Land banking
In some cases the practice is run as a scam, with land being sold above its market value and its potential for future returns exaggerated.
Land banks are quasi-governmental entities created by counties or municipalities to effectively manage and repurpose an inventory of underused, abandoned, or foreclosed property.
[2] The period of deindustrialization in the United States coupled with increased suburbanization in the middle of the 20th century left many American cities with large amounts of vacant and blighted industrial, residential, and commercial property.
Beginning in the early 1970s, municipalities began to seek solutions to manage decline or spur revitalization in once prosperous city neighborhoods.
Some companies now offer UK land plots from locations such as Dubai or Singapore where the local authorities do not regulate such activities, or are not aware of the high risk nature of the investment.
A company representative may contact an individual by telephone, in temporary shopping center booths, or at property shows and offer a strategic land investment in the UK.
The investor may end up paying a considerable amount of money for a small area of low-value land which has a very high risk of standing undeveloped.
For customers that show a willingness to purchase such schemes, there may also be attempts to sell additional plot based land banking products at alternate locations, or other high yield investment programmes.
A You and Yours documentary, first aired on BBC Radio 4 in December 2006,[10] criticized the services offered by many land banking companies in the United Kingdom, suggesting that they were scamming their customers.
Many land banking companies target victims outside of the United Kingdom, particularly in Canada, Singapore, Thailand, Brunei and Malaysia.
[13] MP David Heath requested a debate in the House of Commons following the offering of 209 plots in the village of Dean, saying that "while land banking may not be illegal it is undoubtedly a scam".
Land Registry Head of Corporate Legal Services Mike Westcott Rudd said that the public were being "misled about the prospects of obtaining planning permission", with well-known banks and developers being falsely cited as partners in the project, and that in some cases forged Land Registry paperwork was being presented to suggest that planning approval existed where it did not.
As a result of the significant controversy and media coverage land banking received, many directors and officials of companies involved were prosecuted and handed custodial sentences by the courts.
[16][citation needed] In 2011 New York State passed a land bank statute authorizing the establishment of nonprofits in each county to take title to vacant abandoned homes so they can be rehabilitated, sold or demolished in an orderly fashion.
[17] The recent robo-signing settlement gave Attorney General Eric Schneiderman the wherewithal to fund land banks in Schenectady and Albany.
People such as Bob Hope and Donald Trump have reaped tremendous rewards from buying large areas and holding the property until the market commanded a considerable return when sold.
The development of Disney World and the attraction it received was the sales tool to persuade individuals to buy one acre lots at high speculative prices.
In March 2010, the Reserve Bank of Australia governor announced that it is monitoring the effect of the rule change on the housing market.
[20] On April 24, 2010, Assistant Treasurer Senator Nick Sherry announced the tightening of foreign investment laws as a result of a public backlash to the changes made a year earlier.
It is possible for foreign individuals to create a registered company for the sole purpose of purchasing property in Australia and actively bypass the loophole fix.
Typical countries for such investments during recent years have been Argentina, Brazil, Uruguay, Paraguay[23] where land prices appreciated accordingly.
