Find a plot with potential

To turn a profit from 'worthless' land, local knowledge makes all the difference. Chris Partridge explains why

These days you can't make money simply by buying a house and sitting tight, forcing people to look at other ways of profiting from property. And the biggest slice of the cake is the first link. That is, identifying a plot and obtaining planning permission - a process known as planning gain.

These days you can't make money simply by buying a house and sitting tight, forcing people to look at other ways of profiting from property. And the biggest slice of the cake is the first link. That is, identifying a plot and obtaining planning permission - a process known as planning gain.

An area of scrub worth next to nothing can be transformed into a £100,000 property if planning permission can be gained for an average detached house, which is a bigger profit than the developer will make.

Plot-finding agencies have, thus, sprung up over the last 10 years as the number of people building their own homes grows. But the job demands detailed knowledge and an extensive network of contacts to secure a plot before the surveyors and estate agents.

A good working knowledge of planning policy, highway engineering, building regulations, architecture and local politics is also essential. Added to this is the need for access to funds. Because the big money is on the plots that are not obvious candidates for development, it is likely that the local bank manager will regard the operation as a gamble and will refuse to lend the money.

Sensing an opportunity, several firms of town planners and surveyors are setting up networks of plot finders with the right combination of local knowledge and technical skills to act as their eyes and ears round the country.

The newest and most prominent is Taylor Skelton Walters, a Reading-based development firm founded by property investors and chartered surveyors, and backed by financial institutions, including the Clydesdale Bank and Royal Bank of Scotland. The firm offers to teach a network of plot finders to identify plots, the technical aspects of planning and highway regulations, and negotiating skills.

Vitally, the firm buys plots that licensees identify, and sells them using its contacts with developers. The plot finder does not have to borrow the money or find a buyer. The potential rewards are high: Taylor Skelton Walters offers a 30 per cent commission off a minimum deal of about £100,000.

However, those seeking accreditation must first put up £10,000 (incl VAT) first, and thereafter attend the three-month long course. Qualified surveyors or town planners can do a shorter version.

Founder and managing director John Skelton says the rewards follow soon after. "After sign-up there is three months' training, but you can have the money from the first deal in seven to nine months."

Ten licensees have already started on brownfield sites in the M4 corridor area. "People who are joining us are professionals and business people, some doing a part-time job. It is definitely the most lucrative part of the market," Skelton says.

"Licensees get a primary area round where they live, which is small enough to focus on but large enough to make money. We require licensees to put in at least 20 hours a week, and on that time we believe people can drive a minimum of three deals per annum, a target of £100,000 net profit."

The uncertainty attached to the market will not severely affect earnings, Skelton believes. "At the level we are operating, the slowdown is really a good thing - last year there were three or four buyers for every property - now we won't get the competition," he says. "We will take a hit on property values if they go down, but we take land that is virtually worth zero and make it worth much more, so there will always be a profit in it."

One of the current trainees is former marketing executive Linda Johnston. She left her job because she spent hours on trains travelling from her home in Cheltenham to work in London. She can now fit plot finding around her three children.

"I am half way through the training course, which has been very useful," she says. "For me, the biggest thing is that it gives you the basis to work in a complex field full of experts. And it was a big thing to discover that the planning office is not a secret club, but is completely open."

The training also instils confidence. "With the very basic knowledge I now have, I have had conversations with planning officers when I don't think I sounded daft," she says.

Already, Johnston is on the way to making a bit of money. "I think I have located two plots, one of which I am very excited about," she says.

A different approach to site finding is taken by town planner Peter Kyte of Peter Kyte Associates. He is not charging for training and takes over potential sites at a much earlier stage of the process. As a result, the rewards are smaller, about 1 per cent. He needs site finders more for local knowledge than technical expertise. "Site finding is small and fine-grained," he explains. "The beauty of our format is that we are town planners with a track record in expertise in turning difficult sites into planning permissions. Normally site finders are small operations without planning expertise or the negotiation skills required."

Taylor Skelton Walters: 0118 949 7560, www.profitinland.co.uk

Peter Kyte Associates: 020-8381 4311 www.enablinguk.com/pdk.html