30 May, 2007

Buy The Farm And Keep The View

I live in a city of about two million people that is growing at the rate of 1,500 people per week. Our here in the outer suburbs, the growth rate is faster than the average and this can be seen in the very large housing estates that are being built all around this area and the way that arterial roads between here and the CBD, which used to be clear ten years ago, are now slow-moving traffic jams at almost all times of the day. Of course, people like me live out here to be away from the high-density housing, the noise of traffic, and the misery of too many neighbours. Also for the views across open farmland which I now enjoy.

Unfortunately, the farmer opposite has sold part of his farm to a developer and there is a new housing estate being built a little way up the river from me. It won't spoil the views much but it is bound to increase the noise levels and wreck the peace of the place. I don't mind it too much (although we'll probably sell up and move on sooner or later) and you've got to put 1,500 people a week somewhere. You can't blame the farer either. The piece of land he's sold (maybe a third of his farm) will probably end up with 400 houses on it and, at local land prices, I reckon he must have got $4 million for it. It's just too tempting for a struggling farmer to resist. But it did start me wondering if there might not be a better way.

I would guess that there could be 20 houses whose views will be spoilt by this new estate and probably all of them will suffer a significant drop in the values of their own homes. (They'll also have to suffer at least 400 more cars on the road to the city each morning.) So what if they had bought the land from the farmer instead?

They would each have needed to raise a mortgage of $200,000 to equal the developer's offer and that might seem a bit too steep for some (although I'd say the folk around here are good for it – and, God knows, land in Brisbane is a very good investment, as you can imagine.) But what if they only had to raise, say, a quarter of that, or a tenth even, to keep the farmer happy? An infusion of about half a million into the farmer's bank account might be all he really needed – especially if he still retains a controlling interest in the land and the right to continue to farm it – while costing the 20 home-owners just $25,000 each. In fact, through a series of deals like this over the next couple of decades, the people surrounding the farm could end up owning it, the farmer could still end up farming it, and the views would be preserved. Or, if the farmer decides to take the money and run, they'd end up owning a farm they could let to tenants, or leave to go wild, or convert into a local, private leisure amenity.

Why has no-one put together the legal and financial packaging for this kind of deal? Are there any lawyers or bankers out there who want to start a business in setting up neighbourhood open land preservation deals? It could be a winner.

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