In this era of financial uncertainty, the benefits of owning commercial land are clear. Even if you own vacant land, substantial tax benefits are available to the savvy investor. Develop the site and you’re probably in the running to net a substantial financial gain.
One of the biggest advantages of owning commercial real estate or land is the steady stream of revenue resulting from ground leases.
Ground leases separate the ownership of a commercial property from the ownership of the land it occupies and are a lease of the land only. The profits from ground leases are a lot higher than the typical dividend yields from stock market investments.
These are just a couple of the factors that make commercial land such a popular investment.
However, some parcels of land aren’t as worthwhile as they may first appear. Before you even enter negotiations, here are a few factors worth considering with a cool business head so that you don’t waste time separating the sheep from the goats.
Use a Solicitor
Buying and selling commercial land can be fraught with hidden complexities. A good solicitor will guide you through such issues as they emerge, and will remain objective about the deal, thereby ensuring that you’re not impulsively acting against your own interests.
Most importantly, your solicitor will make sure that you fully understand the transaction you’re about to undertake: unless you are trained and experienced in interpreting legal frameworks, you’re unlikely to be able to manage this by yourself.
Beware Usage Restrictions
Much of the land available on the market nowadays comes with some kind of usage restriction. Many of these are utterly reasonable and make perfect sense in the wider context taken by municipal authorities.
But some may impact upon your plans for the land, so think carefully before accepting them. Sometimes a moratorium is even imposed on building on the land, so it’s vital for you to enter the transaction with your eyes open.
Restrictions will show up on land registry searches, but they are really something you need to be aware of before you make an offer.
Consider Inherent Restrictions
Sometimes a particular plot of land comes with restrictions resulting from its history, topography and resident wildlife.
A problem becoming all too familiar to UK landowners in recent years is the fate of land located in flood zones. And with brownfield development becoming more the norm, so too is the incidence of land contaminated with heavy metals or other products of industrialisation.
Resident wildlife can give rise to a unique set of headaches. Your proposed development site may house colonies of bats, or other protected species.
Sometimes invasive plant species are present, and these can require a considerable investment of additional time and budget to eradicate.
A biological as well as a land survey is recommended to pick up issues like this at an early stage.
Services and Access Rights
Depending on what your plans are for the site, you’ll need to ensure that adequate rights of way can be established for your purposes. After all, nobody wants a warehouse if they can’t come and go from it easily.
For a commercial property you’ll almost certainly be required to negotiate an agreement with the local Highways Authority so that they will eventually agree to take responsibility for any roads you build.
Tempting though it may be to acquire a pristine plot of land miles from the nearest road link, this doesn’t bode well for its development potential.
A certain level of proximity to transportation is required if you’re to avoid creating giant development headaches for yourself. Pretty much the same is true when it comes to mains water, sewers and drainage.
Commercial land is an excellent investment, even in this era of volatile property prices. After all, space is one commodity that can’t be manufactured to order. However, purchasing land can be a tremendously complex process, and however small your transaction it’s well worth engaging a solicitor to ensure that everything runs smoothly.
But even before you instruct your solicitor, you should investigate whether there are usage restrictions on the land you want to buy, whether the plot suffers from limitations because of natural factors or land contamination, and whether it presents a good prospect in terms of proximity to services and transportation.
Cover these areas and you’re more likely to get a good deal without wasting your time on prospects that come to nothing.
At TP Knotweed we make sure your property is safe from invasive plant species such as Japanese Knotweed. If you want to make sure your potential land is secure from these dangerous plants, get in touch with us today by calling 0800 389 1911 or contact us online.