Property Development
Discussion
Are there any PHers with knowledge in this field?
Basically - I am looking at building some flats. I have an office which is quite big and is set back from the road. Its surrounded by residential flats / houses and thinking about knocking it down and building say 4 /6 flats.
If possible this would be great the only problem is I havent a clue where to start! The first thing would be to change the usage from business to residential ? The building is quite old so would probably need to be knocked down.
I know each case is different but is it really really difficult to do this? Would it be better to change the usage and sell to one of the developers?
Have been thinking about doing this for some years - now maybe I should start putting things in place? Is it correct that if they sat no you cannot re-apply for 7 years or so????
Any advice greatfully received!!
Basically - I am looking at building some flats. I have an office which is quite big and is set back from the road. Its surrounded by residential flats / houses and thinking about knocking it down and building say 4 /6 flats.
If possible this would be great the only problem is I havent a clue where to start! The first thing would be to change the usage from business to residential ? The building is quite old so would probably need to be knocked down.
I know each case is different but is it really really difficult to do this? Would it be better to change the usage and sell to one of the developers?
Have been thinking about doing this for some years - now maybe I should start putting things in place? Is it correct that if they sat no you cannot re-apply for 7 years or so????
Any advice greatfully received!!
First thing to do is have a chat with a local architect. They should have good local knowledge and tell you what you will get away with at planning. Meet with a few until you get one that you like and feel is on your wavelength. Commission them to design it, submit plans and away you go.
Initially, I'd ring or visit the local planning dept at the council and informally ask them for any thoughts or advice on the likelyhood of getting approval.
Then, assuming that the advice is favourable, you have to decide if you would prefer to develop it yourself or sell it to someone else to develop.
If you decide to sell it on, a plot should be more 'attractive' if sold with planning permission already gained and so you could then talk to a designer once you know what the planning office might go along with.
Good luck!
One other thought. If you already have offices there, it should be designated as a brownfield site, which is usually more likely to gain planning permission for residential purposes, if already in a residential area.
Then, assuming that the advice is favourable, you have to decide if you would prefer to develop it yourself or sell it to someone else to develop.
If you decide to sell it on, a plot should be more 'attractive' if sold with planning permission already gained and so you could then talk to a designer once you know what the planning office might go along with.
Good luck!
One other thought. If you already have offices there, it should be designated as a brownfield site, which is usually more likely to gain planning permission for residential purposes, if already in a residential area.
Edited by Davel on Monday 19th June 14:19
I've been acting for developers for nearly 20 years and there is so much you need to know to avoid the pitfalls that watching someone take it on without a bit of experience is actually quite scary but as long as you do your research it is possible to turn a tidy profit.
If I simply trotted out all of the braindead mistakes I have seen clients make over the years it would probably put you off but that isn't the intention. From what you say it sounds like a cracking little project but, as with any business venture, there are risks.
I could write a book (and maybe should) on what steps to take but if you are serious then you need to deal with this as methodically and thoroughly as you can.
Starting point - are you actually going to develop or just get the planning and design sorted out and then sell. If you develop then you can make more profit but run more risk. If you get the planning right then you should be able to sell on to a developer without much outlay and with minimal risk - albeit making less money.
You could even team up with a developer to get them to bring in some expertise as to what the market will stand and hence how to maximise value. Upside is that you run virtually no risk, downside is that someone who really knows the ropes could get one over on you.
Title - are there any restrictive covenants that would prevent residential use
History - is there any reason why the site should not be used for residential development, especially contamination. A search with Sitecheck is relatively cheap and will tell you if there is any obvious problem such a previously contaminative use. Heaven help you if it used to be a petrol station!
Overview - what is your market? Owner/occupiers or buy to let (maybe even run them as an investment yourself?). The difference between the two is quite marked in terms of specification - noticeably higher spec for homebuyers rather than investors.
Planning permission - can you get it? If the site is designated for employment then the local planning authority are not going to be keen to see it changed to residential. Is there enough space for the parking spaces you will need? How many units are you going to have and what size; one, two or three bed? How do you maxmise value?
