The Property Speculator

Creating a Property Development Contract with your Builder

Many private property developers aim to save money by carrying out some of the construction work themselves. This can often be very successful, and usually depends upon the competency and persistence of the developer. However, it also depends a lot on the developer having the time to do the work. It’s fine if the novice developer does not have to do a ‘normal’ job every weekday and can just concentrate on the construction/alteration works. Most developers, when beginning their ventures though have to juggle a day-to-day job and run their property ventures in their spare time. I can assure you from experience that having a full-time job and having to squeeze in work on another property in the evenings, weekends and holidays will test your motivation and persistence. In short, it gets quite stressful.

Apart from the obviously increased expense, it usually makes a lot of sense to get builders in to do the work for you (or at least the majority of it). The larger the project, the more benefit there is.

Where to start though? All developers will at some point come to this stage. Knowing that substantial outside help must be secured, but not quite knowing what to do first.

© Copyright Oast House Archive and licensed for reuse under this Creative Commons Licence

The first step is to decide exactly what needs to be done to the property. On smaller projects where the work will only amount to a few thousand pounds (such as very minor alterations) the route will be different to larger projects of hundreds of thousands or even millions. On small projects it’s more likely the developer will have a good idea of what work they require the builder to carry out. It’s very important to write this down, placing it in logical steps. An example of this might be:

Lift Patio area to rear of property (state the extent of this if possible).
Re-route/prepare drains for foundations to comply with Building Regulations.
Dig and lay suitable foundations in preparation for extension.
Construct double-skin brick/block extension to full property height in accordance with planning conditions, tying bricks and blocks in with existing structure.

This list in its entirety should be concluded with important points, for example ‘all associated excess material and refuse to be removed from site upon completion’ and ‘all appropriate Building Regulations to be complied with’.

This list is often referred to as the ‘Scope of Work’ and becomes more important as the size of the project increases. The scope of work can help you out at this point by enabling you to obtain several different quotes for the work if you feel you would like to look around for the most competitive price (known as ‘going to Tender’). If the idea of compiling this list is daunting because you are not experienced enough to place the required work into steps, contact either a professional (such as a Building Surveyor, Architect or Structural Engineer) or ask a reputable builder who will not be actually doing the work (so that the scope of work is impartial) to help out.

The process of finding a suitable contractor with the use of a scope of work is called ‘Tendering’. The larger the project the more important it is to find a contractor that will provide the right work at the right price. Once the builder has been chosen to carry out the required works (it might be the one who produced the most reasonable quote, or the firm who you feel might be the best suited to the work you need carried out) the next step is to establish the terms of the builders contract.

In almost all cases (around 70% – 80%), a Joint Contracts Tribunal (JCT) contract is used to establish the terms of the agreement between client and contractor.

The contract type depends on the type and scope of work to be done. For the smallest work, such as a house extension a ‘Homeowner’ contract would be used. There is further choice within this, for cases where the homeowner is overseeing the work, and where a consultant oversees it. At the other end of the scale is a ‘Design & Build’ contract where the contractor actually designs much of the work to be done.

It must also be mentioned, that when a project is being designed by a contractor, the company MUST have the appropriate level of competence and Professional Indemnity insurance to carry out the design work. This can be achieved by outsourcing to a Structural Engineer or Architect. However it is asking for trouble if a small building contracting firm designs a structure, dwelling or substantial alteration themselves without the appropriate level of design competence. The worst case scenario is if the structure fails or becomes unsafe. As developer, it is possible you could find yourself in court under a charge of negligence for failing to ensure the project was properly designed. Always approach the planning of your project in a professional manner.

For a guide to choosing the most suitable JCT contract, visit their site at:

http://www.jctcontracts.com/contracts/choosing.jsp

Please note, this article has been considerably condensed. Buy for the full version for only £2.

Feb 15th, 2012

The Property Speculator’s First Podcast!

After a steep learning curve of ‘XML Files’, audio editing software and getting over the hatred of my own voice, I’m proud to announce the first of hopefully many podcasts.

