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The size of the land in Bicker is 3.5 acres and we have planning to build 40 houses. (4 x 1-bedroom, 2 x 2-bedroom, 31 x 3-bedroom and 3 x 4-bedroom).
It works for us
Planning for 40 houses. The section 106 cost is £245,000 the affordable housing limit was 15%. This means six houses are for affordable housing.
The margins are good the gross development value is over £7.8m and if we sell the land with full planning it is likely to double our investment.
If we build it out, we will quadruple the investment and the profit on the build is 20%. So, 20% of £7.5m gives you £1.5m that is excluding finance costs.
For finance cost we have put in £300K which gives a margin of £1.2m.
Always do your figures.
Timescales
At Bicker the planning process should have taken six months but took an extra five months which of course extends the length of time to build and sell the houses. I have been quoted 18 months for construction, although I think it will probably take 21 months. This means the houses will be ready to sell within a year and a half to 21 months.
Size -v- income
You need to calculate the sale proceeds per square foot. Plus, obviously land cost per square foot and how much the land is worth (per square foot) after planning.
Then calculate the cost to build a house per square foot. Prices vary depending on the finish and the size. But the location is going to determine a lot of those answers in terms of how much money you need to spend and what return you are going to see.
Once you know these figures you can work out the cost of the land. In the good old days, it was a third for the land, a third build cost, and a third profit. It does not work like that nowadays.
What size hammer do you need for piling?
Following a geologist’s report in June the ground conditions were not stable. There is a band of soft clay, so piling is required to go beneath the strata to solid rock. The concrete ‘stilts’, as they are often referred to, will then hold the houses on a solid foundation.
Watch my video where you can see the construction team undertaking the piling and what the big hammer looks like!
A multipurpose barn!
On the land next to our property development at Bicker is a barn. A decision was made to purchase the additional land with barn. Two benefits:
- have secured panning permission for nine houses on the land
- currently the barn has been modified into our Site office, staff training and storage space. It is working well with the bonus of a financial saving on hiring additional storage and office space.
Once we have finished using the barn it will be demolished, and the nine houses built.
Planning
We purchased this plot with outline planning for 40 houses. We then went for the full detailed planning, which is called reserved Matter’s.
Reserved matters are those aspects of a proposed development which an applicant can choose not to submit details of with an outline planning application, namely they can be ‘reserved’ for later determination.
There are five reserved matters:
Access: Access to and within the site, circulation routes and how these fit into the surrounding access network.
Appearance: Aspects of the building or place that determine its visual impression.
Landscaping: The treatment of the land to enhance or protect the amenities of the site and the surrounding area, including screening and tree planting.
Layout: The height, width, and length of the proposed buildings.
Scale: The height, width, and length of the proposed buildings.
Location, location, location
The new development is land at Bicker. It is located 9 miles from Boston, 33 miles to Lincoln and 29 miles from Peterborough making it commutable in all those directions. When people are looking to buy land for development my advice is to think about which location to choose as you need to be comfortable with the area for a variety of reasons.
For me I set criteria including distance from Peterborough. I have also undertaken other developments in this area. So it ticks all the boxes.