Construction - should you demolish or refurb? There are complex rules on VAT in connection with office to resi conversion and you should talk things over with your accountant to see if the numbers work better one way than the other.
Cost control - BIGGEST issue, how do you stop costs running away and finding that your GRQ scheme becomes a money pit? Paying an architect to supervise is expensive (standard rate is 15% of the contract value plus VAT) but if you try to do it yourself you really need to know how the building is going together to avoid finding that the drains don't meet up or that corners are being cut on quality. Relying on the local authority to inspect for building regulation purposes is not enough. One of my clients turned up on site to find that some numpties had built a garage with no door, just four walls of brick.
NHBC - ever heard of it? If not then take heed, it's essential if you are going to sell. If this means nothing to you then it shows how the "unknown unknowns" can cause problems. It is the National House Building Council and provides a guarantee on the building - at the developer's expense. It also provides protection for the deposit. Without NHBC cover (or a similar product from Zurich) no mortgage lender will touch it.
I am based in SE London and work in the west end so if you want someone to work off as a sounding board just email me off line and I will happily chip in my six penn'orth.
Good luck with the project - it sounds like a it could be a fantastic opportunity.
If I simply trotted out all of the braindead mistakes I have seen clients make over the years it would probably put you off but that isn't the intention. From what you say it sounds like a cracking little project but, as with any business venture, there are risks.
I could write a book (and maybe should) on what steps to take but if you are serious then you need to deal with this as methodically and thoroughly as you can.
Starting point - are you actually going to develop or just get the planning and design sorted out and then sell. If you develop then you can make more profit but run more risk. If you get the planning right then you should be able to sell on to a developer without much outlay and with minimal risk - albeit making less money.
You could even team up with a developer to get them to bring in some expertise as to what the market will stand and hence how to maximise value. Upside is that you run virtually no risk, downside is that someone who really knows the ropes could get one over on you.
Title - are there any restrictive covenants that would prevent residential use
History - is there any reason why the site should not be used for residential development, especially contamination. A search with Sitecheck is relatively cheap and will tell you if there is any obvious problem such a previously contaminative use. Heaven help you if it used to be a petrol station!
Overview - what is your market? Owner/occupiers or buy to let (maybe even run them as an investment yourself?). The difference between the two is quite marked in terms of specification - noticeably higher spec for homebuyers rather than investors.
Planning permission - can you get it? If the site is designated for employment then the local planning authority are not going to be keen to see it changed to residential. Is there enough space for the parking spaces you will need? How many units are you going to have and what size; one, two or three bed? How do you maxmise value?
Construction - should you demolish or refurb? There are complex rules on VAT in connection with office to resi conversion and you should talk things over with your accountant to see if the numbers work better one way than the other.
Cost control - BIGGEST issue, how do you stop costs running away and finding that your GRQ scheme becomes a money pit? Paying an architect to supervise is expensive (standard rate is 15% of the contract value plus VAT) but if you try to do it yourself you really need to know how the building is going together to avoid finding that the drains don't meet up or that corners are being cut on quality. Relying on the local authority to inspect for building regulation purposes is not enough. One of my clients turned up on site to find that some numpties had built a garage with no door, just four walls of brick.
NHBC - ever heard of it? If not then take heed, it's essential if you are going to sell. If this means nothing to you then it shows how the "unknown unknowns" can cause problems. It is the National House Building Council and provides a guarantee on the building - at the developer's expense. It also provides protection for the deposit. Without NHBC cover (or a similar product from Zurich) no mortgage lender will touch it.
I am based in SE London and work in the west end so if you want someone to work off as a sounding board just email me off line and I will happily chip in my six penn'orth.
Good luck with the project - it sounds like a it could be a fantastic opportunity.
Thanks billsnemesis,
Some great advice, bricking up a garage door
Ok I have many things to think about now. I am mainly waiting for my friend to reccomend the guy who works for the council (building and planning) So untill then - maybe thursday, this advice is great.