In this edition, I interview Ryan Fuller of The Fuller Long Partnership. They are an established firm of Town Planning Consultants headed by 2 former colleagues of mine (James Long and Ryan). Ryan has been a Professional Town Planner for many years and has worked in a variety of settings.

Ryan speaks about how the novice developer should approach the process of planning applications, explains the truth about some widely-held myths and suggests a slightly different way of making development plans than the usual one.

Ryan can be contacted through the Fuller Long website which is at www.Fullerlong.com.

Please note this podcast will be placed on iTunes very soon!

Access the Fuller Long Podcast Here

Jan 29th, 2012

Calculating Build Costs for a Property Development Project

When establishing a budget for a property development, the issue of build costs is hugely important. An accurate build cost value is a vital component of the residual valuation.

Build costs are not just for the construction of new build properties. If an existing property (for example) is to be renovated and the usage changed, or a residential property needs a lot of work to bring it back to a habitable state, the costs of work will be very similar to building from new. So to use new build costs is appropriate in the majority of cases.

© Copyright kim traynor and licensed for reuse under this Creative Commons Licence

Build costs are calculated using the gross internal floor area. This is essentially the area of the internal space measured between the inside of the outside walls. This includes all common areas such as hallways and toilets etc.

Build costs are generally available from 2 sources. The first source is the subscription website BCIS (Building Cost Information Service), the second is SPONS (available in book format and updated every year). Both sources are well-regarded in the construction industry as being accurate enough to use in detailed development appraisals but are expensive when you are beginning your venture (both sources are a fairly similar annual price). When using the resources, you will find that a particular rate per M² or M³ is provided. For example, when demolishing a building up to 50M³, a rate of £49.92 would be appropriate per M³. The larger the building, the less expensive the work per M³ is to have carried out (economies of scale).

One of the recognised shortcomings of the residual method of development appraisal, is that the output (the land value) differs a great deal through only small changes in one of the inputs (in this case, build costs). The larger the project, the more likely it is to happen. For example, if 30 houses of 100 M² each are being constructed at a rate of £1,000 per M², the total build costs will be £3m. If the build cost rate were to increase to £1010 per M², total build costs would increase to £3.03m. So for just an increase of £10 per M², the total build costs would dramatically increase by £30,000. Therefore it is important to get as accurate a figure as possible. Fortunately the sources mentioned above are regarded as very accurate.

It can be a time consuming process reading through the construction cost guides if you are unfamiliar with them (I don’t profess to be an expert myself). They are extremely thorough and specific, however if you simply want to know how much it will be to build a 3 bedroomed house (at a rate per M²) then a far cheaper (free) option exists. A regularly updated source of inclusive build costs is at: www.homebuilding.co.uk/buildcosts. It obviously depends on how deeply you want to go into the analysis of costs, but this alternative provides accurate information if it’s an inclusive rate you’re looking for. It’s compiled for self-builders, not really private property developers but it offers a good indication and shows the degree of variance across regions. If you do need to go into the deeper intricacies of building costs then I suggest purchasing either the SPONS book or taking out a BCIS subscription (incidentally, SPONS books are available ‘used’ at a discount at places such as Amazon Marketplace but obviously the accuracy suffers as they age).

At the last update on the ‘homebuilding-buildcosts’ site (Dec 2011) a large 2-storey house being built in the South-East to an excellent standard by main contractors would be in the region of £1291 per M² to build. At the opposite end of the spectrum, a small single storey house built to a reasonable standard through a combination of DIY and sub-contractors in the North-East or Wales would be in the region of £793 per M². These values have been put together by experts using the more detailed costs guides.

The more detailed guides (BCIS & SPONS) allow the reader to obtain far greater information. For example, according to the 2011 version of SPONS:

High quality Inner London apartments would be in the region of £2350 – £2850 per M² to build.
Large budget student schemes with en-suite bathroom would be £1025 – £1275 per M² to build.
Warehouse conversion to apartments would be £1025 – £1275 per M².
Minor office refurbishment in Central London would be £435 – £530 per M².

