The following Property guidance note provides comprehensive and up to date legal information covering:
Land banking is the practice of purchasing undeveloped land with the intention of dividing it into several smaller plots for sale to individual investors at inflated prices. The inflated price is 'justified' by the seller by the potential future developed value of the land. Sellers claim that huge returns will be made on the plots if planning permission is obtained for housing or other development. Misleading advertising or pressure techniques are often used. However, unbeknown to the investor, the land is located in an area where development is either restricted or never likely to be permitted—eg ‘green belt’, agricultural land, areas of outstanding natural beauty or other areas protected from development by planning law. Even where the land does have development potential, subdivision into small plots held by different owners may make it less attractive for acquisition by a single company seeking to develop the land. Investors have been persuaded to pay thousands of pounds for land that has little or no chance of ever being developed.
Investors who are misled about the prospects of the land being developed, obtaining planning permission or redevelopment, may be deluded about their prospects of selling their plot with the benefit of planning permission at even greater profit to developers.
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