Will new ‘garden grabbing’ rules affect your land finding?

Whether you’re sourcing plots for your own developments or looking to generate quick five or six figure profits through planning gain ­– land finding is an essential skill in your property toolbox.

However, because of recent policy changes brought in by the new Lib/Con Government, you may have become reluctant to get out there and source profitable development land. So let’s take a look at how the new rules affect you and your land finding…

What are the new rules?

Basically, the Government has changed the planning classification of gardens to tackle the so-called problem of ‘garden grabbing’. “What’s that?” you ask! Well, put simply, it’s the practice of developers snapping up back gardens and squeezing inappropriate properties onto the land, therefore spoiling the neighbourhood and upsetting local residents.

In an effort to discourage this practice, the Planning Policy Statement 3: Housing (PPS3) has been amended. This sets out policy on previously developed land and housing density.

In simple terms, the changes mean that gardens are no longer considered “Brownfield land” (or land that has been previously developed).

Local Planning Authorities are now expected to consider this new policy when looking at planning applications. However, you’ll be pleased to know that the new policy isn’t to be interpreted as a presumption against residential development on private residential gardens…

So how big a problem is “garden grabbing”?

Independent research was recently commissioned by the previous Government to investigate whether or not inappropriate developments within back gardens is an issue. Let’s just take a quick look at their findings…

“Of the 127 [councils] who responded, less than half (50 councils) considered it an issue in their areas. Of those who reported a problem, only 5 per cent (7 councils) had specific, local policies in place.”

This suggests that ‘garden grabbing’ isn’t the problem that the media and the spin-doctors would have us believe! However, despite the fact that over 50% of councils don’t consider garden grabbing to be a problem, gardens have now been reclassified…

How do the new rules affect your land finding?

Well, looking over my past land finding deals from the last few years I can only find one ‘garden land’ deal that would’ve been affected by the new rules.

99% of my land finding has been Brownfield land and not back gardens. For example, most of my deals have been plots such as an MOT garage and petrol station, a tyre and exhaust garage, a public house, a farmhouse and barns, a former Church, the site of a haulage depot, a van sales yard…but not many gardens!

So will the new rules affect my deals? Not really.

You see, there are several different types of ‘garden developments’.

As has always been the case, some are more suitable than others – it really depends on what you want to build on the land and how it affects the local neighbourhood.

So rather than squeezing a house into someone’s back garden, you might want to stick to “infill” garden plots, where new properties are built in the gaps in between existing properties.

Personally, I’ll still continue to look at appropriate garden sites. A lot depends on location…

For example, I live in Bolton. Lostock and Heaton are affluent wards, so as a result large houses are much in demand. However, to preserve the area, planners have restricted the practice of developing in gardens. They’ve also restricted demolishing properties in big plots and replacing them with high-density developments. So the new policy change will help the council to consolidate local planning policy for the area.

Yet, in other areas of Bolton, where for example, a policy of regeneration is on the agenda, you would find less resistance – so long as the plans are in-line with planning regulations and the local neighbourhood…

So, as I say, a lot will depend on location as local councils will each have different concerns and hence will have different local planning policy. So it’s best to check out what their policy is and stick to it when looking for suitable development plots.

In real terms, local councils have always had the power to refuse planning applications – the new guidance will just serve as a material consideration when they are looking at planning applications.

So how should you conduct your land finding in future?

When land finding, carry out your due diligence and examine local policy carefully! Much will depend on the development that you are proposing – just as it always has. Nothing has really changed!

Just make sure that any proposed development is inline with the local neighbourhood and planning policy and you should be fine.

Saying that, it’s probably wise to stick to less controversial garden types plots. You don’t want to suggest a high-density development on a back garden site if it’s against the local planning policy!

Besides: you really don’t need to stick to garden sites to generate big money! There are literally thousands of suitable Brownfield sites out there, just waiting to be develope

So, what’s involved in becoming a new build developer?

Since my article about new build developing last time, I’ve received a huge amount of feedback from people that are interested in finding out more about what’s involved in the developing process. However, it seems that quite a lot of people out there still think you need to have construction knowledge to become a developer…

Well, let me dispel that myth once for all: you don’t need ANY construction knowledge to become a new build developer.

Let me explain…

I think one of the most common misconceptions amongst property folk is the distinction between a Residential Property Developer and a House Builder. Now, major House Builders, such as Barratt, handle the entire process in-house, from sourcing the land and obtaining planning, to construction and sales.

Now many people presume that new build developers do the same. In fact, when I tell people I’m a property developer they automatically presume that I actually build the houses myself!

However, many residential property developers large and small don’t do any of the construction work themselves. Instead, we outsource that work to a specialist main contractor, who essentially does all the hard work on our behalf.

This leaves me free to concentrate on the “business” side of things, such as sourcing the land, negotiating its purchase, arranging finance, employing the contractor, then selling or renting out the finished houses.