Clearly some interpretation has to be applied to this information, as regional variations on prices can move beyond the ranges listed. It should also be remembered that these prices are inclusive of builder’s profits and overheads, but not of professional fees associated with the work.

For the more specific prices:

For machine-excavated trench fill foundations at 600mm wide x 1 metre deep, a rate of £79.00 – £100.00 per metre.
For facing-brick walls, single skin and pointed both sides would be £81.00 – £105.00 per M².
For a cement and sand screed floor of 50mm thick would be £12.40 – £16.80 per M².

The SPONS books and the BCIS provide a huge amount of information (the SPONS book is over 1,000 pages). You must remember though, that looking into the specific works and simply adding the costs together is risky because without experience, it’s easy to overlook some vital work component. This can have a significant effect on the overall build costs.

Dec 15th, 2011

Developing a Victorian Property

As I’ve mentioned before, it’s never an easy ride developing a property for profit. Developing a listed property is more difficult still and not to be recommended for the novice developer. That said, it’s almost always the listed properties that manage to keep their romantic appeal over the more modern ones.

The vast majority of period property purchasers are pleasantly surprised to find that period features have been retained and enhanced. It can be quite disappointing for viewers to a period property to discover that the interior has been cleared of features and looks like a new-build. Therefore, it’s important to remember that if a property is a period one, you must keep the internal and external features.

Victorian properties are probably the most common of all listed properties. This is because the Victorian era covered many years. It took over from the Georgian period and began in approximately 1840 and lasted until around 1900. It’s fairly easy to notice the crossover period between Georgian and Victorian, unsurprisingly Georgian architectural features blended gradually into Victorian. A specific feature of typical Georgian architecture is symmetrical and proportional windows of many small panes, where the height of the windows is exactly double that of the width. Victorian properties however have very tall and narrow windows of only one or two panes. Technology had moved on to facilitate larger panes of glass which allowed more natural light to enter the property.

At the small end of Victorian properties, there are the long rows of terraced houses. These are situated in almost every town and provide the novice developer with an ideal property to learn the ropes on. They tend not to vary too much in layout; the only differences are the orientation of the stairwell and which floor the bathroom is on. Victorian properties tend to be robustly designed and built but occasionally turn out to have no foundations. This means that a survey is highly recommended as it’s not unheard of to find subsidence to some degree in these properties. On a more optimistic note though, most of these houses that were built without foundations have now had the necessary work carried out to prevent catastrophic movement. Always make sure though…remember – caveat emptor.

© Copyright John Goldsmith and licensed for reuse under this Creative Commons Licence

Larger Victorian properties are often built in a ‘villa’ style. This means that they were built in a certain architectural style that the smaller terraced houses weren’t. This style can be shown in the ornate features that these properties have, such as intricate window mullions and projected porches. Much of this was influenced by the gothic revival period (1850-1880). These houses often had cellars and attic space for servant’s accommodation. Victorian houses tended to be either terraced or detached in towns and cities. Semi-detached Victorian properties are more likely to be found in rural areas as they were built for the workers on the large estates.

The Victorians were the first to introduce the beginning of what we know now to be Building Regulations.

From the middle of the 19^th century, there was an increased importance placed on sanitation in properties. Of course this wasn’t always particularly comfortable in the small properties (i.e. outside toilets) but larger houses were more likely to have a (downstairs) cloakroom built. Proper drainage (meaning the sewers were enclosed) was also introduced. Towards the end of the Georgian period, it was only a very few properties that had running water. By the end of the Victorian era, hot and cold running water was available in the majority of homes. The cellars of Victorian houses were used for the storage of coal. The pavement outside and immediately in front of the property would have a small flap or cover that allowed the coalman to pour the coal directly into the cellar without having to carry the coalbags through the house.

