Many property investors, property developers or speculators are often looking for cheap or bargain properties most professional developers usually purchase off market. This is usually through property traders or from property auctions. Property auctions have changed dramatically in the last fifteen years with people from all over the country and world having access to online property auction listings. Many novice property developers and investors believe that it is simply a matter of chancing your arm at the auction buying a cheap property and then finding a good builder to get it back up to standard. However it is better to get your builder involved before you buy, they can often spot problems that you may miss and could potentially save you thousands of pounds. One thing to consider is that if you had a property with a serious structural or other defect and you wanted to mask the issue you would probably look to off loading a problem property through the property auctions. So be aware that less honest vendors may pass their problem properties onto you. So before you buy set a realistic budget for all the various trades and work that may be required to your auction property. A quick look at the type and age of the consumer unit (fuse box) can give you an indication of if the property may require a re-wire. There are some items that may seem a luxury but dependant on the area can be a good investment. Things like reinstating original period features or altering load bearing walls to open up smaller reception rooms to suit more modern family living styles. It is also important that you do not miss out items like outside space as this could put off drive by viewers and will affect the look of online details. You will find that many builders have worked on auction properties before and will be able to advise on what has worked well for other property speculators and developers.
Home owners are often looking to add a bedroom or master suite and often with houses or bungalows that have large loft spaces a loft conversion is the answer. Loft conversions vary in cost and complexity dependant on the size, specification, layout and design of the existing construction. With more modern properties the roof structure is often constructed using roof trusses rather than the traditional stick built method of purlins and larger rafters. This means that members of the roof trusses are often in the way of living space and need to be removed to make the loft space useable and ready to be converted into a loft room. However when the roof trusses are altered or sections removed this can affect the structural integrity of the roof and this can be potentially dangerous and costly to repair if not done correctly. So your building contractor or architect will need to employ the services of a structural engineer to make sure that the new design conforms to part A of the UK building regulations and is safe. The alterations can be made if the existing structure is upgraded this is usually done by adding additional timber and steel supports usually in the form of steel beams or RSJ’s as they are more commonly know. These are often used to support the new floor joists and upgrade the roof structure once sections of the roof trusses have been removed. These new steels transfer the weight or loads from the new floor and roof structure down onto existing load bearing walls. It is important to select a building contractor who has experience in working with structural steels and carrying out more complex projects as the positions of these steels is critical to the structural integrity of the roof. This is particularly important if you currently have a trussed roof and you are installing ridge or cranked beams to carry the loads that have been transferred from the trusses that have been altered or removed.
The property market may have been in the doldrums for the last couple of years with the number of new build properties and transaction volumes languishing at historic lows but many potential buyers are still out there. Many have become feed up of waiting for signs of a housing market recovery and with no signs of prices falling are choosing 2013 as the year they step on the property ladder. So are there still bargain properties to be had? Well the answer is yes but as with most bargains there is usually a catch, and in the case of cheap properties it is usually either the area is less desirable not much can be done about this. Or the property requires some form of a renovation, repair or improvement project it is important that you get an idea of what sort of costs are involved in these works prior to you buying the property. The other issue is that especially in the current climate mortgage companies are becoming far pickier about the type of remedial repairs that will affect a property’s mortgagibility. So ideally get a good local building contractor around before you buy to give you some indication of the costs that will be incurred in bringing the property back up to standard. They also have the experience to know where to look and what problems are associated with that type of property. For instance a good local builder will know that certain streets suffer from poor foundations or issues with the concrete floor slabs. This costs nothing and could save you thousands of pounds so take the time to check your bargain property has not got expensive building works that you may have missed.
