You have been emailing us with queries on all aspects of renovation and property development. Some topics seem to crop up again and again, so here are the answers to some of your most common problems.
A: The key to developing property successfully is to do your homework, and stick to your budget. Make sure you research the market carefully - with the present slowdown, there’s a shortage of buyers in many areas, so ask local estate agents what types of homes are particularly in demand, and what features you can add to enhance the property.
With the current market slowdown, it's also worth checking that the area you are interested in is predicted to grow - or at least not to lose value. There are various signs - estate agencies opening up in the area, new coffee shops, planned investment for new travel links. All these are good indicators that the are you are interested in should rise. For more essential info, check out our feature How To Spot An Area On The Up.
It's also worth checking just how much properties locally have been selling for (rather than just finding out their asking price from estate agents' windows). You can do this at websites such as Up My Street - you simply type in the postcode and recent sale prices within a radius come up.
Once you’ve found somewhere suitable, get a recommended builder to supply a detailed estimate of how much the planned work will cost. Remember, an estimate is just that. If you want to know an exact cost, ask for a written quote. Finding a builder through recommendation is your best route to success. You want someone you can work with, who is trust-worthy, reliable, good at time-keeping, and sticking to schedules and budgets. If none of your friends or acquaintances are able to pass on their builder's name, don't be afraid to knock on the door of a house that has had work done on it recently (and which looks good externally). You'll find the owners will more than likely be happy to pass on someone's name. Failing that, go via the Federation of Master Builders for a builder who is registered with them. That way, if you have problems, you have someone to refer back to.
If you’re tackling the work yourself, draw up a time plan and stick to it. You’ll only be successful if you make a profit when you sell, so do your sums carefully. You'll need to plan the work in the right order, and also work out when you need to order materials by so as not to hold up work. Remember, there are legal limits to what you can do yourself to your property, and there are regulations to follow. Don't miss our feature How To Develop Responsibly to acquaint yourself with the rules and regs.
Although the property you are buying will obviously be your biggest expense, it’s all the hidden extras which bump up your expenses and eat into your profit. So, when calculating your budget, don’t forget to include legal and search fees, stamp duty, building/renovation costs, plus a contingency fund of 20 per cent extra for unexpected problems, as well as allowing for mortgage payments and a deposit – usually 10 per cent. Capital Gains Tax should not be overlooked either - so work out roughly how much you will be obliged to pay and include it in your calculations.
If you're planning a bigger build, there are a number of other costs to work in, such as insurance for your workers - for more information, see our feature on The Legalities of Self Build- many of the issues raised will apply to renovations and developments, too.
Finding the right mortgage will help to keep costs down, so go to our 4Money calculator to work out monthly payments at different rates of interest. Only when all your sums add up should you take the plunge.
Top tips from George Clarke and Naomi Cleaver!
