Investors Return to Property Projects to Optimise Returns

Demand for projects fell like a stone during 2022 as the cost of building supplies were on the rise and tradespeople were hard to find. But the dream of a tumbledown cottage in a secluded valley is back, and ‘properties with potential’ is a searched-for term according to buying agency Stacks Property Search.

Stacks’ Clare Coode says, “The tide has turned. The demand for projects stopped dead in its tracks during and immediately post-pandemic. Everyone was doing work so tradespeople were at capacity, the cost of building supplies were stratospheric, and renovation projects languished on the shelf. But good knockdown/rebuild and renovation opportunities are now more popular than ever.

“A small run-down farmhouse with a beautiful barn recently came onto the market. The position was glorious and close to the sea, and the project had a likely renovation cost of around £1m. The sale went to sealed bids and it sold for over 50 per cent in excess of the ‘offers over £1m’ guide.

“Certain types of property are so rare in Cornwall that buyers are often tempted to find a knock-down-rebuild opportunity. They can be worth millions and are frequently specifically requested. Sometimes buyers are willing to spend more than the house will eventually be worth, either thinking about the long-term value, or because they can’t find their dream house any other way.

“Plots in fashionable areas of Cornwall change hands for millions. A sea-view bungalow that costs £1.5m may well be worth £3m once £1m has been spent on a fabulous architect designed house.

“Buyers should proceed with caution. It’s easy to get hung up on the idea of finding a plot, but areas of Cornwall differ wildly and the location is as important, if not more so, than the plot itself. Frustrated buyers can be inclined to compromise on location because they can’t find anything else, but building a luxury home in an unfashionable location won’t pay dividends.

“The plot itself is of course vital. There’s nothing worse than a property that feels too large for its plot, and there’s little likelihood that permission will be granted for a three-storey house in an AONB with single storey houses on either side. A relatively level plot with easy access for machinery can save thousands of pounds. And remember to think about aspect and view.

“It’s all too easy to underestimate the costs of a project, and the time it will take to complete. Rushing things is always a mistake often resulting in the project taking longer and costing more, so being realistic at the outset will pay dividends, however anxious you are to get on with it. Watching a few episodes of Grand Designs is a valuable exercise in understanding how the best planned projects can run behind schedule.

“While building supplies are lower than they were at their peak, wage inflation is ratcheted and the high costs of tradespeople are here to stay. It’s easier to get tradespeople, but you may still have to wait a year for some specialists.

“Time spent on prep and research is the best value investment, so before you commit to anything, talk to architects and planners about what’s realistic and possible. A good architect who shares your vision and isn’t working to their own agenda is the first vital link in a very long chain. Try to be very clear about what you want; adding and amending as the project progress will lead to numerous planning applications, delays and higher costs.

“Establish where you’re going to live while the work is done. I know of people who have lived in a caravan on site, but it’s only a realistic option for a few very hardy souls.

“Overseeing a project from afar can frequently lead to problems. A building project needs constant presence and attention so if you’re not in a position to drop in and oversee progress every few days then you should use a project manager. Choose one who, in addition to having the necessary technical skills, understands your vision and is a good communicator.

“A successful project is of course about vision, design and spec, but more than anything else it’s about careful planning and sums. Give yourself plenty of time to create a carefully specced version of your vision, including all environmental aspects that will help your planning application. Put it out to tender properly to several contractors, and don’t be tempted to go for the cheapest and / or quickest!

“Keep a close eye on the value you’re looking to