Why land assemblies could be an excellent post-lockdown play

18th August 2020

Even in the best of times the only certainty is uncertainty. And many would argue these are far from the best of times.

But instead of the doom-and-gloom naysaying about the future, we wanted to talk opportunity. (After all, we’ve put together a guide about some of the practical steps you can take right now).

So if you’re optimistic, and willing to roll your sleeves up, there’s a play that could be perfect for the current climate – land assemblies.

 

Land assemblies – a quick overview

A land assembly involves buying adjacent parcels of land, combining them to form one bigger site.

Some land assemblies will be made up of massive brownfield sites. Others are much smaller in scope – among SME developers the most common land assemblies involve simply buying parts of gardens.

Want to know more about land assemblies (including the four steps to make it a success)? Download the eBook below:

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Land assemblies are by no means easy, and they can take a lot of time. But, done right, they can be massively profitable.

And done now? They could be more profitable than ever.

 

Why now might be the right time for a land assembly project

1) House prices are mostly stable, but...

No one’s quite sure what’s happening to house prices.

We looked at the house price talking points here, but even since that post went live there’ve been new developments (new predictions, stamp duty changes, even a 'mini boom' etc.).

House price crashes are usually caused by a sudden influx of forced sellers. But between the furlough scheme, mortgage holidays and other government support, very few homeowners currently have to sell. So many would-be sellers will attempt to wait out the storm until prices bounce back. 

That means fewer properties being listed, and a lower supply means higher prices… so it all balances out.

Of course, as those various support schemes come to an end, the situation may change. But, for now, we’re in a holding pattern.

Land is a little different.

 

2) There’s less competition for land – especially off-market land

A lot of people look to buy houses, especially when prices drop. Of course, increased demand tends to limit how far prices fall.

But fewer people look to buy land. Even fewer look for off-market land. And fewer still will be looking to buy part of someone’s garden.

Lower competition means that when prices start to fall, they can fall pretty hard.

 

3) Land purchases can be less emotional than property purchases 

Sellers often don’t have the same kind of emotional connection to their land as they do their house. 

If you tell someone that their home, the place they’ve loved and looked after for many years, maybe raised their kids in, is now worth £50,000 less – that stings. But land? That feels much more transactional.

And besides, many people wouldn’t even know what part of a garden is actually worth. Homeowners keep half an eye on property prices, but land values? Not so much.

If you offer them £10,000 for a part of their land, and they get it independently valued at the same, they’ll often be happy (and completely unaware it might have been worth £15,000 back in January). 

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4) Sellers might actually be grateful for the approach

Times are tough. And, for a lot of people, they’re probably going to get tougher.

As we mentioned earlier, there might be an influx of people struggling to meet their monthly outgoings soon. If nothing changes, they could be forced to sell their homes.

Someone coming along and instead offering thousands of pounds for a part of the garden that they rarely use? That can feel like a gift – one that can help them through the tough times until things are back to normal for them.

 

5) Land assemblies take time (which could mean things are more normal when it’s finished)

A land assembly isn’t a quick project. You need to find potential sites, talk to all the owners involved, coordinate them, agree prices, get things signed, apply for planning permission, wait for the actual build etc. 

Usually, that can be a downside – it’s a long time for capital to be tied into a single project. But now? Well, the longer it takes, the more time there is for things to bounce back, house prices to go up, and your project to turn an even bigger profit.

Buy while the market’s cheap – sell when the market’s recovered.

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6) You can make conditional offers (keeping your cash liquid)

We’ve looked at how times might be tough for sellers, but let’s not ignore the elephant in the room – times aren’t exactly great for anyone.

Odds are you’re not as flush with cash right now as you might like. And with a lot more uncertainty ahead, having a bit of cash in the bank isn’t necessarily a bad thing.

With a land assembly, you can always make conditional offers on the land. Instead of paying upfront, you agree to pay when planning permission is agreed, for instance, and you know the full project will go ahead.

That cuts your risk, and means you aren’t putting your hand in your pocket until you’re as sure as you can be that there’s a profit at the end of it.

 

7) It’s easier to socially distance on a land purchase

This last point would have been crazy to include even just a few months ago, but here it is – it’s easier to social distance on a land purchase.

You often don’t need to physically go visit sites. And if you do go, they’re out in the open and much safer to view. 

Even if you’re buying a property for access, you don’t need to worry about the details of the building itself – no need to open cupboards, assess the loft etc. since you’re probably going to tear it down anyway.

So, in a post-COVID world, this can actually be the best option for your peace of mind as well as your bank balance.

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OK, great. So how do I organise a land assembly?

Land assemblies offer a lot of opportunities, especially in the current climate. They’re potentially more profitable and less risky than some other plays you could make right now.

So… how do you go about getting started?

 

We’ve got a free eBook showing you more details on land assemblies, the pros and cons involved, and how to get started with one of your own.

 

Grab your free copy here

Before Harry joined LandTech he spent eight months as a pub landlord, and was almost an international DJ (but his big Ibiza performance was cancelled with just two weeks notice). Still, their loss is our gain as he now one of our in-house experts helping to make thousands of property professionals' lives easier.