Guest post from Ian Gracie of MyPlanningExpert
From the seasoned property investors to those just buying their first home, we all look for the best deal on a property. We want to add value but it’s not always easy to understand where to look or how to find out where there is a good opportunity. This article will teach you that through the right research using the planning system you will be able to find that great investment and profit up to the hundreds of thousands as I will demonstrate using an example throughout.
Some of the tips provided below are the exact steps that local authorities use to assess planning applications. So if your research seems to point toward a particular development being acceptable, then there is a good chance that your proposal could be as well.
Step 1 – Check the planning policy
The first tip I is to check out the planning policy for your area and site. You might think that planning policies wouldn’t differ drastically from area to area but unfortunately, which is one of the issues people have with planning, policies can vary quite drastically between authorities.
For instance, I had a friend ask me for advice on a site he was thinking of developing. The first thing I did was look at the planning policy for the area and I quickly realized that it was a non-starter. The site was what is known as ‘backland’ development which is effectively building on a site that is usually reserved for back gardens. This was clearly a development pressure throughout the borough as there was a policy dedicated to the issue. In some areas backland development was acceptable whereas in others, such as at my friend’s site, backland development wasn’t considered acceptable for a number of reasons. In this case, it was because of its impact on the conservation area.
So in just 10 minutes I learnt that a site, to the untrained eye, looked like a great investment was actually a non-starter. That saved my friend tens of thousands of pounds and hours upon hours of headache once he would realise down the line that a site is a non-starter.
So whether it is building backland development or even just extending your own home, check the planning policy. There will be a policy directly or indirectly related to what you want to do. I guarantee you’ll be glad you took the time to check.
NOTE: If its extensions and alterations you are interested in, then the Council usually sets out guidance within their ‘design’ policies.
Designations
Every site within your local authority’s area will have a designation. Some local authorities have different names for it but most call it a ‘Proposals Map’. This is a visual policy map which tells you which policies are relevant for your site. So search for your authority’s Proposals Map and see which policies affect you. Some authorities are different but generally the Policies Map (such as in this case) can be found as an interactive online map.
Is your site in a conservation area like the above? Is it next to a listed building? Is it in a town centre? Is it in a growth opportunity area? An Archaeological Priority Area? A Viewing Corridor? Are there any Tree Preservation Orders?
These are all key things that you need to check as it will give you an idea as to how ambitious you can be with your project and what policies will apply. It will also give you an initial idea as to the development cost of a site. The more designations (like archaeology, for instance) the more specialist consultants you will need to advise you.
If your building is listed, unless you know what you are doing or you are fully committed to preserving that building (and the time it takes for doing so), then I would think twice about developing such a site. If your authority’s Proposals Map does not show listed buildings then you can use Historic England’s map function HERE. Just put in the postcode and see if your site is, or is next to, a listed building.
It may be charming to look at but I know people that have bought because of its charm only to find out that it was the worst decision they have made because of the time and expense that it takes to develop listed buildings. So if you are thinking of developing a listed building, do your research or employ the help of a heritage consultant before buying to give you an idea of what you can achieve on such a site.
As well as looking at the designations for your own site, check those around you. Are there any large redevelopment or growth areas identified? This could be a sign that the local area is on the up. If there is a site near you, have a look around their website (there is usually a dedicated webpage) and find out how progress is going. Has development started? Or are they struggling to develop the area?
Minimum dwelling sizes
This is a little off topic but an important point to make nonetheless. I often see developers trying to squeeze those extra housing units on a site that just will not fit.
Save yourself and the Council time and check the minimum dwelling sizes table before approaching the council to make sure that your units are big enough for people to live in. It is a nationally set standard and you can find the standards HERE.
Step 2 – Check the site and surroundings before seeing the site in person
Before you spend the time arranging a viewing and travelling to see the site which might be across the country, have a drive around the site on Google Streetview.
I once considered purchasing a house that looked a great investment and the price they were asking for was incredibly competitive. I checked the policy. Opportunities were there to develop. But after having a drive around on Google I noticed an industrial yard was immediately behind the back garden of the house. Having a residential unit immediately next to such a noisy neighbor is a recipe for disaster.
It depends on what you are looking to achieve on the site but I would think about a couple of things when looking at a site on Google Streetview:
- Any noisy neighbours (nightclubs, bars, industrial yards) that could disturb future residents?
- Is it near a town centre to offer the amenities for a resident?
- Can you park on site?
- What sort of developments have been built in the close vicinity? Is there scope to develop?
- Has the property or site been heavily altered already? This could suggest that the potential for the site has already been maximised.
Step 3 – Check the planning history of your site AND similar properties nearby
Your property
First off check the planning history of the property or site in question.
You may find that an application has been refused on site which would raise a red flag that needs further investigation. If an application was refused for something similar for what you had in mind then read the officers report which should be online as one of the publicised documents on the Council’s website. If it isn’t online then call or e-mail the Council for a copy. It could reveal exactly why the application was refused and might show that your site is a non-starter. Or it could give you an idea as to what would be acceptable.
