Landbank

Land banking is the practice of aggregating parcels of land for future sale or development. While in many countries land banking may refer to various private real estate investment schemes, in the United States it refers to the establishment of quasi-governmental county or municipal authorities tasked with managing an inventory of surplus land. 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.^[1]

Definition

Land banks are quasi-governmental entities created by counties or municipalities to effectively manage and repurpose an inventory of underused, abandoned, or foreclosed property. They are often chartered to have powers that enable them to accomplish these goals in ways that existing government agencies can not. While the land bank "model" has gained broad support and has been implemented in a number of cities, it is implemented differently so as to best address the needs of the municipality, the state and the local legal context in which it was created.^[1]

History

Land banking originated in the 1920s and 1930s as a means of making low-priced land available for housing and ensuring orderly development. 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.^[1]

United Kingdom

Land banking developed in the late 17th Century in the British Isles and was previously the preserve of the landed gentry or real estate developers such as Nicholas Barbon. Many reputable commercial building companies engage successfully in land banking for future building projects. Companies also purchase land sites and easily divide them into smaller plots, then offer these plots for sale to individual investors.^[1]

Australia

In December 2008, during the Great Recession, the Foreign Investment Review Board (FIRB) relaxed laws regarding foreign investment in Australian real estate. Under previous legislation temporary residents were only allowed to purchase a property for Principal Place of Residence purposes valued at up to $300,000. Under new laws active since February 2009, this monetary limit has been removed.^[1]

Agricultural land banking

While most land banking is based on the prospect of urban areas expanding at the expense of rural areas, agricultural land is expanding at the expense of virgin land in various parts of the world. Agricultural land banking involves purchasing virgin land that has been identified as suitable for agriculture because of its climate, topography, and soil properties, where the buyer has no intention of working the land himself or leasing it out.^[1]