Follow The Smart Money: UK Property Development Is Booming!
This confluence of factors means it is a great time to look in greater detail at the industry and identify the opportunities that are abundant right now. In this article, I will show you exactly what is happening in UK property development and how you can take advantage of these trends.
Billion Pound Corporations Buying Or Developing UK Property
- John Lewis building 10,000 rental homes.
- Australian bank to buy, develop and operate £1 billion of UK residential property.
- Lloyds Bank opens its residential property subsidiary called Citra Living. It is buying existing developments but plans to “build the bulk of its portfolio through partnerships to develop new sites from scratch”.
Institutional players are seeing the build-to-rent sector as a viable business model here in the UK. That’s because they are aware of the current worldwide trend of central bank money printing and therefore need to lock their capital up in appreciating assets such as property. Following the pandemic, commercial property seems like a less certain bet with an increase of working from home and e-commerce (taking the place of traditional retail).
When the ‘smart money’ is moving in a certain direction, it makes sense to follow. The same pressures that have led to institutions entering residential development apply to the average investor as well. It makes sense to lock up capital in assets to avoid inflation. It also makes sense to get into development given the fact there are now many unused commercial buildings that could be converted into residential property.
Planning Law: It’s About To Get Easier!
- Change of use from commercial to residential without requiring full planning permission, from August 1st.
It’s about to get a lot easier to change the use of property from commercial to residential. You will no longer need planning permission in many cases. However, there are still some hoops you will need to jump through and there will still be an application that needs to be made.
These changes will mean that many commercial buildings will become residential in the near future. Those that jump on this opportunity quickly will make a fortune. If you have been thinking about getting into property development, now is the time to do it.
Taxes On Big Developers
- Proposal: Developers with profits over £25m per year to face new tax to help the government pay for removing unsafe cladding from existing buildings from April 2022.
This tax isn’t likely to affect you directly, but it is important for understanding where the government sees things heading. The government is aware of the growth in the sector and therefore is creating this tax.
The tax is currently designed to fix a specific issue but, as we all know, ‘there is nothing as permanent as a temporary government program’! The government know that there is a development boom and it is set to continue for the long term. They are therefore going to get their cut. Even if this exact tax doesn’t last beyond it’s specific purpose, similar taxes will take its place. This is a sign of government confidence in the industry and therefore is a positive overall.
With big business and government backing the residential development space, the future looks bright. The only question that remains is, are you going to take your slice?