The planning history may also reveal that a significant amount of development has come forward on the site already. Again, make sure you read the officer’s reports if they are available. They may reveal that there is no further scope to develop on your site.
Do not panic if there is no planning history for a site. It is quite common. Instead use the planning history of the immediate neighbours to get a flavour as to what is possible on the site.
An interesting piece of planning history for our site:
Surrounding properties
As well as looking at the planning history for your own site, looking at the planning history for neighbouring properties or streets may reveal some very helpful information.
For instance, you may find that rear extensions have been refused all along your street.
Why is that?
It may be that you are in a conservation area or those buildings are listed so they are very sensitive on design grounds. Understanding the development pressures immediately surrounding your site is very helpful. It may reveal something that cannot be picked up through usual desktop research of a site.
Conversely, a number of extensions or developments may have been approved around your site which might reveal an opportunity. Again read the officer’s reports to look for any further information that might help you.
Step 4 – Do you have permitted development rights (or PD)?
Permitted development rights are rights you have to build certain forms of development without the need for planning permission. The various forms of permitted development are set out HERE.
In certain instances, though, a local authority will serve an ‘Article 4 Direction’ on an area or property which removes CERTAIN permitted development rights. Some Councils display the content of their Article 4 directions differently from one another. Some provide it within a Conservation Area statement or some may have a dedicated webpage explaining exactly which properties are affected and how.
Step 5 – Check on site
Once you have done all of the research above, have a good look around the site or property and look for anything of interest. For instance, if you want to build a terrace, a rear extension, or even a new house, will there be any impacts on your neighbours in terms of overlooking, daylight, noise from use of the terrace etc. Anything that could scupper your plans for the site.
The main concerns to neighbours are related to noise, overlooking and impact on daylight (generally speaking). If you can cover those things off early on then you will be in a good position.
Step 6 – Bid accordingly
Once you have assessed the site and determined that you can add value through your newfound planning genius then submit a bid in line with the level of work required. This is where it would help to have a discussion with a builder or contractor. Get a rough estimation and calculate how much you can spend to generate the value you identified through your planning research.
Before you go. Some interesting stats on the site we have been looking at:
| 24th June 2016 | Site bought on 24th June 2016 for £800,000.
|
| 23rd November 2016 | Planning permission granted to sub-divide the house into three flats. Application was actually only submitted one month after the original purchase. |
| 26th July 2017 | Rightmove advertising two of the 1-bed flats for £500,000 and £525,000 each. That’s potentially a £225,000 profit (minus development costs) and that is BEFORE the 2-bed unit is sold.
|
| Lessons learnt | I know this a very crude example. But understanding what you can achieve from a planning point of view on a site could potentially unlock a huge amount of value. This is an expensive property to begin with but there are many more affordable examples around the country where the same research could unlock a huge amount of profit. |
So now you should be able assess the planning potential of a site with more confidence!
You can find more over at www.myplanningexpert.co.uk where you can find other helpful articles to give you more confidence when navigating the planning system.
The Property Voice Insight from Richard Brown
When Ian Gracie initially approached us about a guest blog post about how we can add value to our property investments and developments through planning gain, I was very keen to explore the topic.
Planning gain is one of the best ways to add significant value to a property - you can also choose to undertake the works subject to the planning approval received for maximum potential profit, or you can simply pass a planning approved project onto another developer, at a lower profit margin, but equally with less of the development risk associated with it.
Needless to say, this article pinged back and forth between us took a little longer to get published than we both originally thought...probably my fault with that...sorry! However, what a cracker we have for you, as I am sure you will agree...it is packed with great tips and advice of how to make a start using the planning system to profit in property.
I love the very practical tips and resource suggestions that you can apply without even leaving home - so many of the preliminary due diligence steps highlighted can be undertaken without having to go to site and this can cut down on your the time required to assess a potential site's development feasibility. Don't get me wrong, a site visit will be an essential step in the process as you get a completely different perspective by seeing a property or site in context, but with so many tools available to support us these days, that can come later once we know we have something of a viable project to view.
I touched on profit and risk above and I see so many aspiring property developers become memorised with the pot of gold that development projects, with planning (or even permitted development rights) can offer, only to lose sight of the potential risks involved. The potential profits are supposed to be high to compensate for some of the potential risks involved, so always protect the downside.
Ian goes a long way towards helping to identify and protect against some of these risks with the recommended checks involved. Planning approval is not a straightforward process, it tales time, often comes with conditions attached and is by no means guaranteed to be granted, either first time or at all.
So, my advice is to get proficient at the due diligence, or at least work with someone that is good at it instead. I know that Ian's website, MyPlanningExpert is still evolving, but the idea of matching experienced planning consultants to your project is a good one.
Finally, always remember that planning consent is just the first step in a development project's success. After that, securing qualified and reliable builders and other contractors at the right price and terms is also key, as is tight project management, on-time and on-budget delivery and a smooth exit to fully realise those anticipated gains. The tips in this article go a long way to helping to de-risk our project at the front end, so we would be wise to follow them.