The Victorians strongly believed that a ‘bare’-looking interior was a sign of very bad taste. Subsequently, they tended to fill their homes with as many knick-knacks as possible. It is extremely unlikely that anyone would follow such a trend in modern times. However, it’s also not a good idea to attempt to incorporate a modern, almost minimalistic look into a period home unless you absolutely know what you are doing and it can be done sympathetically. Most people can’t. A compromise between the two would be to look for comfortable and classic looking fixtures and furniture to acknowledge the history of the property without overfilling it. The general intentional feeling of Victorian homes is of comfort. The Victorians prized their home-comforts more than the Georgians.

In common with the Georgian era, Victorian house interiors in towns and cities were generally not painted in particularly bright colours. This was because of a combination of the pollution and the fact that paint technology was not very advanced. As the era progressed though, more interesting colours became popular such a rich greens and reds. The general idea was to use a single colour as a main one and add several ‘secondary’ colours to compliment it. These secondary colours were intended to compliment the main one by giving a contrast but without clashing. Varying textures between mouldings, ceilings and woodworks was also popular towards the end of the 19^th century.

The most obvious features of Victorian interiors is coving, cornicing and ceiling roses. Originally, Dado rails were fitted in dining rooms at chair-back height. This was to protect the walls from dining chairs hitting them whenever a diner stood up. Picture rails were fitted in drawing rooms and parlours, where they did actually support pictures hanging beneath. Coving and ornamental woodwork should be painted in gloss white paint. This gives a ‘clean’ look that contrasts with the colour of the wall (just make sure the lines are straight…).

Wallpaper also became popular in the Victorian era. Although it was not quite as you might imagine. The patterns were extremely bold and were full of florals and swirls. In common with the idea of filling the property with lots of ornaments, it’s unlikely a developer would seek out Victorian style wallpaper unless it was intending to be a very accurate ‘museum’-type property. A good compromise would be to look at the Laura Ashley type of wallpaper. This would be regarded as sympathetic to a Victorian property, without being too accurate (i.e. dark). There’s no reason for a Victorian property to ever be dark. If the interior furnishings and decoration are light, then in combination with the tall windows, a Victorian property can be a very pleasant place to be.

May 31st, 2011

Risk Management in Property Investment & Development

Let’s be clear on this, investing in or developing property represents an element of risk to a greater or lesser degree.

Most prospective property developers and investors realise this but some subsequently procrastinate over taking positive steps to progress their venture. Perceived risk can include:

Getting a property project only partially complete before running out of cash.
Experiencing a problem during build of such scale that the contingency fund does not cover it.
Finishing the build and not being able to sell or let the property in order to recoup costs.
The property build/conversion will cost so much that the developer with experience substantial financial hardship in order to get it finished.

All these concerns can be effectively managed and guarded against prior to the start of the project. This is where a particular approach is vital; these risks should not put anyone off engaging in a property development or investment project.

© Copyright Jeremy Bolwell and licensed for reuse under this Creative Commons Licence

Risk is the ‘price’ of the return from a venture. It’s been said that ‘the higher the risk, the greater the reward’; however this seems (to me anyway) to be a contradiction in terms. If risk is high, then there is no guarantee of reward at all. People generally have very differing views on the amount of risk they are comfortable to adopt. However, if a developer is looking to borrow in order to fund the purchase and renovation/conversion of a property, then the mortgage provider will be very keen to see the project organised as low a risk as possible. This includes the developer putting around 50% (for first-time developers) of their own money into it.

So in conclusion, it’s important to minimise risk wherever possible. And to be honest, property is one of the lower-risk methods of investment and capital building. It’s not THE lowest, but there are far riskier investments available to those with the appetite.

To address the points above in turn:

1. Running out of cash mid-project.

This element of risk is managed by careful planning of the project. Many novice developers run low on cash, but it’s almost always because the budget has not been organised properly. The principles of running a financially viable project are:

Purchasing the property at a good price. It takes time to select the right property; it must fulfil many criteria – purchase price being one of the most important. If you are purchasing at an auction and the bid goes above your maximum level, you MUST resist the temptation to continue bidding. In my experience, if one opportunity has come along, then the chances are that another is not far behind. Once in a lifetime chances are just not that common. It’s far better to purchase a property at a good price and sell at an average one, rather than buying at an average price and hoping to sell at an exceptional one.

