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

From an investor’s perspective, real estate fund managers are the professionals with the skill set needed to grow assets that go into real estate development. Ideally, they make the calls it takes to buy land at a low price and resell it at a much higher price – the higher the better.

It is about more than smart and strategic physical development. Key negotiation skills are required from 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 function of negotiating and managing the planning license.

Local planning authorities (LPAs) are critical to the land value appreciation formula. Most work objectively, trying to meet the needs of their constituents with appropriate and manageable growth schedules. But their 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 corresponds to the local planning authorities to have an established development plan, with which the changes of 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 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 – Sadly, only about half of the towns and cities in England and Wales have developed their plans required by the NPPF by mid-2014. Among those that do not, the process necessarily follows what the developers propose to the authorities. Those authorities may reject proposals for various reasons, however it is logical that they are predisposed to a positive review of such proposals due to the critical housing situation. This is where real estate fund managers must be resourceful and convincing in communicating the benefits of the particular development they are proposing.

• Community Participation – The Urban and Rural Planning Association advises that community participation be at the center of planning results. Certainly when there is a well-organized opposition group opposing community development it can be heard and powerful. But experienced land fund professionals should be able to identify shared objectives, and make adaptations and adjustments to development plans, which create alliances within those communities that can at least bring balance to the discussion.

As government agents, planning authorities strive to find consensus while respecting divergent views. Similarly, investment groups work to identify common ground so that development can ultimately move forward.

People considering land as an investment should seek an independent financial adviser to discuss 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. The relative medium-term returns to investments based on land use (18 to 60 months, typically) are part of that consideration.