Starting property developing for a living

HugoSP

Trogg

This may be of use to you. It seems you may be able to get VAT relief on your project.

Courtesy of another poster in the Cutting Tax Forum - well worth a visit when you decide which route to take.

http://customs.hmrc.gov.uk/channelsP...HMCE_CL_000513

TJ27

I don't think I've ever asked for an external fire escape to be provided. Red40 is quite right that we concentrate on making the primary escape route safe i.e. the main stairway, hall and landings. I guess that if a house layout is very poor we might ask for one.

Sometimes an external fire escape is already present, which is fine as a secondary means of escape. However if one is provided we do ask that it is safe to use. Most of the external fire escapes I see are very old and rusty. It's often easier and cheaper to remove them rather than repair them. If it's kept, then it would also require emergency lighting and windows nearby might need to be fireproofed. Possibly this is why Doozer had to remove one.

Building regs ask for escapes from third storey bedrooms though.

lynzpower

TJ27 wrote: »

I don't think I've ever asked for an external fire escape to be provided. Red40 is quite right that we concentrate on making the primary escape route safe i.e. the main stairway, hall and landings. I guess that if a house layout is very poor we might ask for one.

Sometimes an external fire escape is already present, which is fine as a secondary means of escape. However if one is provided we do ask that it is safe to use. Most of the external fire escapes I see are very old and rusty. It's often easier and cheaper to remove them rather than repair them. If it's kept, then it would also require emergency lighting and windows nearby might need to be fireproofed. Possibly this is why Doozer had to remove one.

Building regs ask for escapes from third storey bedrooms though.

Maybe I misunderstod when OP wrote

The property I am buying is a three story end terraced with a single roomed shop with a cellar .

I intend to turn it into a HMO (5 bed) and keep the shop as a shop or office.
This will be the only property that I will keep, so I’ll have some income and I will be able to use the property as security for other purchases.

I picture the building as the shop to the GF, then the 3 storeys above.

Getting 5 bed ensuite in this sort of building, I would preume some sleeping accom on the 3rd floor bedrooms, which is why the external escape sprung to mind.

trogg

Yes, I apologise, my original posting is a little confusing.
The property is,…. Ground floor, shop with cellar underneath and 3 further rooms.
First floor, 3 rooms..
Second floor 1/2 rooms.

takoo

I understand that you wish to hold on to the completed development as an investor.

Depending upon how your project will be done, you may like to see whether you proposal is eligible for capital allowances. Capital allowances are available for the creation of flats over shops and other commercial properties.

They work so as to allow some of your capital expenditure on conversion against rental income once the property is let.

If you intend to do property dealing you may not be eligible for the capital allowance.

A competant professional accountant should be able to advise on the above.

Takoo

trogg

Had a look on hmrc web site, The criteria states 'Each flat must have no more than 4 rooms, excluding kitchen and bathroom and small areas such as cloackrooms and hallways.'
So the HMO and 5 bed flat wouldn't qualify.

Gives me something to think about

Forgot to mention, The Highways Agency won't except any development that will increase traffic on to this road.
However 2 flats above shops on the same road have had pp approved even though they have no parking whatsoever, but I believe this was on the proviso that secure bike storage was included in the plans.

nicola1982_2

In my eyes the most important thing would be a back up source of income. Property development is a somewhat high risk career choice and one mistake can cost a lot of money. However if the prospect of risk with a potentially very lucrative end excites you then go for it.

I don't know your personal circumstances but I would say if you have a family particulary kids you need to seriously sit down and think about how much of a risk it would be to you. If there was a house price crash (and I don't want this thread to turn into a crash discussion, I'm speaking hypothetically) would you be seriously losing a lot of money and how many people would it impact?

Think of it like you would investments - would you be willing to make a living in stocks? Or does the risk scare you? If it's the later I would rethink.

Other than that I would research tax implications, best way to sell etc.

Conrad

In the last downward cycle prices fell from 1988 to about 1994.

What evidence makes you think this cycle wont last as long?

The Japanese lending famine lasted 15 years.
The German property market peaked in 1996, and prices fell until now.

Are you goinmg to tell me 'it's different this time'?

40% less mortgage cash now available = 40% house price reductions.
The mortgage famine could take years to play out.

Reality check please foplks, before you make some awful big losses.


And note price fall IN ALL AREAS IN EVERY DOWNTURN - there are NO immune areas.

neas

Theres no point discussing house price crash... with him now. No point crying over spilt milk... as they say.

Best way is to advise him how best to achieve what he wants for as little cash as possible.... So if this is like project managing.




1. Can you provide a rough breakdown of what you believe the 30-40k will be spent on?
2. Are all the rooms derelict? Will you be renting them out or selling the flats out empty?
3. What other 'block of flat' type developments are there in the area, rental yield, saleablility?
4. Whats your risk budget? What risks have you identified? i.e builders being delayed, bad weather slowing plan down.
5. How long will the development take?
6. What work have you identified that you can do? or What work can't you do etc?
7. Which family members can be 'called in' to help reduce the costs... i.e knowing a window fitter, plumber, leccy etc would help... and obviously you are experienced and can fit the gas etc.

nicola1982_2

Oh also make sure you have recommended RELIABLE labourers. One of the most common problems property developers face is shoddy workmanship/being let down by labourers. There are many very reliable labourers, but try to get a recommendation rather than take a risk.