What is a main contractor?

In simple terms, main contractors are companies who typically manage the whole construction phase of the project from start to finish. They employ all the labour and various trades like ground workers, bricklayers, plumbers, plasterers and joiners directly on our behalf and make sure the right people and materials are on site at the right time.

One of the benefits of using a main contractor is that they have a great deal of experience in construction – not just on the technical side but also how to project manage the entire process from start to finish. More importantly, they’re also able to comply with the huge raft of health and safety legislation that you need to adhere to.

A good contractor will have your whole project meticulously planned from beginning to end. They will know – to the day – when a particular trade or materials need to be on site – many months in advance.

In general whether you employ a main contractor to handle the construction element of the deal depends on:

• How much time you have available.
• Your project management skills.
• Your experience of construction and home improvement projects.

If you are working full time and don’t have any experience of major works, such as new build construction, or even house extensions and conversions, then it’s much better and more cost effective to leave it to the experts.

Yes it’s true, it’s often said that you pay a premium to a main contractor for their skills and expertise and all the hassle of juggling subcontractors that they will save you. Yet, providing you get the right contractor, the extra cost can be far outweighed by the savings.

Why? Well, by using a main contractor you are very likely to find that your project will be completed much quicker, potentially saving you many thousands of pounds in interest costs.

Comparing the development process to managing a BTL portfolio

If you’re already involved in BTL, you’ll be very pleased to know that making the leap to new build developing is a fairly natural progression. Believe it or not, there are many similarities between being a property developer and managing a buy to let portfolio. The main one being that both businesses involve employing experts to carry out particular tasks.

For example, just as you wouldn’t attempt to fit a new combi boiler yourself or re-plaster the lounge (well I certainly wouldn’t!) with a BTL property, you won’t attempt to build a house from scratch when developing.

Plus, just like new build property developers, most BTL landlords concentrate on the “business” side of things: sourcing properties, negotiating its purchase, arranging finance, employing a builder or maintenance contractor to carry out refurbishments, then renting out the finished houses. Sound familiar!?!

The main difference with BTL is that when you need to source construction, renovation or maintenance work for your property, Bob the Builder will give you a quote for a job… Unfortunately, that price will often start to escalate as all the extras begin to mount.

He’ll also tell you that he’ll be done by next Friday. Inevitably, the job then turns out to be a long drawn out process taking weeks. At the end of the day, you’re left frustrated and out of pocket.

Thankfully, with developing you don’t get any of that. We tend to employ main contractors on a fixed price contract. That means that you know exactly how much the build is going to cost and when it will be finished.

Plus, with new build developing, once you’re out of the ground, there are very few nasty surprises because you are starting with a blank canvas. However, with renovations to existing buildings, you’re never quite sure what’s going to be involved until the work is well underway.

So as you can see, developing is strikingly similar to BTL investing – just on a larger scale. But that said, developing needn’t necessarily demand any more capital investment than a BTL property…it’s all about structuring the deal in the right way.

So what does the development process involve?

Obviously every development is different but, broadly speaking, a typical project can be broken down into the following key stages:

• Source and appraise your plot.
• Secure funding.
• Secure plot and agree terms.
• Appoint your architect and design team to oversee the planning application (if your site doesn’t already have planning consent).
• Acquire land and remediate the site as necessary.
• Tender for construction contracts.
• Appoint contractors.
• Begin construction.
• Appoint sales agents.
• Complete construction.
• Sell the houses and bank the profits!

Sounds like a lot to sort out doesn’t it? Well don’t panic – remember, you won’t be building the properties yourself! Really, your role is that of facilitator. In fact, most lenders will insist on it…

Development funding

All today’s lenders will insist on you having an experienced team of professionals behind you if you don’t have any experience yourself. They will rely on the experience of the team and in particular your main contractor to deliver the project on time and on budget. So to help you complete each of the stages I’ve mentioned above and satisfy your lender, you’ll be enlisting the help of a number of professionals. Your team is likely to include:

• Architect.
• Main Contractor.
• Structural Engineer.
• Employers Agent.
• Planning Consultant (if your site doesn’t have planning).
• Finance Broker.
• Monitoring Surveyor.

Really, the key to successful developing is really about working smarter not harder. By leveraging the expertise of key professionals you could soon gain life changing returns from just one or two development projects per year!

If you would like to ask Lyndon a question click here.

Click here to download the Development for Profit FREE Guide

For many BTL and land investors, developing for profit is a very natural progression. In fact, it was the path I took – and I’m sure glad that I did. The potential profits can be truly staggering…

“How much experience do I need?”

The surprising thing about developing for profit is that you don’t need to know very much about construction at all! In fact, I didn’t know anything about construction when I started out… and I still wouldn’t know how to place one brick on top of another!

