Property development profits
I wrote last week on how now may not be the time to invest in residential property. Based largely on the fact that property prices will not be zooming up any time soon.
However, there is always money to be made out of property even during a stagnant market.
The classic development options available to a landlord are those that allow them to go up into the loft or down into the basement or out at the back or side. Occasionally, you might be able to spot an opportunity to get permission to squeeze an additional dwelling in; however never under estimate the malevolent influence of the town planners!
This brings me neatly to my ongoing dalliances with the arch enemy of all developers – The Planners.
Locked in combat
I have been locked in mortal combat with the planners for nearly 5 years.
I had acquired a couple of masionettes over several years as well as buying in the freehold with an eye to future development of the site when the next door bungalow came up for sale. I couldn’t resist! Despite taking the planning application to appeal; I failed to get permission to knock down the bungalow and replace it with 9 flats.
I then fell to Plan B, getting permission to build a single house between the maisonettes and bungalow, this was also kicked into touch by the Planning Inspectorate. Ouch!
Then came my ‘Federeresque’ fight back, Plan C.
To date I’ve got permission for one flat and permission won at appeal to raise the roof of the two storey building to allow another floor.
Planning Achilles heal
As an ex town planner I know the one thing that the planning system can’t cope with is small incremental permissions. I’ve seen a tiny garden nursery grow into a veritable garden megastore in the Green Belt! How? Well it’s all about patience! If you go for broke then the chances are you will get hit for six by the planners or the planning inspector. Start small and proceed over several years slowly expanding your planning permission and you have much more of a sporting chance of getting the development you want.
I’m aiming to develop land currently used for a garage and take the number of apartments on the site from 2 to 4. If I’m successful I will easily achieve the 15% return on Gross Development Value (GDV) that most developers aim for. Even more importantly for me is that I will ultimately end up with 4 income generating apartments in a very desirable part of Nottingham where development prospects are limited but tenant demand is high.
My advice to landlords in the current market is to urge them to wear both a developers and property investors hat.
In this way you could still generate significant returns out of what has become a very becalmed housing market.
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