Hmm.. If what you say is accurate, does it mean that all land banking companies that say that green belt land will be freed up are scam companies? I personally doubt it. I'm quite a skeptic by nature. But it really transcends any human understanding that any company, if it is a scam, will get itself linked with a law firm to protect not just itself but its customers as well... And i have gone for some presentation workshops done by land banking companies which prides itself that way. Honestly, i wouldn't have believed that. But the company went to the extent of protecting its customers. In that case, would you consider it still a scam?Originally Posted by Tim the Mage
By saying "I can't say that every land bank offer is a scam but since most of them are, the consumer is best to ignore any offer." I know where you are coming from. I'm more or less just interested in understanding how come you take a stand such as this. Because my perception is that just because there are some failed attempts, or some rotten apples, it doesn't mean that we hide back into our shell and are afraid to try again, or worse, just totally clam up. I'm not advocating that people get scammed by scam companies. However, I'm just intrigued by that comment.
Sorry for the spam, but I was just curious because i am not too sure what theInvestor might have meant. Anyway, just a question, would you suggest there is ANY real deal in ANY investments (might be other forms of investments) at all? Or are investments by nature dependent on "fluke" - as in the supposed case of land investments?
The current round of spatial planning (under the Planning & Compulsory Purchase Act 2004) local planning authorities are required to identify land for the development to meet a predicted increase in housing demand between now and 2018. It is anticipated that 60%+ of this development will take place on previously developed ('brownfield') land. of the remaining 40% over half is covered by existing plans to release land from the 'Green Belts'. The remainder is subject to a current consultantion process - Bradford Councils can be viewed on this link (http://www.bradford.gov.uk/the_envir...uction_dpd.htmIf what you say is accurate, does it mean that all land banking companies that say that green belt land will be freed up are scam companies?
There is a possibility that land identified by a 'land banker' might be released from the 'green belt' in the subsequent generation of spatial planning. But under the current schemes I can see no prospect at all of the promises made by land bankers - however well they might be phrases and however legal they are - coming to fruition. Hence scam.
Of course all lawyers and every law firm are entirely trustworthy and would never involve themselves in any attempt to gull money from joe public!But it really transcends any human understanding that any company, if it is a scam, will get itself linked with a law firm to protect not just itself but its customers as well...
With apologies to our good friend Jack of kent but caroLive you do know how to tell when a lawyer's lying, do you not?
His lips are moving!
"No statement should be believed because it is made by an authority." Robert Heinlein
I don't have a personal nor in depth knowledge of land banking, hence my original question - what is the difference between the scam and the real deal.
Where I see the scam is in selling land that the LB company has no certainty and usually no likelihood of ever turning into profitable development land, yet giving the impression that there is a good chance of a big return. And they don't care. They get their money from the inflated prices they sell the parcels of land at. The 'fluke' is if, despite the really high odds, money is made for anyone other than the Land Bankers (and their Lawyers)
If they sell it honestly, as a highly speculative investment with no likelihood of making a profit, probably loosing money if they need to sell, then I would say that was the 'real deal' - but that isn't likely to attract many buyers is it
It is all legal - as long as they are careful with the words - which I'm sure their lawyers check. As such, why wouldn't a lawyer be involved? A solicitor acts - within the law - on his/her client's instruction.
But even if something is legal, it doesn't mean it isn't a scam. Knowingly selling something way over the market price isn't a crime (unless you misrepresent it) but it isn't very honest, especially if you lead people to believe that it is a good price.
To me a 'fluke' depends on the odds. Invest in a guaranteed Government bond, it isn't a fluke when you make a return - it would be a fluke if you didn't!!
Know the market and it isn't a fluke when you see a good return on shares, property, wine or fine art. A friend is currently doing a roaring trade in 100Watt bulbs - great investment on his part and no fluke. Of course there is a risk - but you know the risk when investing.
The problem with Land Banking - unless you know differently - is that the high risk and the minuscule odds of seeing a return are not made explicit.
