Is Buying Land a Good Investment UK?

Land investment in the UK has long been considered a stable, long-term investment strategy. But is buying land still a good investment in 2025? This comprehensive guide examines the benefits, risks, returns, and strategies for land investment to help you make an informed decision.

Quick Answer: Is Land a Good Investment?

Land can be a suitable investment for experienced, well-advised investors, but it is higher risk and more speculative than buy-to-let property, REITs, or diversified funds.

• Risk level: High-risk, specialised investment requiring significant capital and expertise
• Returns: Typical ROI is 6-15% per year; higher returns (30%+) only when planning permission is secured
• Time horizon: Land is a long-term investment (10+ years), often illiquid
• Planning risk: No guarantee of planning permission, even over decades
• Your goals: Only suitable if you can afford to tie up capital for many years and potentially lose part or all of it

Research shows that average UK property returns have lagged inflation since around 2016, while global equities have performed better. The assumption that "property always wins" is no longer safe. Land investment should be approached with extreme caution and only as part of a diversified portfolio.

Benefits of Land Investment

1. Finite Resource with Growing Demand

Land is a finite resource. The UK has a limited supply of land, and as the population grows and development continues, demand for land increases. This fundamental supply-demand dynamic supports long-term price appreciation.

2. Potential for High Returns

Land with planning permission can see values increase by 8-10x or more. Even agricultural land in strategic locations can appreciate significantly over time. For example, agricultural land near expanding towns can increase in value as development pressure grows.

According to UK land price data, development land with planning permission can command £200,000-£500,000 per acre, compared to £6,000-£15,000 for agricultural land.

3. Portfolio Diversification

Land provides diversification from traditional investments like stocks and bonds. Land values don't always move in correlation with financial markets, making it a useful hedge against inflation and market volatility.

4. Low Maintenance Costs

Unlike property investments, land typically has minimal ongoing costs. There's no building maintenance, tenant management, or property taxes (though you may pay council tax on some land types). This makes land a relatively "hands-off" investment.

5. Inheritance Tax Benefits

Agricultural land can qualify for Agricultural Property Relief (APR) and Business Property Relief (BPR), potentially reducing inheritance tax liability. This makes land attractive for estate planning purposes.

6. Planning Permission Potential

One of the biggest advantages of land investment is the potential to secure planning permission, which can dramatically increase land value. Even if you don't develop the land yourself, obtaining planning permission can make it highly valuable to developers. Learn more in our guide on how to sell land with planning permission.

Risks and Challenges

1. Planning Risk (The Biggest Risk)

This is the single biggest risk in land investment. Local planning authorities may refuse or heavily condition your scheme; there is no guarantee of uplift from "hope value", even over decades. Planning policies change frequently, and what seems like a good location today might not get permission tomorrow.

Many investors buy agricultural land hoping to secure planning permission, but there's no guarantee of success. Even if you buy land in an area that seems likely to be developed, planning permission can be refused for many reasons: environmental concerns, infrastructure capacity, local opposition, or changes in planning policy.

Key question to ask: What is the current permitted use, and what is realistically achievable on this site? If planning is refused or delayed, what are your exit routes?

2. Illiquidity and Pricing Risk

Land (especially agricultural fields or awkward small plots) can be extremely slow to sell. Unlike stocks or bonds, you can't quickly liquidate land if you need cash urgently. Owners may need to accept a significant discount to exit in a reasonable timeframe.

This illiquidity means land is unsuitable for investors who may need to access their capital quickly. You must be prepared to hold land for many years, potentially decades, before realizing returns.

3. Legal and Title Issues

Legal and title issues can block or devalue development, and many buyers discover these problems only after purchase:

• Restrictive covenants: These can prevent development or impose conditions that make development uneconomic
• Rights of way: Public or private rights of way can block development or require expensive diversions
• Access issues: Lack of proper access can prevent development or require expensive infrastructure
• Easements for services: Existing easements for utilities can restrict where you can build
• Ransom strips: Third parties may own strips of land needed for access, allowing them to demand high prices
• Boundary disputes: Unclear boundaries can delay or prevent development and lead to costly legal disputes

Essential: Always get a full title search and legal review before exchanging contracts. Never skip this step, even if the seller or agent tells you it's not necessary.

