Buying 'Cheap' Development Land
May 2005
Scammers, skimmers and chancers love to operate in markets that are hot, where all the money is so to speak, in areas where people have recently got rich.
It's therefore no surprise that a new potential scam has surfaced over the last year or so. Agricultural land is presently priced at around £3,000 an acre. A company will approach a farmer and offer to buy 5-20 acres for double the going rate. The farmer normally needs no motivation to sell.
The new owner (scammer) then splits the land up into smaller parcels and heavily promotes the fact that the UK needs an extra ‘1 million houses’ over the next 10 years etc alongside the fact that he’s got plenty of bite-sized plots that are just ripe for 'investment'.
No doubt in the sales literature there's plenty of talk about easy doubling and tripling of the original investment.
The land will be near a big town or village and is just 'sure' to get planning permission on over the next few years. You can buy a plot for say £5k-£10k which will at least double or triple or even quadruple 'when' planning permission is granted. So goes all the rubbish in the sales pitch.
Planning Permission? No chance
Of course there’s almost a zero chance that planning permission will actually be granted on the land in question due to a lot of reasons. Farmers aren't stupid for one, so it's highly unlikely any farmer would sell land for peanuts that had a chance to be developed within say 5-10 years. But many peoples natural greed supersedes common sense.
Beware of these types of scams and if you’re interested or know somebody who is then it would pay for them to at least visit some of the local land agents (who are likely to roll their eyes when you tell them which bit of land you're interested in) to get some sort of professional opinion. Also call up the local paper or get in contact with the Parish Council to hear the other side of the story.
Even if you’ve got to spend a few hundred pounds in research that money if written off could turn out to be a great investment. This is contrast to shelling out thousands of pounds in buying agricultural land which has virtually no chance of getting planning permission in most people’s natural lives.
As ever use the power of Google and the search engines to fully investigate the company or companies involved because if there's anything at all suspicious then it will likely be online.
Bottom Line: DON'T get involved in buying land which is being sold as potential development land unless you really understand how the planning laws operate. If in doubt stay out otherwise there is a 99% chance you'll lose your money.
Update
The investigative financial journalist Tony Hetherington has just written an excellent article on what looks to be a very shady company called the English Land Partnership. The article makes these points -
- The company's address is in flashy Mayfair, London but this is just a maildrop with the real location being Doncaster
- The salesman aren't shy in making false claims as the BBC caught them out telling prospective investors that 'Barratt's wanted to buy a site for £6 million' - See this link
- The man behind the company is a convicted fraudster, Kevin Jones
- Leeds Council suggest that on one of the company's plots of land the 'prospects of the land's greenbelt status changing in the foreseeable future is highly unlikely'
- And the Leeds North West MP Greg Mullholland said: "It's pretty dodgy to put it mildly... the reality is that the plots of land are worth a few hundred pounds and they're being sold off for... 18 to 20 thousand pounds. Now to my mind that's a rip-off."
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