When it comes to property development there are all manner of risks that you will face along your path to eventual success. It’s likely that you’re wary of most of the obvious risks involved but it’s good to refresh yourself on them every now and then.
From floods to finances you can eliminate risk from your property development if you do your research, here are a few to look out for and how to prevent them.
Getting your planning right
Planning permission can be stressful and the construction industry is renowned for failing to meet deadlines, due to problems arising later in the development when planning permission has not been obtained correctly. Permitted development rights are essentially rights to make certain changes to a building without the need to apply for planning permission. However, you will need planning permission if you want to build something new or make a major change to the property.
However, it is not always that straightforward because in some areas, permitted development is restricted due to being in conservation areas, a National Park, an Area of Outstanding Natural Beauty or the Norfolk or Suffolk Broads. Here, you will still be able to make changes but your local planning authority will want to know about it first. It’s the local planning authority that you need to look out for; it’s best to keep them on your side from the beginning and keep them up-to-date with your plans, especially if they change along the way.
The local planning authority can suspend permitted development rights in their area as long as they have clear justification. And, clear justification can be just about anything from protecting local amenities to the ‘wellbeing of the area.’ If you’re still confused by the planning permission legislations, take inspiration from someone who has been there and done it, such as Jason Harris at First Urban.
The next risks you’ve got to look out for are the structural risk that may come with your property development. Things like flooding, busy roads and subsidence are best avoided even if it means slightly increasing your budget. If you’re second-guessing whether to buy a property, chances are so will the buyers you want to eventually buy it from you. Avoid purchasing a problem in the first place and if you aren’t sure then get a surveyor in to scope the property out.
However, to make money in property development you want to buy low and sell high, so expect to have to do some work to in order to sell for a profit. Here, the risk is that you’ll be using a builder who is charging you too much for the work required so make sure you find builders and any other contractors who you can trust. Just knowing the difference between development and a re-build project before you hand over any cash.
Ensuring you are risk free also ensures the money coming into your development business is not taken away when something goes wrong. The biggest property developers have plans in place and this is why many of them are worth millions of pounds. You can look into property development businesses and their progress on Duedil, to give you an idea of how your business could look in the future once risk is removed.