4. Cost Overruns

Even if you secure planning permission, professional fees, abnormal ground conditions, infrastructure requirements, and Section 106/CIL obligations can erode or wipe out profit:

• Professional fees: Planning consultants, solicitors, surveyors, architects, and engineers
• Abnormal ground conditions: Contamination, poor ground conditions, or flooding can require expensive remediation
• Infrastructure: Roads, utilities, drainage, and other infrastructure can cost hundreds of thousands
• Section 106 obligations: Local authorities may require contributions to affordable housing, schools, or other community facilities
• Community Infrastructure Levy (CIL): A tax on development that can be substantial

Many development plots are now bid up by would-be developers to levels that can make small sites uneconomic once all costs are factored in. "Bargains" can hide serious problems.

5. Concentration Risk

A single land plot is a concentrated bet on one location, planning authority, and exit route. Unlike diversified property funds or REITs, you have all your eggs in one basket. If planning is refused, the local market crashes, or infrastructure plans change, you could lose a significant portion or all of your investment.

This concentration risk makes land investment unsuitable as a primary retirement plan or for investors who cannot afford to lose their capital.

6. No Rental Income

Unlike property investment, land doesn't generate rental income. Your returns depend entirely on capital appreciation, which means you need to be able to hold the land for the long term without needing income from it.

This makes land investment unsuitable for investors seeking regular income. If you need cash flow, consider buy-to-let property, REITs, or other income-producing investments instead.

7. High Entry Costs

While land prices per acre can be lower than property prices, you typically need to buy larger parcels. Additionally, land finance often requires larger deposits (30-50%) compared to residential mortgages, meaning you need significant capital upfront.

You also need to budget for professional fees (solicitors, surveyors, planning consultants), which can add 5-10% to the purchase price.

Land Banking Scams & Regulatory Warnings

What is Land Banking?

Land banking schemes involve companies buying large plots of land, subdividing them into smaller plots, and selling them to investors with promises of high returns once the land is "rezoned" or "fast-tracked" for development. Many of these schemes are fraudulent or operate without proper authorisation.

Red Flags: How to Spot Land Banking Scams

Common red flags for scams or abusive schemes:

• Guaranteed high returns: Promises of guaranteed high returns once land is "rezoned" or "fast-tracked" for development. No investment can guarantee returns, especially land without planning permission.
• Pressure sales tactics: Cold calls, aggressive sales tactics, or pressure to invest quickly without time to think or seek advice.
• Glossy brochures with inflated prices: Small plots sold at hugely inflated prices with promises of future development.
• Being told a solicitor is not needed: Legitimate land purchases always require independent legal advice. If someone tells you not to use a solicitor, or steers you to "panel" lawyers only, this is a major red flag.
• Unrealistic timelines: Promises that planning permission will be secured within a short timeframe, or that the land will be "rezoned" soon.
• Unauthorised firms: Companies promoting collective land schemes that are not authorised by the FCA.
• Lack of transparency: Refusal to provide detailed information about the land, planning status, or how returns will be generated.

FCA Regulation and Protection

Important regulatory information:

• The FCA does not regulate simple land sales between individuals
• The FCA does regulate collective investment schemes, including many land banking schemes
• If you're investing in a pooled or managed land scheme, check if the firm is FCA-authorised using the FCA Register
• Check the FCA's land banking scam guidance and Warning List before investing
• If you've been a victim of a land banking scam, the FCA may be able to help you recover funds

Land Investment Returns: Realistic Expectations

Important: Research shows that average UK property returns have lagged inflation since around 2016, while global equities have performed better. The assumption that "property always wins" is no longer safe. Land investment returns vary significantly and are not guaranteed.

When Buying Land Can Make Sense (For Experienced Investors Only)

Important: Land investment is only suitable for experienced, well-advised investors who can afford the risks. The following scenarios may work for some investors, but all carry significant risks and require professional advice.

1. Edge-of-Settlement Strategic Land

Only for: Experienced investors with planning knowledge and professional advice

Buying edge-of-settlement land where future housing need and infrastructure plans provide a realistic route to planning uplift. This requires extensive research into local development plans, infrastructure projects, and planning policy. Even with research, there's no guarantee of planning permission.

