Currently, we are looking to develop a site we purchased for a client in NW London.
Generally, when we purchase a site, the aim is obviously to maximise its potential; with this site it will be done in phases. The first will involve redeveloping the existing flats; the second will be to convert the commercial into residential; the third will be to extend the building outwards; and the fourth will be to build upwards.
The planning for phase one and two is in place. The aim is to rent all 8 flats out, and switch the borrowing to a 5 year fixed rate; and when there is a monthly cashflow and the project is stabilised, then go for the third and fourth phases, taking our time. When the planning does come through, the lender we are looking to go with allows the borrower to swap to a development mortgage and back again; hence of the reasons why we choose to go with this particular lender.
However, whilst talking to the neighbour, it transpired they are also looking to go for planning. Their property butts on to ours. There is a rule which means if someone has constructed a building and you are looking to build as well you need to ensure your line of development is built keeping a certain distance away from theirs. This severely restricts what you can build.
It was some time after talking to the neighbour, and hearing about their proposed plans to build on top of their site, that the penny dropped. If they get planning first and build out it will severely affect our ability to extend and perhaps even build upwards; the extension aspect for sure. This was further confirmed by our planner.
This prompted us to pull our finger out and get moving with the third and fourth phase.
This decision to move first, perhaps a little prematurely, could serve to enhance our development by at least a couple of hundred thousand pounds.
Once the planning is in, we will have a few years before it expires, so there is no need to act on it straight away. There is the possibility of implementing it close to its expiry, in other words starting it to further extend this time period.
Once our planning is in and hopefully approved, it will mean our neighbour will need to follow the same guidelines and cut back what they can submit, as our development will have a right to light and therefore any proposed development will need to be mindful of this. In other words, it will restrict what they can put up.
Ideally, this should have been a joint venture; but people always have an exaggerated idea of what their properties are worth. Valuing the existing properties is the first basis of a JV.
It seems there is only one route to go down if we wish to maximise this investment.