Many home owner look at doing a loft conversion but some properties are less suited to a loft conversion than others. This can often be the case with some bungalows either the pitch is simply to shallow or the ridge of the roof is too low. Even if you can stand up in your loft and the head height is a little tight with the addition of loft insulation bringing the ceilings down and an increase in the thickness of the floor joists it can still be unachievable to convert the loft. However it can still be the best value project for that property so what is the answer? You need to raise the roof this can be done by simply taking the roof off and replacing it with a roof with a stepper pitch and an increased ridge height and therefore more standing room. Or staying with the same pitch and increasing the wall heights to move the whole structure up and give more height or a combination of the two. This usually gives rise to the need for structural steels in the ridge to give the roof more strength and allow for the removal of trusses or other supporting timbers or masonry columns. It will also be likely that you will require steels in to support the new floor structure. This has the advantage of reducing the spans that the floor joists have to make meaning that their depth can be reduced and this again helps with head height. It also makes it easier to get workable stairs and there are various building regulations relating to the depths of the stair risers and the length of stair treads. It is also important to maintain the stairwell ceiling height which is made easier to achieve when these works have been included in the conversion. This does mean more materials and extra work and labour charges but can be well worth while in certain properties particularly those that are set in areas that has high re-sale prices. If you can turn a standard small three bedroom bungalow into a two story house the value of the property can increases dramatically. With all the space down stairs now being able to be utilised as living space you get the added bonus of a large property down stairs. Although this type of building project is too ambitious for most home owners done by the right building contractor they create some amazing houses that command a premium price.
When modernising a house it is important that you do not cut corners on some of the essential items that can have been half done in the past. Items like drains, roofs and electrics are often bodged up or added to without due care and attention. So take the time to check these items carefully before you set a modernisation or renovation budget. When checking the roof do not miss items like the re pointing of chimney stacks or the lead flashing around chimneys, take some time to check the performance of the gutters during heavy rain. With drains the best way to check these items is to have a professional company carry out a CCTV drainage survey. These are usually less than two hundred pounds and could save you thousands in the long run as a leaking drain can undermine the foundations of a property. With the electrical installation make sure you get a qualified electrician to carry out a periodic inspection and provide you with a full report and recommendations. For properties that are in a worse conditions or show tell tale signs like cracking get a structural report carried out by a structural engineer. It is also a good idea to get a few quotations from good building contractors use their different experiences and opinions to suggest any further defects that may require attention. Also a common mistake is to forget a budget for external works this is less of an issue if you are developing the property for your own use. If you are developing and modernising the house for resale or to let out you will need some budget for external works. This might simply be patch pointing or some landscaping but these items soon add an additional strain to renovation budgets. The challenge is how much to spend on the survey works prior to purchasing the property. If it is your first project or you are a novice developer at least get a friendly building contractor to give you some advice on the estimated refurbishment costs. If you are buying at auction don’t get too caught up in the moment and run out of time to check important details prior to purchase. There will always be other properties that can be both profitable and rewarding so take your time to avoid buyer’s remorse.
Building projects vary in size and complexity but they all require a certain level of planning and with larger more complex building projects require the input of various building professionals. You may need a structural engineer these are the people who calculate what will and will not stand up. They often advise on simple beams or RSJ’s for small home extensions through to complex solutions for large individual commercial developments. You may also need the assistance of a surveyor, these are the least understood by the general public. This is partly due to the many different disciplines of surveyors, they tend to specialise as quantity surveyors, building surveyors, conservation surveyors, and general or commercial surveyors. Quantity surveyors deal with costs they are the accountants of the building world controlling costs through cost reporting, bills of quantities, etc. Building surveyors tend to deal more in project management and restorations and building defects although there is always a great deal of cross over between the two. Then conservations surveyors will basically do the same but deal primarily with period and listed property. General and commercial surveyors tend to deal more in the sales and letting or properties but again will run building projects for existing clients. Then there are the architects who will carry out all of the above works but only on a small scale. They will also run planning and building regulations applications although they may chose to employ a planning consultant to assist with more complex applications. The key is to keep professional fees to a minimum without cutting corners and making false economies. After years of experience in the building industry you see many cases of when projects have gone wrong and ended unfinished and in court due to poor planning or clients cutting corners. A good building contractor will spot clients who are inexperienced and have cut corners and avoid these projects knowing that they always create challenges. Novice developers have been known to “get structural calculations done for just a few hundred pounds”, this has cost thousands when the projects has the roof off because the local building control department will not let the contractor build the roof as they are not satisfied that the structural calculations prove the structure works. So take some time to find good local professionals who can assist you and advise you and this will be money well spent.