Agreeing a fixed-price contract with the builder. This is insisted on in many cases when obtaining development finance. It should be possible to agree stages of build with the contractor, where you pay a proportion at the end of a stage before moving on to the next. The agreement is likely to specify what is not covered in a fixed-price agreement. This might be substantial ground work or structural alterations. This is all in the negotiation.

Sourcing materials shrewdly. This might fall into the principle above, but if you intend to do it yourself, approach it as a business and not a personal ‘statement’. Buying the property and approaching the building work with your head, not your heart helps so much in this. Keep in your mind that the aim is to get the property let or sold and move on to the next.

2. Blowing the contingency fund on an unforeseen problem.

A contingency fund is an excellent idea. This is usually around 10% of the whole project budget. A fund of this amount will actually be a condition of borrowing with many companies (you’ll have to produce proof of the amount in a bank account).

So if a whole project budget is £240,000 for example, a contingency of £24,000 should be available in addition.

If the principles above are followed, there really should not be any reason for unforeseen problems to require more than 10% of the budget to rectify. Ground, structural and roof problems are usually the most expensive to sort out, but almost all of these can be taken into consideration if a good survey is carried out prior to purchase. Excessive build/conversion costs are another one of the criteria that should be considered before purchasing the property.

In some cases, problems do arise that there really was no way of knowing about before the project is bought. In this case, a degree of imagination is sometimes called for to resolve it without blowing that contingency fund. The most expensive and challenging problems are things like disused wells or buried objects. However these are rare.

3. Not being able to sell or let the property at the end of the building phase.

This is a problem that has affected many aspiring property developers over the past 4 years. As mortgage companies suddenly tightened their criteria for lending, the amount of buyers across the market as a whole reduced to such an extent that demand came to an abrupt halt.

This might be regarded as the greatest of all the risks involved in a property venture. It is theoretically possible to have a property advertised for sale for an indefinite period of time; and this scares the life out of many prospective developers.

Property is widely regarded as being highly ‘illiquid’. This means that the value cannot easily be released. The opposite end of the scale is cash; this is obviously a ready source of capital that can be used easily. Because of the nature of property’s lack of liquidity, it has certain characteristics such as a degree of stability of value (due to the fact that it is a tangible item, unlike for example – company shares). Unfortunately because of this shortcoming, capital can be ‘wrapped up’ in a property with little way of extracting it.

The way this problem is managed, is again by proper financial management. To reuse my quotation from above…. far better to purchase a property at a good price and sell at an average one, rather than buying at an average price and hoping to sell at an exceptional one. You must remember this! In many cases, the reason why properties stay on the market for so long is because they are overpriced for resale. Sticking to a rigid budget dramatically reduces this risk because there is less chance of financial overstretch. You should certainly make sure that you have planned for the property to be complete yet vacant for around 6 months after the build.

4. Experiencing financial hardship in order to complete the build.

Clearly, this is a variation on the perceived risks already mentioned. Most successful private developers have sufficient ‘surplus’ income to cope with the increased monthly outlay to cover another mortgage.

Some amount of flexibility will be needed to cover unforeseen problems, but the contingency fund will be in place to cover them.

There are not really many valid reasons why novice developers should find themselves enduring financial hardship to get their project completed.

To conclude, sensible and realistic budgeting should go a very long way to managing the anticipated risks involved. However as I’ve mentioned already, property development and investment is risky; if it wasn’t, there would be no money to be made in it.

May 13th, 2011

Understanding Building Regulations

Building Regulations are as important to a property developer as Planning Permission is. For all new-build, newly-converted and renovated buildings, the building works carried out have to comply with Building ‘Regs’ by law.

According to the UK Government Planning Portal, if you want to:

1. Put up a new building

2. Extend or alter an existing one

3. Provide services and/or fittings in a building such as washing and sanitary facilities, hot water cylinders, foul water and rainwater drainage, replacement windows, and fuel burning appliances of any type.

