It’s broadly agreed that the future of property, particularly residential, in the UK needs a rethink and political support for development schemes is strong across all political parties. The UK government is facing a housing crisis and has therefore committed to building 240,000 homes every year until 2020. In fact, London mayor Sadiq Khan is currently planning a ‘housebuilding team’ for the capital. To that end, land is a highly sought-after commodity. You probably knew that already! These 240,000 homes will all require land to be built on, and this is essentially what drives strategic land investment. Having a strategic stake in undeveloped areas is the key to taking advantage of that demand.

Investopedia goes into detail on the multiple land investments that investors can consider, such as residential and commercial land opportunities. A strategic land investment opportunity generally refers to greenfield land that has significant development potential. This land will be well-suited for residential or commercial development, due to its close proximity to key transport links, high local demand for housing and nearby amenities in a neighbouring settlement. An enormous amount of research should go into choosing such an area, with sites selected on the advice of an Architect and Chartered Surveyors, hence the term ‘’strategic land’’.

Due to this demand the UK now has a cabal of modern-day land Barons. These are a group of private companies, largely unknown to the public, that have carved out a lucrative niche locating and snapping up land across the UK. these firms prepare sites for development by doing the time-consuming work of gaining planning permission. It is then sold on “shovel-ready” to housebuilders. These companies don’t ever build homes, but work within the UK’s labyrinthine planning system, taking advantage of its complexity and loopholes. It’s a modern-day gold rush. The reason for this is the huge profit that can be made by obtaining planning permission on a strategic land site. According to Simon Hodson, head of residential land at JLL, while an average acre of agricultural land may sell for £5,000 to £10,000, land with planning permission for residential development is normally worth £1m-4m per acre, depending on its location and the amount of infrastructure and preparation needed before building.

The true size of the industry is almost impossible to determine, as many strategic land companies initially take options over land, which does not have to be registered at the Land Registry, rather than buying it outright. There are around eight big companies, and many more niche players, quietly preparing land around the country, though largely outside London. Figures from Savills suggest that land promoters and investors currently control around 20% of land due to be put through planning, enough for 153,400 homes. This is compared to UK housebuilders’ holdings of just 8% of land currently undergoing development. However, the strategic land companies remove much of the risk for housebuilders, who may then focus on building, rather than the complexities of gaining planning permissions. A source in one of the large housebuilders says that it buys one third of its plots from these strategic land companies, although this figure varies. Although some housebuilders have substantial land banks that they take through the planning system themselves, such as Taylor Wimpey and Persimmon. The key to success comes from navigating the planning system. Strategic land companies look for underfunded local authorities that have not yet set out their local plan for housing for the next 15 years, or their programme for building in the next five years in its National Planning Policy Framework and makes representation to include their plot of land in the plans. The UK land market is inefficient and fragmented,” says Tom Aubrey, from the Centre for Progressive Capitalism, who argues that these land promoters are a natural product of its dysfunction and lack of transparency. He likens the model of these businesses to private equity firms, as an agile, speculative force.

For private sophisticated investors there are a number of closed and open investment funds allowing them to participate in this new gold rush, such as Land Club, Horizons, Intro Crowd and GB Strategic Land Fund to name a few. With some, such as Intro Crowd, the investment start as low as £2,000 and each investor obtains shares in a dedicated UK company that owns the strategic land site. Usually these investments are a 3 to 5 year hold, depending on the Surveyors report, which reputable investment funds make available to potential investors before they invest. A friend of mine invested on the birth of his baby, with a view that he’d have a nice windfall when he needed to start paying school fees and one invested with an eye on his daughter’s university costs down the road. For those interested, a good start is to look at the opportunities through www.aurum-wealth.com, an investment portal that lists a variety of alternative investment options for individual sophisticated investors to choose from. As Mark Twain once said ‘’ Buy land, they’re not making it anymore.’’. However, he wasn’t aware of the land reclamation taking effect in many countries. Luckily for investors, the UK is not one of them