, but significant gains are made when planning permission has been granted on this land.
Highgrove Consulting has partnered with a specialist group of UK property experts that demonstrate a solid track record & has the experience to select allocated land or, brownfield land, in locations where councils are behind on their 5-year housing supply.
This makes it very difficult for the council to refuse planning permission on this land!
Especially when the plans submitted, they are in line with the councils own requirements for its local community.
This could be senior housing, low-cost housing, additional housing, or even student accommodation.
It is often the case that a buyer for the land has been found before planning has been granted.
These buyers or developers will enter a contract to buy the land that is subject to the planning being approved.
So why don’t these buyers buy the land instead of our team?
Simple, developers DO NOT want to tie up money whilst waiting for the planning process to complete.
The time taken to appoint architects, and to provide drawings & reports on construction, drainage, traffic control, parking, environmental and wildlife, for instance, is time-consuming and not what developers do.
Also, developers typically take a loan to buy & develop the land with planning in place, as banks will not loan on land without planning.
In short, developers are happy to buy land with planning already in place at a higher price because they make their profits from the build-out or development of the land.
If this is starting to make sense to YOU and you would like to find out more about this exciting UK property investment opportunity, please contact us for further information about our latest sites offered and the expected returns.