…the work must be compliant with current (that is, current at the time of work being carried out) Building Regulations. They must also not make other fabric, services and fittings less compliant than they were before – or dangerous.

Building Regulations will very likely also apply if you intend to change the use of a property, for example a shop being converted into a residential dwelling. Although a property in its original use might have been building regs’ compliant, the proposed new use may have different requirements.

To summarise, any work that involves the following, falls under the term ‘Building Work’ and will therefore be subject to Building Regulations:

1. The erection or extension of a building

2. The installation or extension of a service or fitting which is controlled under the regulations

3. An alteration project involving work which will temporarily or permanently affect the ongoing compliance of the building, service or fitting with the requirements relating to structure, fire, or access to and use of buildings

4. The insertion of insulation into a cavity wall

5. The underpinning of the foundations of a building

6. Work affecting the thermal elements, energy status or energy performance of a building.

Before commencing work you should refer to Regulation 3 of the Building Regulations for the full meaning of ‘building work’ or, if you are unsure, seek advice.

Speaking from experience, Building Regulations are not the easiest publications to work through. They are changed very often and tend to be quite ambiguous in many aspects. A link to the 2010 Building Reg’s is here.

If you are planning on using a builder to carry out renovation or development for you, then the responsibility to comply with Building Regs is on him. However, I advise you make all possible enquiries to check that not only are your builders indemnified by insurance, they know their way round the regulations too. Once the work is finished, it is likely to be very difficult to get the builders back to rectify any non-compliant work.

If you are carrying out the building work yourself, then you must be familiar with the regulations to ensure that the workload is planned correctly, the materials are compliant and the standard of workmanship is also high (yes, this is enforced as well). If you are not familiar with the regulations, then it is very advisable that you recruit the services of an appropriate professional consultant such as a Building Surveyor, Architect or Structural Engineer (as appropriate to the work that is being carried out).

Building Regulations are enforced by the Building Control Service. This can be provided by either the Local Authority Building Control Service, or an Approved Inspector’s Building Control Service (they should be registered with the Construction Industry Council (CIC)). The Approved Inspectors though are less likely to be able to work on plans for new-build houses, flats or private-rented property. They are better suited (for insurance reasons) to working with extensions and additions to properties.

If the work is substantial, a ‘Full Plans Application’ is made to the Local Authority. It involves the submittal of detailed plans and material specifications of the intended work. The plans should be drawn up by an architect or designer (this might be a bit expensive). The point of this approach to obtaining approval is that any ‘glaring’ problems can be rectified before the project starts and it becomes even more expensive to remedy.

The cost for the Full Plans application is collected in 2 lots. The first payment (the plan charge) accompanies the plans when they are submitted. The invoice for the second payment (the inspection charge) is sent after the work has begun. This charge is to pay for inspection(s) that will be carried out on the site during the build. Once the design problems are resolved, an approval notice will be issued. Work must then commence within 3 years from the date the plans were deposited. When the build is complete and is judged compliant with the Regulations, a certificate is issued to confirm this.

The alternative route to Building Regulations compliance is based upon smaller scale projects such as property extensions, alterations etc. It’s known as ‘Building Notice’ procedure. This cannot be used for buildings that have to be compliant with Fire Precautions/Regulations, or work that will be carried out near or over rain water or foul drains. The building notice approach does not provide for the plans to be scrutinised prior to build. This means that in the inspection phase, any non-compliant work will need to be removed or made-good.

The disadvantage of the Building Notice approach is that a certificate is not issued to confirm Building Reg’s compliance. If the work you are carrying out on the property is funded by borrowing, the lender might very well require the certificate of compliancy.

Note that Building Regulations are only applicable at the time the work is carried out. Once a property has been issued a compliance certificate, no updating is required unless other legislation requires it.

For help in understanding the Building Regulations, there is an explanatory leaflet that answers many questions. The link can be found here.

