Residential development costs - Help !!!
Discussion
I recently bought a plot of land for slightly over 300k a while ago. Dimension wise its roughly 45 metres x 25 metres.
It has planning permission for 6 apartments, however it seems that due to it actually owning a bit more land (owns access down side), that 8 apartments would be agreed to.
Each apartment would be worth circa £125k (now), so £1 million in total. Maybe 5% more in 6 months when its built.
Each apartment would be approx 65m2 each, so total build area would be approx. 520m2 + staircases, etc. Say 600m2.
Gas & electricity are already on site.
Looking around it seems that apartments cost between £550 - £650 per m2 to build, so that would equate to between £330k & £390k
So........
Land £300k
Build £360k (based on average = £600/m2)
Value on completion £1000k
Profit £340k (less fees, etc)
Seems highly viable, does it not ?
At end of build I would owe bank 660k, which I could then either get a buy to let mortgage if I wanted to keep all the properties, or I could sell 5 & clear the debt, keeping 3 for myself which would all be paid for.
Am I right in thinking that in either of the above instance I would not have to pay CGT as no profit has been made at this stage ?
What do you reckon ?
It has planning permission for 6 apartments, however it seems that due to it actually owning a bit more land (owns access down side), that 8 apartments would be agreed to.
Each apartment would be worth circa £125k (now), so £1 million in total. Maybe 5% more in 6 months when its built.
Each apartment would be approx 65m2 each, so total build area would be approx. 520m2 + staircases, etc. Say 600m2.
Gas & electricity are already on site.
Looking around it seems that apartments cost between £550 - £650 per m2 to build, so that would equate to between £330k & £390k
So........
Land £300k
Build £360k (based on average = £600/m2)
Value on completion £1000k
Profit £340k (less fees, etc)
Seems highly viable, does it not ?
At end of build I would owe bank 660k, which I could then either get a buy to let mortgage if I wanted to keep all the properties, or I could sell 5 & clear the debt, keeping 3 for myself which would all be paid for.
Am I right in thinking that in either of the above instance I would not have to pay CGT as no profit has been made at this stage ?
What do you reckon ?
Not to sure on the CGT part as ive never done it before, why dont you sell all properties though ?
Out of interest, where did you buy this site, as i was looking at a site and was very close to buying it , and every figure you have mentioned is the eaxt same, site price, build cost, 6 apartments with further scope fr 2, sizes etc.
Out of interest, where did you buy this site, as i was looking at a site and was very close to buying it , and every figure you have mentioned is the eaxt same, site price, build cost, 6 apartments with further scope fr 2, sizes etc.
Ah, but surely I get a interest only mortage, say 10 years & the rent from the apartments would pay this.
In 10 years time, hopefully the value of the property has double (to £2 million), at which point I may sell, pay the bank back its £660k, leaving £1.4 mill profit, which would them be subject to 40% CGT, i.e a real profit of £840k. Still ok in my eyes.
In 10 years time, hopefully the value of the property has double (to £2 million), at which point I may sell, pay the bank back its £660k, leaving £1.4 mill profit, which would them be subject to 40% CGT, i.e a real profit of £840k. Still ok in my eyes.
ScottNicol said:
im based in the west cost as well , could possibly be the same site !!
im looking at lots of other development sites in that area as well
where are you based ?
im looking at lots of other development sites in that area as well
where are you based ?
Where was the site you were looking at ?
I suspect its not the same one, but without going into detail what was the current use, ie. empty land, pub, offices, post office, house, etc ?
In all honesty I'm not really looking at present. I was looking for something else when I laid eyes upon this & just thought that it might be worth doing (don't believe in giving other people my money for them to possibly give me it back when I retire).
I'm quite open to anything (legal) if there's money to be made at it. That being house, offices, pubs, etc, etc.
Oh, I also near within 10 miles of the site which makes it more appealing to me as I know the area, prices, etc.
I'm quite open to anything (legal) if there's money to be made at it. That being house, offices, pubs, etc, etc.
Oh, I also near within 10 miles of the site which makes it more appealing to me as I know the area, prices, etc.
Edited by thesilentpartner on Thursday 4th January 13:00
Possibly. As mentioned, this is the first time I've done anything like this so I am sure I'm missing things.
On the other hand though, as a business, am I not allowed to claim relief against interest on loans, ie on the interest-only mortgage ?
On the other hand though, as a business, am I not allowed to claim relief against interest on loans, ie on the interest-only mortgage ?
Edited by thesilentpartner on Thursday 4th January 13:06
Income Tax is chargeable on PROFITS generated from rents. profits are calculated after deducting ALLOWABLE rental costs. This includes the cost of borrowing i.e interest. If a loan is an interset only loan, then the monthly repayments will equate to the monthly interest charge and should be fully allowable.
Losses from rents can only be carried forward for offset against future rental profits.
Losses from rents can only be carried forward for offset against future rental profits.
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