Amateur buy-to-let landlords are increasingly trying their hand at major restoration projects, or even building houses from scratch, tempted by the profits that would go to the developer.
Many part-time landlords gain much practical experience of building by doing up their investments, and get ambitions to undertake larger projects. "A lot of people would like to do it, and they think they can do it because they have seen it on the TV," says James Greenwood of Stacks Property Search & Acquisition, who seeks out suitable projects for landlords.
Part-time developers have also been encouraged by the raising of stamp-duty thresholds, which has made many building plots and "doer-uppers" cheaper.
"Potentially, it will be more worthwhile, and the stamp-duty threshold increases have reduced the price of many of them, but plots are rarer than hen's teeth," Greenwood adds.
"Private individuals will be competing on the one side with small builders who may be able to pay a small premium because their build costs will be lower, and on the other with self-builders who are also prepared to pay a premium for the site of their dreams."
Creating a clear plan and sticking to it is essential for success. "You have to think about exactly what you want to do and what sort of project you want to get involved in," Greenwood advises. "You need to have your finances in place beforehand, and to budget conservatively."
Letting your heart rule your head is a common mistake. The vision of that thatched cottage fully restored with roses over the door may be so enticing that you fail to notice the motorway on one side and the pig farm on the other. The people you'll eventually want to buy the place will not be so forgiving.
"People get carried away so often, which is why so many plots are sold at auction," Greenwood says. "It's a simple calculation: take the cost of the plot, add the cost of the build, and look at the market to make sure it is a profitable proposition. This sort of project is not for the fainthearted."
It is also essential to do your homework and not take vague statements by estate agents or vendors that "getting planning permission will be no problem" or "the place is structurally sound" at face value.
The developer must also have a clear idea of the market and what buyers really want. "Talk to agents at an early stage. Don't put in a £20,000 bathroom if it won't add anything to the price," Greenwood says.
The pitfalls of property development are such that many developers run out of money or energy and sell up half-way through. This is an opportunity, Greenwood points out: "Consider taking on a half-finished project. As developers are squeezed, more are coming on to the market. Don't expect to pay way below the market value as lots of work has already gone in, but most of the boring stuff, like the drains, is already there."
Stephen Worth, a designer and formerly a teacher of fashion at the London College of Fashion, moved into part-time property development by accident. The vagaries of a freelance life forced him to sell his house in Brighton and buy a wreck, which he did up for a substantial profit. Another house in Brighton followed, after which he moved to Cornwall and restored a house in Falmouth.
Then came his biggest challenge: a barely habitable cottage near Cambourne, called White Stile.
"The lady who lived in it before must have been agoraphobic, because she had not left the house in 17 years. The garden had grown up, leaving only a tiny space round it," Worth says.
The roof and windows had to be replaced and the inside renovated. "We tried to keep it as original as possible - not difficult as the place had never been modernised. There was a hole in the dining room where a fireplace had been ripped out, but we found it in pieces in the barn."
Now the four-bedroom house has all mod cons and the 10 acres of garden and paddock are in prime order.
If Worth gets what the estate agents are asking, he will have made a good sum for two years' part-time work. "I bought it for £240,000, spent £50,000 on it and the estate agents advised to put it on the market at £465,000," he says.
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