Apr 19th, 2011

Developing Property on Contaminated Land

There is a (reasonably) well known quote by Mark Twain that goes:

“Buy land! They’re not making it anymore”

I personally quite like this, as it is a very succinct way of reminding people of the relative scarcity and finite nature of land.

What this means to the novice property developer and investor is that theoretically, at some point all land could be bought and developed upon. Of course, this is never likely to happen but what is foreseeable is a point where all available land has become so sought after that the asking price has been driven up to a level where it renders a project financially unviable.

In this situation, brownfield sites (sites that have developed previously and are currently available for a new use; possibly subject to a grant of planning permission) might have to be considered. Sometimes, these plots will have been used for activities that would render them contaminated (for example, a filling station). When novice developers think about a contaminated site, they might visualise being ankle-deep in oil or waste fuel while the building work is carried out. The reality is that this could never be the case.

The control of contaminated areas of land is governed by either the planning process as a whole, or Part IIA of The Environmental Protection Act 1990 (EPA 1990). Under Planning Policy Statement 23, a property developer is responsible for making sure the development is safe for its intended use. So if the site is suspected or there is proof of it being contaminated, the planning authority will require assessments to be carried out before any planning consent is granted.

Under EPA 1990 Pt IIA, if the site is not dealt with through the planning process, then a local authority has an obligation to investigate any potentially contaminated land within its boundaries. If any contamination is found, then the developer must carry out a clean-up if the contamination is considered a risk to people, property or the environment. Clean up of an area will include some or all of the following:

‘Desktop study’, site visit and initial risk assessment. This will entail an appreciation of the site history; original, current and future/proposed use; information on expected contaminants and their sources; information on potential ‘receptors’ such as people and flora/fauna. When Phase 1 has been completed, a report containing a preliminary risk assessment and recommendations for further investigative work will be submitted to the local authority and the Environmental Agency prior to moving on to Phase 2.
Site investigation and risk assessment. This phase involves the investigation into the scale of the contamination. This could be heavy metals, oil and fuels or gas. A ‘Sampling Strategy’ will be drawn up to specify the depth, scope, pattern and frequency of sampling. An assessment of risk to human health, waterways and other receptors will also be carried out at this stage. Upon completion, a report will have to be submitted to the local authority and The Environmental Agency detailing the recommendation as to whether remedial action is required to make the ground fit for use.
Remediation approach and works. The approach to be adopted for remediation will include the intended standard to be achieved. The works is when the physical work is actually carried out to make the site fit for development. It might include the removal of contaminated soil from the site and/or the introduction of a layer of impermeable material to prevent contamination seeping through. Any potential source of contamination will also be remedied to prevent further contamination.
Validation of remedial works. This is when the ground will be re-sampled to establish how effective the works have been. A Remedial Works and Supporting Validation Report must be submitted to the local authority and the Environment Agency. If it has been successful, then a written decision will be issued and the usual application for planning consent can be submitted.

Clearly, this is not a particularly speedy process. And it is also unlikely to be particularly cheap. However, there are specialist companies who will look after the process for you. Assessing the cost involved is a difficult thing to do because it depends entirely upon the scope and nature of the contamination, the size and location of the site and the intended eventual use of the site.

A very approximate indication of prices however is:

Removal of contaminated material – £50-£170 per cubic metre.

On-site encapsulation – £40-£100 per cubic metre.

Soil washing £60-£120 per tonne.

Items that might have to be included in the above are:

Haulage costs

Landfill tax

Accommodation of personnel (if required)

Traffic management

The best recommendation I can provide if you are considering developing on a site you suspect to be contaminated, is to speak to one of the specialist companies (links provided below). They are fairly unlikely to be able to give you a very accurate quote for clean-up, but should be able to give you some idea of approximate costs. An appraisal could then be carried out to see if the project is financially viable.

Building on a contaminated site might financially benefit you, as many other developers might be unwilling to use the land, even post clear-up. Subsequently, if you considered this a worthwhile idea, the land cost might prove to be substantially cheaper than the alternatives even after inclusion of the cost of clean-up.

