I’m a Property Developer AMA

[Cheesenibbler]

Fire away

Are you absolutely minted?

@wannarunfromitall lol - no. I work on medium sized developments. It requires a lot of capital to get going, and therefore the profits, assuming there are any, get split out across banks and investors.

So you get together with other property developers to buy land and build?

@wannarunfromitall - no so I look for horrible, contaminated, industrial (brownfield) land, or dilapidated houses. The aim is that they offer no current or future employment prospects, or in the case of houses, can’t be lived in. We create high-quality accommodation and let it out to tenants.

The idea is that we increase the housing stock, whilst minimising any negative consequences.

We have investors who invest in the business for set returns generally 10%. The banks generally want 12%.

In my opinion what you're doing isn't ethical. Rent is higher than it could be to allow you and the investors / banks to profit. How many people pay you rent every month? Renting is an awful thing.

What do you mean by 'minimising negative consequences'?

Where do you cut corners on housing renovations? Seen so much poorly executed work clearly done on the cheap.

The government want you to think that building houses is unethical, because they don’t want Houses built, because the less houses that are built the more expensive they are to buy and to rent.

The reason house prices continue to rise, and rents are sky-rocketing is because of a fundamental lack of supply of housing. If there were suddenly 3 million more homes, which is the latest estimate of how sort we are, then house prices and rent would be a lot more affordable.

The only way to tackle high house prices and rent is to build more, which is what I am doing.

What percentage of the money involved is your actual money?

@wannarunfromitall by negative consequences I consider the environmental effects, employment opportunities the land could yield or
the potential for another beneficial use.

For example, the site I am currently working on. We have remediated £300k of asbestos & hydrocarbons that were getting into the ground water and local soils, causing potential health effects to residents.

Why don't you sell the properties to people instead of renting? It's that aspect that I find immoral.

How do you find reliable tradepeople? Have you ever employed any cowboys?

I don't think building houses is unethical at all. What I object to is housing being a source of profit when people are in desperate need.

well we tend not to renovate a house into another house. We convert and extend houses into blocks of flats. We have to provide certain energy, and CO2 emission targets, as well as sound and air tests for building control. Therefore you have to do everything to a very a high standard. As we are keeping the property, we also take a 50 year view on any works we do. I.e. no fudging or cutting corners.

@wannarunfromitall what? So students, people who don't want to buy or can't afford to do what?
Developing brownfield sites not fit for other uses into needed housing - where is the negative?

What's needed is decent family homes. Not pokey flats. The reason you convert houses to flats is because you can make more profit that way. Minimal space, maximum profit and never mind the families overpaying to live in a rabbit hutch.

I live near a university town that has an excess of student housing because of property developers doing this. It's families who need homes but there's less profit to be made in that, which is why you're not doing it. The government need to fund proper house building before everywhere is like this

People are in desperate need, they do need new homes. I sleep very easy at night knowing that I treat my tenants well and charge them fair rent. I know this isn’t the case across the board.

The problem is that building houses is extremely risky, and therefore were there not a reward, nobody would build anything. It is not a cake walk. It requires huge sums of money, and one of a thousand things could bankrupt you.

For every minted developer, there are 10 bankrupt ones.

The only way out of our housing crisis is to build
more, which is what I am trying to do.

How sustainable are your projects? What EPC rating do you aim for? Do you install renewable and low carbon technologies?

There are more cowboys than good people unfortunately. I have lost hundreds of thousands of pounds to conmen and jokers along the way. The reality is that if you act professionally and refuse to tolerate any nonsense, the cowboys disperse and the good eggs rise to the surface.

So the system is broken if there's no incentive for private property developers to build family homes. Bring back council housing, financed by government and rented at a not for profit rate. You're enjoying what you do, which is lovely but don't kid yourself you're some sort of saviour to the housing crisis because you're part of the problem.

They are all EPC B rated or above, which is very high given most of our projects are conversions of industrial buildings. We are now fully electric and we adopt EVs, air source heat pumps, solar panels as standard. The biggest thing you can do though is to properly insulate your property, as well as using a hot water recovery system under showers.

Incorrect. The government build almost no social housing. They used to build 100,000 a year. They then sold it all off.

I am not the saviour, but building new housing can never be cast as part of the problem.

The real problem is that the government have deliberately made houses extremely difficult to build by adopting reems of archaic planning law, to stop new developments. The lack of supply of housing then makes house prices greater, so those with housing benefit, and stuffs everyone over who doesn’t have a house. I guessing this is what you are facing now.

The baby boom generation are the biggest beneficiary of this. My parents, two teachers, own over £1mn in property. My mum thinks she is one of the Candy brothers.

So in my model, I will secure a site, usually on a legal agreement called an option. I will then pay the costs associated with planning permission. That generally comes to about £100k on a medium sized deal. I put that in.

Land without planning is worth considerably less than land with planning, so from that £100k investment, the land may increase by £500k. I will then use that £500k of equity as a deposit against a bank loan to fund the purchase of the site and the works money. So to start with I have 100% of the money, and then it drops to about 35% when I get planning.

On the family homes debate. 1 in 3 homes I create have to be 3-beds or more. I don’t just create “pokey flats” - my flats are really big, and considerably larger than the minimum technical standards requires. The average size is 65 sqm and the min is 37.

if the demand and market is there for family homes it will get built. Generally though the demand is actually there for 1&2-bed flats in the areas I am based. I get the most enquiries for 1-bed flats vs 3-bed homes by a distance of 10-1.