Firstly, thanks (to both Tim the Mage and Mischief Monkey) for clearing my doubts. Granted, lawyers have the ability and capability to phrase the words of a contract or a presentation in the best manner that would be in the clients' interest, even though it might not be the exact representation. However, going into that discussion would be a whole new thing altogether about lawyers.
Anyway,
I do think that they do mention the risks that land banking brings. However, it might be that the profits from land banking are higher than other investments, that might be the reason why the risk appears minimal next to the profits. But when compared to any other investments, the risks are actually (maybe) higher. But yes, there are companies that would not be totally honest with the risks... However, if the initial argument (the risks and odds are not made explicit) that was brought forth holds true, then it can also be said of most investments (e.g. wine, stocks, etc) and not just land investments only.
Yet, any human that wants someone to invest in a product, will apparently promote the product as a best and try to "down play" the risks involved. But i would like to believe that as an investor, the responsibility lies in my hands to check through everything and to make sure that what the company tells me is factual, instead of taking in everything that is thrown at me. Any investment definitely carries risks.
You might beg to differ, but i do think that land investments aint all that bad. Just because some companies are a misrepresentation of it (or have misrepresented it) it does not remove the high profits that could come along with it. Land investments are also a bit different from short term investments. Land investments require high capital input and a longer gestation period before the profits are realised. It could be that because of this, it might not seem to be the best and more feasible investment type for all, but if I can afford the capital, the wait and have done a thorough check on the company and the particular plot of land I might be investing in, then i really do not see why i should still shun investing in land.
Did i leave any loopholes? Or should i still not invest?
No problem with investing in land - some good deals to be had out there at the moment. And if you're prepared or able to tie up capital for a few years with no reurn, could prove a win.
However, if you're serious about this go to an auction of agricultural land and buy directly rather than at the 'land bankers' inflated prices. Or better still look for cleared 'brownfield' sites.
There is an issue around 'effort and return' - land investment no more guarantees 'easy money' than any other investment. To find the right deal requires some effort in terms of research, mrket knowledge and price.
'Land banking' is for the gullible and not the serious investor.
(another option might be a proprty trust - but right now these look a little rocky!)
"No statement should be believed because it is made by an authority." Robert Heinlein
I would agree that investing in land is not an easy way to get high returns, but i do think that the effort pays off, of course with the underlying assumption that the invested plot is the right one. i do think it is feasible to just get the land directly from the agricultural owners themselves, but that would require the investor to first have a huge sum of money. Isnt the land investment companies there to "split" up the land so that any given investor does not have to come out with a huge initial capital?
Take for example, i cannot afford the entire agricultural land and therefore i approach a LB company. They will offer me a small plot out of the entire gigantic plot (of course, i can buy more than one small plot, depending on how much capital i have). If not, wouldn't land investment be unfeasible for at least 90% of the world's population?
But at a massive mark-up.
As I said, as long as they do not mis-represent the land, all perfectly legal.
And fair enough - buyer beware - as long as they do not misrepresent the possibility of making a return on the investment.
LB buys a field for £20k, splits it into 20 plots sold at £10k each. That is a pretty darn good return for the LB, but 20 people are now sitting on land that is basically worthless. If you can't access your plot without trespassing and can't fence it off, you can't even sell it for agricultural use anymore. Your only chance is if you can find someone else to buy your worthless land for £10K, without the marketing, lawyers and spiel of the Land Banking company.
Better to join with like minded people and buy in a co-operative if you can't afford the field on your own. At least your share might be worth something and it'll cost (and therefore lose) you far less for the same potential return.
I've known the co-operative approach work, not as an investment admittedly, when buying forestry land or stopping a field being sold to Travelers.
Agricultural land really isn't all that expensive - depends where you are but about £7,000 per acre is pretty much par.
Here's one link which might help preent you getting ripped off by land bankers:
http://www.lawsonfairbank.co.uk/buying-land.asp
"No statement should be believed because it is made by an authority." Robert Heinlein
I really know nothing about land investment to be honest but I've read this thread with interest.
