As property strategies go, some see it as the new kid on the block, and it has recently taken off in a big way. The truth is; however, it’s been around for quite a while – it’s just never been quite as popular as it is now. You won’t see any housing estates or shopping centres being built here. Scale-wise, you need to be thinking much, much smaller. Think one step up from a flip. More Danny DeVito than Arnie. Many projects that constitute ‘small-scale’ involve converting a single existing building and take less work on the developer’s part to oversee than your average flip or refurb does. Yet they can produce significant six-figure profits in less than 24 months, with the developer overseeing the project in their spare time. And just like their projects, small-scale developers aren’t in the same mould as their archetypical large-scale counterparts. Think savvy investor rather than multi-millionaire wheeler-dealer. So, if you were looking for a property investment strategy and were thinking there’s not too much going for buy-to-lets at the moment, then small-scale development might be right up your street.
So, what makes small-scale development so attractive right now? Firstly, there are a lot of empty commercial properties all over the country that are ripe for conversion into residential. We’ve got a national shortage of homes and a massive oversupply of unused brownfield sites such as shops, offices, and light industrial units. You only need to travel into your local town to see the dozens of empty commercial buildings, and the situation will worsen this year. More businesses are going to the wall, plus many owners have found the cost of maintaining their buildings increasing (energy, mortgage, maintenance, etc.) just as their value is going down, forcing them to sell. 2023 is, therefore, likely to see commercial values dip considerably, and so, for the aspiring developer, it should be a great time to buy.
A second benefit is that the government is desperate for empty brownfield sites to be converted into new homes, so much so that they’ve recently granted a whole raft of new permitted development rights (PDRs). These PDRs allow us to change the use of a building from commercial to residential without having to apply for full planning permission. It shortcuts the process and gives developers much more certainty since the local council has far fewer grounds on which they can object.