Risks: Planning may be refused even after years of waiting. Infrastructure plans can change. Local opposition can block development. You could lose your entire investment.

2. Land Promotion Strategy

Only for: Investors with significant capital and planning expertise

Adding value by promoting land through the local plan, securing an allocation, and then outline or full planning permission before selling to a housebuilder. This requires professional planning consultants, solicitors, and surveyors, and can take many years.

Risks: High professional fees. No guarantee of success. Can take 10+ years. Cost overruns can wipe out profits. Many plots are now bid up to uneconomic levels.

3. Development Land with Planning Permission

Only for: Investors with significant capital and development expertise

Land with full planning permission offers higher potential returns but is also the most expensive. Prices typically range from £200,000 to over £3 million per acre. However, many development plots are now bid up to levels that can make small sites uneconomic once all costs are factored in.

Risks: Cost overruns, abnormal ground conditions, infrastructure costs, and Section 106/CIL obligations can erode or wipe out profit. Requires development expertise.

4. Agricultural Land (For Estate Planning)

Only for: Long-term investors seeking inheritance tax benefits and capital preservation

Agricultural land offers stable, modest returns (3-5% annual appreciation) and can qualify for inheritance tax reliefs (APR/BPR). It's less volatile than development land but offers lower returns. Only suitable for investors who can afford to hold long-term and don't need income.

Risks: Still subject to market fluctuations. Illiquid. No guarantee of planning permission. Tax reliefs may change.

Land vs Property Investment vs Funds

Important context: Research shows that average UK property returns have lagged inflation since around 2016, while global equities have performed better. The assumption that "property always wins" is no longer safe. For most investors, regulated property investments, REITs, or diversified funds are likely to be more suitable than raw land.

Questions to Ask Before Buying Land

Before investing in land, you must ask these critical questions:

Land Investment Strategy (For Experienced Investors Only)

1. Research Location Thoroughly

Location is the most important factor in land investment. Research local development plans, infrastructure projects, population growth, and planning policy. Areas with planned infrastructure improvements or expanding towns offer the best potential.

2. Understand Planning Policy

Understanding planning policy is crucial for land investment. Review local development plans, understand green belt boundaries, and identify areas likely to be released for development. Consider consulting with a planning consultant for strategic land purchases.

3. Start Small

If you're new to land investment, start with smaller parcels or building plots. This allows you to learn the market without committing too much capital. As you gain experience, you can consider larger investments.

4. Diversify

Don't put all your capital into one land purchase. Consider diversifying across different locations, land types, or combining land with other investments like property or stocks.

5. Long-Term Perspective

Land investment requires a long-term perspective. Don't expect quick returns. Plan to hold land for 10+ years to realize significant appreciation. This makes land unsuitable for investors needing liquidity or regular income.

6. Consider Professional Advice

Land investment can be complex. Consider working with land agents, solicitors, and planning consultants who specialize in land transactions. They can help you identify opportunities, navigate planning processes, and avoid costly mistakes.

Conclusion: Should You Invest in Land?

Land may be suitable for experienced, well-advised investors if:

• You have a long-term investment horizon (10+ years, potentially decades)
• You don't need regular income from your investment
• You have sufficient capital to cover purchase, professional fees, and long-term holding costs
• You understand planning policy and can identify genuinely good locations
• You're seeking portfolio diversification as part of a broader strategy
• You're comfortable with illiquid assets and can afford to lose part or all of your investment
• You have access to professional advice (planning consultants, solicitors, surveyors)
• You can afford to tie up capital for many years without needing it

Land is NOT suitable if:

• You need regular income from your investment (consider buy-to-let or REITs instead)
• You require liquidity or quick access to capital
• You have a short investment timeline
• You don't understand planning policy or land markets
• You can't afford to hold the land long-term or lose your capital
• You're looking for a "safe" investment (land is high-risk and speculative)
• This would be your primary investment or retirement plan (too much concentration risk)
• You're being pressured by salespeople or cold callers (likely a scam)

Ready to explore land investment opportunities? Browse our land for sale listings or read our comprehensive land buying guide to learn more about the land purchase process.