Written by Toby fancied trying his hand at some property development. Primarily, he was enthralled by the idea of finding a small plot and building a couple of houses on it. But how to go about it?
He had carried out developments of sorts in the past in the form of a refurbishment of some buy to let properties. That had stretched his project management skills to the full and he had learned a lot about council regulations and red tape into the bargain. But building from scratch; that was something else. How does one actually go about such a venture?
The first task is actually identifying candidate sites. There are several ways to approach it. One way is to drive to an area of interest and then walk around and look for gaps between people’s homes. Driveways. Garages. Blocks of garages. Wasteland. Builder’s yards. Car parks. Areas of grass verge.
You can also cultivate relationships with local estate agents and persuade them to keep you abreast of any whispers they hear. Alternatively, look on the local authority website for anything being sold off. Auctions are, of course, another avenue and connected to this is websites that can supply you with alerts over plots of land becoming available, like onthemarket.com.
Toby actually took a proactive approach and produced a standard letter template that he would tweak for a given location and deliver to the owners or potential owners, enquiring whether they would be willing to sell. Sometimes delivered through a letterbox. On occasion affixed say to a garage door in a polythene, water proof envelope. Part of his “want to sell” kit, residing in the boot of his car.
Once you’ve identified an actual physical possibility, you need to determine whether it is something worth pursuing. There are several issues here:
1. Is the site easily accessible? That is, does it have road access? Can you get a vehicle to it and, on top of that, can all the necessary services be connected up to any potential build without having to get rights to cross someone else’s property?
2. Is the whole plot available and owned by the same parties or are you dealing with several title deeds? This becomes relevant when you try to buy a block of garages for instance where each one is connected to given homes.
3. How high can you go? Will a two storey building affect any neighbouring property’s privacy? If you can only remain at one storey, is a bungalow sufficient for what you want in development space?
4. Is the plot in a conservation area? A council will have rules about what can be built, how it blends in and how big it can be. On top of this, you will have a higher number of conservation-minded locals ready to oppose your proposals for the site.
5. Are there any large trees on the site? If so, are there any tree preservation orders in place? Toby had actually visited a site where there were some large trees present where two had clearly been removed without council consent before the land was put up for sale. The uncertainty of the situation actually caused him to pull out of the auction for the site.
6. Has any type of planning permission been previously requested? This can be found on the local authority website. Speaking informally to a planning officer has its merits too. If planning has been declined in the recent past then that is a bit of a red flag.
7. Can you make a decent profit on the venture? There is a rule of thumb here that operates amongst developers. For a venture to be worthwhile, the sale price you can achieve on anything you build should be 50% higher than the total of cost of land, planning fees and the actual cost of constructing the building. With this, you need to keep in mind a rough idea of the cost of building a house in a given region and how much properties sell for at the site you have identified. There is no point spending £200k on a plot and £300k putting
up a dwelling when the natural ceiling on prices in that street is £500k.