What are the relationships between land fund managers, local governments and planning authorities?

There are formal and informal ways in which investor-funded developers achieve land use change. But community relationships and flexibility are also important.

From an investor’s perspective, real estate fund managers are the professionals with the skills necessary to grow the assets that are invested in real estate development. Ideally, they should make the calls necessary to buy land at a low price and resell it at a much higher price – the higher the better.

It’s about more than smart and strategic physical development. Key negotiation skills are required of the people who guide these alternative investments through the process, starting with negotiating the initial purchase price of the land. But of equal value is the negotiation and management of the planning permission function.

Local planning authorities (LPA) are central to the land value appreciation formula. Most work objectively, trying to meet the needs of their constituents with appropriate and manageable growth programs. But your decisions are not made in a vacuum; There are several means by which they determine whether or not to approve a land use change:

• Formal: it is up to the local planning authorities to have an established development plan, with which changes in use must be complied with. This requirement is emphasized by the National Planning Policy Framework, which published new requirements in 2012. There, the NPPF stipulated that the LPAs establish a development plan to promote net housing growth in a relatively short period of time. This requirement was raised to enroll local municipalities in the cause of increasing the housing stock, a critical national need.

• Informal – Unfortunately, only about half of the towns and cities in England and Wales have developed their plans set out by the NPPF in mid-2014. Among those that do not, the process necessarily follows what the developers propose. to the authorities. These authorities may reject proposals for various reasons, however, it is logical that they are predisposed to a positive review of said proposals due to the critical housing situation. This is where real estate fund managers need to be resourceful and convincing in communicating the benefits of the particular development they propose.

• Community participation: The Urban and Rural Planning Association advises that community participation be at the core of planning results. Certainly when there is a well-organized opposition group that opposes development, the community can speak out and be powerful. But seasoned land fund professionals should be able to identify shared goals, and make adaptations and adjustments to development plans, that create alliances within those communities that can at least bring balance to the discussion.

As agents of government, planning authorities strive to find consensus while respecting different opinions. Similarly, investment groups work to identify common ground so that development can finally move forward.

People who consider land as an investment should seek an independent financial advisor to analyze two factors. One is the perspective of real estate investing itself, and the other is determining how real estate and other forms of real assets influence the investor’s unique wealth portfolio. Relative medium-term returns on land-use-based investments (between 18 and 60 months, typically) are part of that consideration.

Leave a Reply

Your email address will not be published. Required fields are marked *