There are three main cost considerations when you carry out any type of property development from refurbing a small terrace house through to a multi million pound housing estate. The first is the acquisition costs, this is the price you pay for the land or property. The second is the build or construction costs this could be a simple refurbishment budget though to a full construction cost contract. The third is the GDV this stands for gross development value this is the end sale or sale price of the finished project. If any of these figures are incorrect the profit can quickly slip away, the most common mistakes of novice developers is to overestimate the sales prices and underestimate the build costs. If you are buying at auction or even on the open market if you are working on unrealistic sales figures or optimistic build costs your sums will allow you to pay over the odds for the property or development site as other more seasoned developers have been more conservative on sales and have allowed a contingency for the build costs. So the best thing to do is start with a small simple development like a two bedroom terrace house and even if you cannot sell for your desired asking price you can rent the property for a rent that will hopefully cover costs. I have never seen a first time developer buy a large project and it go well, there must be some but particularly when the market is not rising even those with experience can get caught out. In fact many developers have looked at finance costs and availability coupled with challenging sales conditions and have simple decided to shut up shop until they see the market start to move upwards. With this said those that have cash on the hip can get some good bargains with the number of depressed and bank owner land sales. So make sure you buy wisely in areas where you can resell easily and quickly. Get a few quotes from contractors before you commit and do not be lead too much by the estimated GDV or sales figures that the agent who is selling the potential development quotes.
It is now possible to obtain a buy to let rate at 2.44 percent over the Bank of England base rate, this comes from Crystal Mortgages who specialise in independent commercial finance. They report that from just last year they have loaned £25million pounds to buy to let investors and property investment companies. The company offers up to 80 percent loan to value products. Many investors are keen to buy properties as they can still buy at discounted rates. With many choosing to buy and renovate properties at auction. There are companies that purely focus on purchasing and refurbishing then selling onto property investors a readymade income stream. Many busy property investors are looking at buying readymade investment properties or even ready made property investment portfolios. These can of course be used to supplement income streams for retirements or as a safe guarded regular income. The key to the refurbishment is setting realistic budgets and spending the money wisely. If your building works is not going to increase rent or letability there is no reason to add the spend. Refurbishment companies that specialise in refurbishing investment properties know how and where to spend the refurbishment budget for maximum effect. Choosing cost effective but durable design items that will stand the test of time and tenants.
In planning terms the Amber Valley forms part of the Derby Housing Market Areas, along with other parts of the region being Derby City Council and South Derbyshire District Council. These all fall under the Regional Plan which focuses on the principle urban areas of Derby, Leicester and Nottingham, these are known as the Cities Sub-Areas. The Regional Housing Provision sets out the housing requirements for each Local Authority within the East Midlands between 2006 and 2026. Derby City Council has a need to find sufficient land to accommodate 14,400 new houses, South Derbyshire 12,000 and the Amber Valley 10,200 new homes. This raises a requirement for these areas to provide a total of 36,600 new dwellings over the 20 year period under Policy 13a the Regional Housing Provision. This gives an annual build rate for the Amber Valley of 510 new homes per year.
The policy states that a minimum of 30 houses per year should be built in Derby or the adjoining urban areas, with the rest being built in Alfreton, Belper, Heanor and Ripley, to include sustainable urban extensions as necessary.
It is thought that the new targets will be increased by somewhere between 5-30 percent, so we could see annual build targets for the Amber Valley exceeding 650 new homes per year. To achieve these levels the local authority planning departments will be forced to consider some large residential development sites which can accommodate hundreds of new homes. Their challenge is to locate suitable sites that can be built out in the time frame and are sustainable in terms of access to infrastructure, highways, drainage, etc and local amenities schools, shops and employment. The new local plan will be available in the not too distant future and the local construction and development sectors will soon be reviewing its finest details. So they can look for suitable development sites to meet the planner’s needs.
The recent cuts announced to the budget for social housing will not only affect tenants but will also have a negative effect on the UK’s construction industry. At a time when there is an increased demand on social landlords and a woefully small number of new homes being constructed in the UK this has come as a considerable blow. This will undoubtedly lead to a short fall of over a million homes in the UK at a time when there are five million people languishing on council waiting lists for homes. With the continued mortgage drought as banks continue to rely on tighter lending criteria to hold down gross mortgage lending. Social landlords have taken advantage of depressed site values and have been either acting as developers or extending their land banks. With the last few years the development and house building sector has been in hibernation and cash has been king so social landlords have acquired some good sites. Sites that perilously would have been difficult for social landlords to secure due to competition from developers. They have been able to purchase village and market town sites that in better times would have been snapped up by developers who could out bid them. This has been because commercial developers have the advantage of increasing specification that is not suitable or would not uplift the gross development value of social housing. Where a social housing developer will focus on value engineering a house builder or private developer will spend more if they can justify an additional return on the additional investment.