What's the deal with parking? is it half a space per property now? I know the criteria changes quite often?!?
Anyway,
Some info on the plot...
We have just had it valued (well beginning of this year) and the building as it stands including parking would be puton the market for around 250k the estate agent saying the property is worth 210k - 230k.
The buiding comprises of ...
Ground Floor 1139ft squared
First Floor 994ft squared
External 1553 ft squared (mainly parking)
What would be possible to fit in this area? I need to vist some estate agents to find out what is needed in the area - 1 bed? 2 bed? etc.
The plot is a 20 second!!! walk from the Central Line and also has many bus stops outside.
Also - icing on the cake , there is an unused peice of land right next to us . It is about 1500 ft squared - if we purchased this bit of land this would give us a great size plot.
Where do I go to find out about it and also how would I approached the owner?
Sam
Some great advice, bricking up a garage door
Ok I have many things to think about now. I am mainly waiting for my friend to reccomend the guy who works for the council (building and planning) So untill then - maybe thursday, this advice is great.
What's the deal with parking? is it half a space per property now? I know the criteria changes quite often?!?
Anyway,
Some info on the plot...
We have just had it valued (well beginning of this year) and the building as it stands including parking would be puton the market for around 250k the estate agent saying the property is worth 210k - 230k.
The buiding comprises of ...
Ground Floor 1139ft squared
First Floor 994ft squared
External 1553 ft squared (mainly parking)
What would be possible to fit in this area? I need to vist some estate agents to find out what is needed in the area - 1 bed? 2 bed? etc.
The plot is a 20 second!!! walk from the Central Line and also has many bus stops outside.
Also - icing on the cake , there is an unused peice of land right next to us . It is about 1500 ft squared - if we purchased this bit of land this would give us a great size plot.
Where do I go to find out about it and also how would I approached the owner?
Sam
Edited by sam_r on Tuesday 20th June 12:04
Average sizes for flats area 450-500 square feet for one bed, 750-800 for two bed. You may see ones below that but they would feel cramped. Anything bigger is super generous.
As you have a little over 2000 square feet already you should be able to get four one bed flats in it although internal configuration may make that awkward. If you could extend the building or replace it with something bigger then you could be looking at four two beds or maybe more. My instinct would be to try for the two bed layout if possible as that is the vanilla standard for buy to let and maximises your market appeal
Without seeing the physical condition of the property or the configuration it seems like an aquisition value of £249k (to keep stamp duty at 1%), conversion costs of about £50k per flat and about another £50k in legals, finance, sales and architects and you should be able to pocket a couple of hundred grand.
Sweet.
Parking varies from area to area. Some new developments in our area work on 0.6 spaces per dwelling so you get fewer parking spaces than flats. It's to encourage use of public transport apparently.
The fact that it is so close to a tube station is a godsend. Generally you look at a 10% premium over anything more than a ten minute walk away. It's a steep price gradient but should get you a top price for the area
If you want to find out who owns the plot next door you need to go to the Land Registry web site www.landreg.gov.uk and get the "search of the public index map" form, designated "SIM". Send that off with a scale plan showing the plot.
You need to find the right district registry for your area and this is on the Land Registry web page under "Customer Service" and "List of areas". That will tell you which office you need and "List of offices" from the same Customer Service menu will get you the address. Don't worry about the DX reference, just use the postal address.
Ideally you need a plan at 1:1250 scale and should be able to get an A4 OS plan at this scale for about a tenner. Google "OS Superplan" for a shop in your area. I use Stanfords on Acre Lane as it is easy for me to get to in central London but there are other places that offer the facility. The superplan gets you a selected area with the property you want right in the middle. The A4 versions are ideal for these kinds of searches
The search for details of the titles shouldn't cost you anything as it is free provided there are fewer than 10 registered titles on the search.