If you have the right team around you, including a good architect and a quality single main contractor, you can leave them to worry about all the hard work and specialist construction knowledge.  You can use industry standard ‘fixed priced’ contracts – so the contractor handles all the construction work within an up-front agreed price. This means that you won’t be landed with any nasty surprises and you can minimise the associated risks.

“What about the finance?”

As market conditions improve, more lenders are returning to the market with new development finance products. Better still, loan-to-value ratios are increasing all the time. 65% loan-to-value is now once again achievable for certain deals.

Of course, the most critical element of the deal is securing the land at the right price. If there’s enough capital tied up in the land, then it’s possible to fund the deal with little (or possibly no) money down…

“What about the state of the market?”

Increasingly positive news reports seem to suggest that we may be slowly emerging from the recent property crash. For example, last month, Barratt announced that forward sales are 43% ahead of a year ago. Plus, recent RICS figures show that house price rises are likely as demand for available property outstrips the supply.

Signs are that things should be more stable in 2010, hopefully preparing the way for increased recovery later in the year.

That’s why I recently took my first steps back into developing. Although I’m only developing a very small site of two semi-detached houses, the project should return a healthy profit for very little “work”.

“How much work is required?”

My method of new build development involves very little work by me at all – no more than two or three hours per month from start to finish!

However, I know I’ll spend more time on site than I need to as I find the whole process so exciting! Basically, I’m buying a piece of dirt and turning it into two fantastic brand new houses worth £160,000 each.

The return on my time from a small project like this is significant – hopefully around £70k. I anticipate that this development will take around six months to complete. I’ll be keeping an online diary of the progress of this project, so if you’re interested to see how it’s coming along, keep an eye on my blog at www.ukpropertyexpert.com.

“Can I reduce the amount of up-front capital needed?”

A great way to reduce the amount of upfront capital needed is by entering into a joint venture (JV) with a landowner.

I recently agreed a JV deal on a site for 16 houses. Essentially the landowner will be putting his land into the deal and I’ll be arranging the development. The deal should clear £400,000 for my company. Sound easy? Well, when you get to know the ropes, it is!

So will 2010 be the year you take the next logical step in your property career with comparatively quick, life changing profits from developing? It really isn’t as difficult as it sounds. If I can do it, anyone can!

If you would like to ask Lyndon a question click here.

Without a great deal of funding it’s always been considered difficult to buy land as an investment. Development is so restricted in the UK, that when we do obtain planning, the difference in the land value is often immense. So, understandably, it’s perceived to be next to impossible to acquire land for investment without capital.

Well, I’m here to dispel the myth.  It is actually possible to acquire “control” of land for very little capital… if any!

As regular readers of my blog will be aware, I encourage anyone seeking substantial income to explore a broader, more rounded approach to property. It’s an approach I’ve adopted personally and which delivers a regular, life-changing income, allowing me to experience true financial freedom.

How to generate profits from a plot of land without buying or owning it

Land trading is the most effective method I’ve found to generate quick FIVE and SIX FIGURE PROFITS. It’s also relatively easy, requiring minimum time and effort. Once you know how to go about it, trading in development land is actually a very simple process.

In fact, it’s so simple that even a novice can put together two or three deals a year to generate exceptional profits, fitting the ‘work’ around their existing commitments. Best of all, it can be done part-time, with hardly any capital or previous experience. Strangely enough, you don’t even have to buy or own any land…

So how can you control land without purchase or ownership?

With the use of a little-known gem called an Option Agreement. In fact, an Option Agreement can enable you to control land for just one pound.  And crucially, while you have “control” of that land, you can increase its value by 200 times or more by obtaining planning permission to develop it.

Land finding is actually a great opportunity. It’s the ideal way to generate income for anyone that’s willing to learn the ropes – just like becoming a buy-to-let landlord.  If you’re willing to put in the effort and learn the methods of sourcing and appraising, it offers significant rewards.

We’re not talking rewards that pay £150 per month “positive cash flow”. No. We’re talking rewards that can clear your mortgage in one fell swoop.

For the more experienced, the rewards can be huge.  However, I always advise people to start small – perhaps look for single plots and work your way to bigger deals as your confidence and knowledge grows.

My ideal sites have been those up to two acres in size.  Sites like these are often overlooked by developers especially if they have existing buildings or uses that make them less obvious.  You will also find that there are deals-a-plenty right on very own your doorstep. It’s just a question of knowing where to look…

I recently made £300k profit on a site near my home in Bolton in just 9 months.  I have lots of others I could mention and I will give full details in time.  Deals like barn conversions that made £375,000 profit, a pub that made £70,000 profit, an old church that made £125,000 profit or an old haulage depot that made £350,000 profit…

Basically, my point is this: You don’t need to be a billionaire to invest in land: with land finding you can make life changing profits without investing vast sums of money!