Deciding where to invest is always a tricky decision. While property investment comes with its share of advantages, you shouldn’t be too quick to dismiss land as a potential revenue generator. Not only is it low maintenance and generally cheaper to buy, it may sell for much more than you paid for it, maximising your overall return.
However, whether you invest in land or property, with so much at stake, it’s important to do your research - and CJ Hole can help. Whether you’re a seasoned investor or you’re taking your first tentative steps, we’re on hand for whatever you need.
Investing your money into property or land can be beneficial for your financial future, but which is better? Explore our guide to evaluate the pros and cons and find the best option.
Find out about Land and New Homes
Investing in land
Investing in land can be highly lucrative. After all, the price of land has been steadily rising over the years and this shows no signs of stopping anytime soon. But how do land investments work, exactly?
How to invest in land
Tip 1: Do your research
Your first job should be to research the different lands available and form a plan for what you want to do with them. Perhaps you’re looking to build on the land yourself, or simply sell it to a developer at a later date?
In the UK, there are two main types of land - brownfield, which has been built on before and greenfield, which hasn’t. There are advantages and disadvantages to each, so it’s important to have a strategy for what you want to do with your land ahead of your investment.
Tip 2: Look into planning permission
Most land sold in the UK will already have planning permission in place, however this is usually limited to Outline Planning Permission (OPP), which means full permission is still needed and will have to be applied for within three years of this being granted.
Have an experienced lawyer look into any planning permission caveats, as there may be restrictions on how the land can be used. This is particularly true of greenfield land which may be protected.
Tip 3: Think long-term rather than short-term
Investing in land won’t deliver an immediate return on your investment - and this is largely to do with the time it’ll take to get your planning permission. Land investments are more likely to take years than months to turn-around so before you invest, make sure you’re willing, and able, to be in it for the long-haul
Pros and cons of investing in land
Pro
It’s usually cheaper to buy
Compared to property, land can be much cheaper to buy, reducing your overall investment. Not only does this make land investment more accessible for a greater number of investors, it may deliver a higher return on your investment.
…and the returns can be highly lucrative
Land can potentially yield a higher return on your investment. The price of land over the years has been steadily rising, as the demand for new land is outstripping supply.
Lower maintenance costs
Land is easier to maintain than a property. This is particularly true if the property in question is old and has tenants, making it prone to damages that are costly to fix.
Cons
Land isn’t immune to market trends
While the current resale value of land is reasonable, this may not be the case forever. Land is just as susceptible to price swings and market crashes as property and so, as with any investment, there are no guarantees.
Location is everything
Investing in land in an underpopulated part of the UK won’t guarantee a sale. After all, an area should be prime for development opportunities, which are limited if it’s located somewhere that people do not want to live and work.
After all, your land’s value is very much determined by what can be done with it, and land with no potential to develop will not deliver a return on your investment.
Land use may be restricted
Zoning boards and other government agencies are making it more difficult to develop on land, which may affect your ability to make a sale. Ongoing environmental concerns in greenfield areas, may lead developers to step away from a sale, for fear of negative PR or lobbying that would affect their plans.
Investing in property
Investing in property, whether it’s for flipping or buy-to-let purposes, can be very lucrative. That said, a reasonable return on your investment isn’t a guarantee, and it’s always important to do your due diligence ahead of any sale.
Related: How to invest in property
How to invest in property
Tip 1: Sort out your finances
Property moves fast - particularly low-value investment properties. The availability of ready-cash is therefore a necessary part of property investment. If you’re using a mortgage, make sure you have an agreement in principle ahead of your purchase.
Tip 2: Seek help from the professionals
Investing in property not only requires ready access to capital; it involves a keen eye and the right contacts to help you secure your investment property before anyone else.
When you work with CJ Hole, we’ll advise you accordingly, making sure you’re among the first to know about any property investments.
Related: Five things to look for in an investment property
Tip 3: Bookmark investment property pages
You’ll need commitment and tenacity in equal measure to become an effective property investor. Check the investment pages of estate agent websites in areas you’re looking to invest daily.
Pros and cons of investing in property
Pro
You’ve the option to rent out your investment
Annual growth in rental prices in the UK is at its strongest since records began. Furthermore, the supply of homes available to rent is still below average, while demand from tenants is running 51% above the five-year average. Put simply, now is a great time to rent a property and investing in bricks-and-mortar will allow you to do this.
Works as a short-term investment
If you want a quick-turnaround for your investment, property may be the best option. After all, if becoming a landlord isn’t for you, it’s still likely in the current market that you’ll make more than you paid for
Selling property may feel more familiar
Chances are you’ve bought and sold property before. Whether that’s your home or another investment, the process of buying and selling property is likely to be more familiar.
Buying and selling land may feel altogether alien. With so much at stake, it could be easier to stick with what you know and are comfortable with.
Book a free property valuation
Con
You’ll spend more in transactional costs
Whether its estate agent and conveyancing fees, buying and selling property comes with its share of expenses. These should be factored into any investment decision or you’ll run the risk of making a loss on your overall investment.
Related: The cost of moving home
It can be legally complicated
Your conveyancer will be put through their paces with your property purchase and sale. From local searches and collating all the relevant documents, it takes time to exchange on a property so it’s important to factor this into your decision.
Related: Your guide to conveyancing
Looking to invest in land or property? CJ Hole can help.
Whether you’re looking to invest in property or land, our expert investment and land and new home teams are here for you.
Further reading
Invest in property - a beginner’s guide
