Five Entry Points to the UK’s Property Development Sector

Taking the plunge as a first-time property developer can be exhilarating and daunting in equal measures. The UK is renowned for the robustness and resilience of its property finance market when it comes to generating reliable returns.

But which are the most viable entry points to the market for newcomers, who may lack experience and expertise?

For anyone looking to make their mark on the UK’s property development sector for the first time, each of the following comes equally highly recommended:

1. Buying a residential property to renovate and sell/rent

The most popular option for newcomers to the sector is to purchase a property in a questionable state of repair, conduct the necessary renovations and sell it or rent it out. Profit margins on a good fix and flip project can be as high as 20%, and it is possible to complete such a project in its entirety within a few months.

2. Buying a commercial property to convert to residential

This has the potential to be a profitable venture for the simple reason that available inventory on the residential property market is in dangerously short supply. Demand for homes is higher than demand for commercial properties in most parts of the country, paving the way for healthy profits for those who know how to conduct residential conversion. To put things into perspective, a derelict factory was recently purchased for £1.25 million and converted into 10 residential flats valued in excess of £300,000 each.

3. Building a second home on your property

If there is sufficient land around your current home to do so, you could consider building an additional property from the ground up. Assuming it is land you already own, you could save as much as £100,000 on the costs of a conventional ground-up construction project, in order to maximise your profits. Just be sure to establish any potential limitations or restrictions regarding planning permission, before getting started on a project like this.

4. Buying land and building from the ground up

A slightly more ambitious project, buying land for a ground-up development project is nonetheless a viable option. Even including the purchase of the land, it can be significantly more cost-effective to build a property from scratch than to buy an existing home. Depending on the type of property you build and its location, it could be worth exponentially more than its total development costs the very moment the project is completed.

5. Buying land, get planning permission and sell it on to a developer

First-time investors and developers willing to take a high level of risk could consider buying and selling land for profit. The logistics are fairly straightforward - you buy a plot of land in a prime location, you obtain the planning permission needed to build on it, and you sell it on to a developer at an elevated price. But as it can take months to obtain the planning permission you need, it is not always a business model you can count on for rapid returns.