As an investor in other vehicles however, I have looked at many things over the years.
There are always a few points I look at before considering whether something is suitable for me as an investment.
If the investment is that good an opportunity and the potential returns are so good, why is it being sold on?
Secondly, what would possibly justify a huge mark-up being placed on the investment? Reputable middlemen in any market are usually dealing in volume at lower margins.
Thirdly, how liquid is the market.
With these companies selling land at inflated prices, I feel the investment opportunity fails on all 3 counts. I appreciate that investors seeking high returns will accept a high level of risk, but the deal seems to be firmly in favour of the land reseller.
These companies may be just on the right side of misrepresentation, but to me it looks like a mug's game.
Any chance its the same type of salespeople involved that are currently rapidly exiting the buy-to-let market?
I have a little experience in this area. I have:
1) Bought landbank plots on behalf of clients who flew in the face of my advice not to purchase. I have subsequently, and in light of experience, stopped doing such transactions altogether.
2) I have received instructions from a Land Banking Company to sell land as individual building plots. (I turned these instructions down after having investigated what they were doing).
3) A member of my extended family is a property developer and has actually sold land as a Land Bank.
My experience of 1) above coupled with all that I have read on the subject suggests to me that no one has ever seen a return on a Land Bank investment. This fact alone would seem to demonstrate outright that Land Banking is a straightforward scam.
My experience of 2) showed me that the people behind Land Banks can be disreputable. You cannot be sure of who you are dealing with, offshore compaies are employed, people are convinced not to take legal advice, cash changes hands, all the hallmarks of dodgy dealing. Never allow yourself to be convinced that there are legitimate reasons for any kind of dodgy dealing. A scammer will come up with almost any excuse he can think of, but the tried and tested methods of business can and should always be employed in any situation.
My experience of 3) was that a property developer I know admitted to me that when he realised that a plot he had bought had a snowballs chance in hell of getting planning permission he subdivided it into small plot and sold it on as a Land Bank investment. Ask yourself why the person who originally acquired the land for development would not want to keep such a great opportunity for profit for themselves?
So Sorry, in light of my experience I am afraid that I can't see that any Land Bank could ever represent "the real deal" as an investment.
I was thinking long and hard about all the replies that had been recently posted in the past week. And i do agree with some to a certain extent.
However, would it be fair to say that the confidence of ANY investor (regardless of what they are investing in) has dropped, at least by a bit. In a reply to Legaleagle, i agree that there are LB companies out there plainly interested to get the money, period. However, like my earlier argument in some other post, that doesnt mean that there all LB companies are as such. With all due respect, could it be that it so happened that the company that approached you was a scam company? I cant say for sure and neither can i be certain, especially in such uncertain times. I do feel that, from a neutral point of view, this entire LB idea is receiving the "crap and stench" left behind by the ppl who caused this worldwide financial crisis. I still am very risk adverse and at times, i'm still rather critical about investments (that would include analyzing LB) as a whole...
And if i am not wrong when i did some checks, that Land investments take years. They are not immediate or short-termed. Could this be why it seems like no one has any returns from LB as of now?
"I agreee that's true of some but that doesn't mean it's true of all"
Perhaps you have no idea how often we hear that on this forum. Some psychics are frauds, but that doesnt mean that all are. Some chiropractors are quacks but that doesn't mean that they all are. Some energy healers are chareltans but that doesn't mean that they all are. Some sunrises are in the east but that doesn't mean they all are.
OK we don't often hear the last one, I'm allowed a little comic relief but the others we really do hear them all the time. Suprisingly this argument is hardly ever made in response to someone arguing that because some x then all x.
As skeptics we're open minded to possibilities but we don't believe something just because it's possible. If I say that there is a teapot orbiting the sun beyond Pluto then so long as I'm careful to stipulate that it's too small and too far away to be seen by our intruments then that's possible. No-one can prove me wrong. For that reason Bertrand Russell argued that it's not up to anybody to disprove such claims, the burden of proof rests surely upon the shoulders of the person making the claim.