Links:

Environmental Agency page on Contaminated Land

http://www.environment-agency.gov.uk/research/planning/33710.aspx

Land Remediation Specialists

http://www.trm-ltd.com/

http://www.ecologia-environmental.com/

http://www.thelkgroup.com/

Jan 24th, 2011

Planning the Workload in your Property Development

Picture the scene, you’ve just completed on your first property development project. The keys are yours and for the last month or two, you’ve been mentally running through what you can do to this, your very development property and the first step on the ladder to becoming a professional property developer. You might have a very long list of things that need replacing, reworking, extending, removing or simply repainting. Tempting as it is to get stuck right in, I urge you not to rush in quite so quickly.

There is always a logical order to the various tasks that need to be completed; if you are using a builder he will advise you on what you can do first (if you intend to carry out some of the work yourself). If you intend the builder to complete pretty much everything, then depending on the scope of the work, a Project Manager might be needed.

If you are planning to carry out the majority or all of the work yourself, then a plan must be put in place to avoid some potentially expensive rework later on. It may seem obvious to many novice developers that certain jobs need to be progressed to a certain point or completed before other work can be started, however it just doesn’t occur to others. For example, an expensive floor might have been laid in a kitchen or bathroom; this should not be the point at which you begin to consider the plumbing requirements. The plumbing should really be almost completed before floors are laid.

Again, it may seem obvious, but you must have a plan in place before you start trying to progress individual tasks. A logical approach is suggested as:

All mains services should be located and well marked. This is so that any potential hazards or financial disasters (such as a mini-digger damaging a water-main) are avoided as much as possible. If the existing property is going to be demolished, the location of the services will also need to be incorporated into the design of the new development. These mains services MUST be disconnected by a qualified tradesman, through the appropriate company). If the water supply onto the site is working, a lockable box should be fitted around the standpipe for security.
Look at the ‘largest’ aspects next. This would be any possible extensions to the property, any groundworks such as underpinning, additional foundations, anything involving drainage, mains services or tree-roots etc, and any structural work on the building as a whole, such as brickwork or the roof. There will be overlap of various trades and jobs during this process because there is never a ‘clear-cut’ boundary between work stages.
Next, the property should be made ‘weatherproof’ as soon as possible. In large projects that involve extending the property or replacing the roof coverings, this work should be completed before most other work is begun. Weatherproofing the property simply means ensuring that if it rains or snows, the inside is dry so that work can continue within. External doors and windows are normally fitted at this point.
Electrics and plumbing should then be planned out. It is often said that you can never have too many electric sockets; however if aesthetic appeal is important to you, plan carefully where the outlets will be placed to make them discreet (such as behind where furniture is likely to go). If you make a drawing of each room with the location of the electric sockets, this should form part of the contract with the builder/electrician. Plumbing should be equally as carefully planned. This includes provision for any en-suites, additional cloakrooms, utility rooms, outside taps, underfloor heating etc. The electrical cables and pipework can be routed through the floors/ceilings before the boards are put down.
The property can be made to look much smarter because it is then time to plaster over all the conduit for the cables, and the floorboards and ceilings can be put in too. Included in the plastering, is coving and tiling.
The walls are coated with a watered-down mixture of PVA glue to seal the dry plaster. Once this has dried, the walls can be painted. This is also the point where kitchens and bathrooms can be fitted.
There will now be many tradesmen progressing different aspects of the development. At this point, 2^nd fix carpentry (architrave, skirting boards etc), electrics (light fittings, wall switches and sockets) and plumbing (taps, toilets and showers) can all be fitted.
The final phase is really only carpet fitting and decorating. These are the two finishes to the property that are most likely to show sign of marks (like muddy boots or scrapes along the wall). Therefore it makes sense to have these jobs completed as the very final activities.

The above is merely a suggestion, every property is different and the scope of the work carried out in each development project will vary a great deal. The main point of this post is that a plan should be established to place the activities into a logical order. This will minimise the risk of expensive rework.

Nov 8th, 2010

Groundworks

Please note, this article has been considerably condensed. Buy for the full version for only £2.