The nationwide property development and training company has witnessed a “significant” surge in property investors pursuing a development career.
“We’ve seen a lot of landlords looking over the fence at development thinking, ‘What is that about? How could I get into development?’”
While they still want to build their portfolios, he pointed out that this gives them another route to do so.
Ritchie referenced the new permitted development rights (PDR) coming into force on 1st August, which will allow unused commercial premises to be converted into homes, delivered through a simpler ‘prior approval’ process instead of a full planning application.
The rules are expected to revitalise the high street and encourage more people to live near it, transform unused buildings, and make the most of brownfield land.
“This is the biggest encouragement for anyone, and landlords particularly, to enter and become a small-scale property developer,” he said, highlighting that it is the next step up from the ‘fix and flip’.
Adding to that, he emphasised that there is more office and retail premises coming to the market, available to be reconfigured as a result of new ways of working and shopping.
He said that this “abundance of stock”, combined with the new PDR, is where the “great opportunities exist” in 2021 for landlord-developers.
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“[By leveraging] your way into a commercial building, you can do a development for the same price of [buying] a straightforward, vanilla BTL in certain parts of the country,” he explained.
He added that investors can then either build it to hold and rent out — thereby expanding their portfolios — or release cash from it.
“If you want a really good return, it is about [diversifying] the portfolio you are building and doing some development,” he said, “Development has risk to it, but it’s about being educated.”
When discussing how landlords with little experience in this area can secure finance for their projects, he stressed that obtaining funding isn’t the problem — the key is how you approach it.
“It’s all about credibility,” he said. “To be a developer, you need management, organisational, decision-making and people skills.”
He underlined that landlords entering this sector need to demonstrate these skill sets and surround themselves with an experienced team to build credibility. This includes employing a project manager and a main contractor to look after individual trades, so that landlords can still manage their portfolios while their professional teams run and control the development.
“There is more money out there than there are deals, so the person with the deal has the opportunity.”
The full video can be watched here.