You've claimed that some landbanking schemes might not be scams. I'll grant you that it's possible.
However is it plausible - that's to say can you concoct a scenario where such a scheme would be to both parties benefit? It's easy to imagine that such parcels of land might under some undefined circumstances be a worthwhile investment. It's much harder to specify what circumstances those might be and why the original owner doesn't want to keep this worthwhile investment.
Even if plausibility has been established then there's the matter of liklihood. Is it probable? Should there be conceivable circumstances when someone in possession of such a worthwhile investment finds it in their benefit to parcel it up and share the wealth, would there be alternative courses of action they might take that would be of even more benefit. If there are circumstances where entering into a land banking scheme is a sensible course of action for all parties involved then is it likley that such circumstances might come about?
Finally there is the matter of fact. Is the non-scam Land Banking scheme a fact. Even if it's not totally improbable that doesn't mean it actually happens. However the good news is that proviong that it does skips the other two steps. The only acceptable proof is direct observational evidence of it actually happening. Give us an example of a land banking deal that wasn't a scam and you'll have proved your point. We'll have no choice but to accept this. If it happend then it can't have been beyond the realms of possibility, plausibility or probability.
If you want to set yourself one of the lesser goals of saying that it's probable then go right ahead an outline a probable scenario. If you want to set yourself the lesser goal of saying that it's plausible then go right ahead and outline a plausible scenario.
However if you're happy just saying that it can't be proven as impossible then that's fine too. You're in great company with the people who believe that 911 was staged using advanced alien technology beyond our comprehension, that they hear the voice of God inside their head or that the universe is a computer simulation indistinguishable from reality.
We can't disporve the alien conspiracist because the advanced alien technology is indistinguishable from magic, too poorly defined for us to be able to make arrive at any conclusions about its capabilities.
We can't disprove the schitzophrenic because the very idea of God is too poorly defined for us to be able to say that he doesn't exist that every occurence in the univesrse included this mans voices is not God's will.
We can't disprove the computer simulation theory because it's carefully constructed to allow no differences between what we would observe from within it and what we would expect to observe in reality.
Likewise we can't disprove that there's not at least one land banking scheme where all parties acted in good faith without misrepresentation because we don't have the resources to examine every property deal in history to see whether it fits with such a description.
Insteasd we will continue to do what skeptics do, apply doubt until there's evidence to quash it.
I can do plausible for you but I won't. I can make a stab at probable but the results lead me to conclude that it's quite improbable. However I've sounded off enough and I want to hear what you have to say. You may have different scenarios from me. They may be more plausible and more probable. We'll see.
Last edited by Matt; 22nd January 2009 at 10:40 AM.
We have now:
1) Lawyers with expeience of conveying land banking deals
2) Experienced investors explaining the considerable risks
3) An explanation of the UK's planning system
All of these point otwards land banking being exploitative of the gullible. This is especially notable since there is no re-sale market for plots sold under 'land bank' schemes - because those plots have approaching zero value (especially when the seller retains grazing and other agricultural rights which is normal).
If you have money to invest you will get a better return from investment in RBS or HBOS than you will from these schemes. At least you've a chance there of some dividends - with 'land banking' you merely place you funds in a wholly illiquid investment with unspecified and unpredicatable returns and an unknown point in the future.
"No statement should be believed because it is made by an authority." Robert Heinlein
Yeah i agree with Matt. This being a skeptics forum, we will never know whether UK Land Banking is a fraud or not until you see your returns. Benefit of a doubt is pretty good in an investment where you're dealing with money(a large sum). As of now, we have seen many scam companies and not many good news about people getting returns from their investments. I guess it's perfectly alright to be a little careful and skeptical about the whole UK Land Banking.
My point stands.At the end of the day, it's your decision. If you see your returns in 10years time and you become rich, good for you. Whoever says that it's a scam will eat his/her words. Until then, we'll never know whether aliens exist.
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