When you get the search result back it will give you a title number (something like EGL123456). You then go back to the Land Registry web page for form 109, fill in the details and send it off to the same Land Registry. The cost is usually £4 for the registered entries (which will tell you who owns the property along with some other technical information) and another £4 for the Title Plan which will show you the extent of the title. This applies to each title so if there is more than one you have to pay the same amount again for each title.
If there are freehold and leasehold titles then you should get them all as buying the land for development will mean you need to clear off all of the leasehold titles before you build.
As an aside, and for general consumption, if anyone reads all of that and wonders what their solicitor is actually doing when you buy a house just think that all of that is just to find out who owns the land. I have a title at the moment with 27 pages of information on covenants, easements, rights, restrictions, can do's, can't do's and ain't never dids. And I do this every single bloooooody day...
Glad I got that off my chest
As you have a little over 2000 square feet already you should be able to get four one bed flats in it although internal configuration may make that awkward. If you could extend the building or replace it with something bigger then you could be looking at four two beds or maybe more. My instinct would be to try for the two bed layout if possible as that is the vanilla standard for buy to let and maximises your market appeal
Without seeing the physical condition of the property or the configuration it seems like an aquisition value of £249k (to keep stamp duty at 1%), conversion costs of about £50k per flat and about another £50k in legals, finance, sales and architects and you should be able to pocket a couple of hundred grand.
Sweet.
Parking varies from area to area. Some new developments in our area work on 0.6 spaces per dwelling so you get fewer parking spaces than flats. It's to encourage use of public transport apparently.
The fact that it is so close to a tube station is a godsend. Generally you look at a 10% premium over anything more than a ten minute walk away. It's a steep price gradient but should get you a top price for the area
If you want to find out who owns the plot next door you need to go to the Land Registry web site www.landreg.gov.uk and get the "search of the public index map" form, designated "SIM". Send that off with a scale plan showing the plot.
You need to find the right district registry for your area and this is on the Land Registry web page under "Customer Service" and "List of areas". That will tell you which office you need and "List of offices" from the same Customer Service menu will get you the address. Don't worry about the DX reference, just use the postal address.
Ideally you need a plan at 1:1250 scale and should be able to get an A4 OS plan at this scale for about a tenner. Google "OS Superplan" for a shop in your area. I use Stanfords on Acre Lane as it is easy for me to get to in central London but there are other places that offer the facility. The superplan gets you a selected area with the property you want right in the middle. The A4 versions are ideal for these kinds of searches
The search for details of the titles shouldn't cost you anything as it is free provided there are fewer than 10 registered titles on the search.
When you get the search result back it will give you a title number (something like EGL123456). You then go back to the Land Registry web page for form 109, fill in the details and send it off to the same Land Registry. The cost is usually £4 for the registered entries (which will tell you who owns the property along with some other technical information) and another £4 for the Title Plan which will show you the extent of the title. This applies to each title so if there is more than one you have to pay the same amount again for each title.
If there are freehold and leasehold titles then you should get them all as buying the land for development will mean you need to clear off all of the leasehold titles before you build.
As an aside, and for general consumption, if anyone reads all of that and wonders what their solicitor is actually doing when you buy a house just think that all of that is just to find out who owns the land. I have a title at the moment with 27 pages of information on covenants, easements, rights, restrictions, can do's, can't do's and ain't never dids. And I do this every single bloooooody day...
Glad I got that off my chest
Thanks for the reply Bill,
Have done the land search - just waiting for them to get back to me.
With regards to buying the land / approaching the owner, I think I'll just say its for extra parking at the office? Is this the done thing?
I have also applied for change of useage, just got the forms to fill in. (I think they want drawings though?)
Rich - I sent you a message - let me know if you didnt receive.
Sam
Have done the land search - just waiting for them to get back to me.
With regards to buying the land / approaching the owner, I think I'll just say its for extra parking at the office? Is this the done thing?
I have also applied for change of useage, just got the forms to fill in. (I think they want drawings though?)
Rich - I sent you a message - let me know if you didnt receive.
Sam
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