SME housebuilders face unique challenges in the construction industry. By following these essential tips, you can enhance your chances of success.
Tips for SME housebuilders:
1. Pre-commencement planning conditions: Understand fully before you acquire site with planning.
2. Plan an exit strategy: Local agents, exhibition, sale off plan to investors? Realism rather than hope factor needed here.
3. Establish your view of the market: Be realistic on current market conditions. Sales/rental market.
4. Construction costs: Take professional advice (QS) to be realistic about cost profile of scheme early on. Finalising the design/fit out as far as possible in order to avoid unforeseen costs during the project. Carefully consider the level of contingency. Take a view on ongoing cost inflation and build this in to the appraisal as far as possible.
5. Utilities: Don’t underestimate the cost of utility connections. Timing is also paramount in achieving a planned project completion date and early discussions with application to service providers are well advised. Delays in applications can have a significant impact on project completion date with associated risk on sales timing and finance costs.
6. Ground conditions: Diligence required in assessing the drainage requirements, utility connections, contamination, environmental issues. These all need to be assessed early on. A significant element of the development risk of a scheme is in the ground works.
7. Party wall issues: Avoiding investigating responsibility for party wall and boundary issues at an early stage could add both cost and delay during the construction process. If necessary, seek professional advice from an RICS party wall surveyor at the outset.
8. Procurement route: Clearly select the development procurement route from the outset. Whether design and build, traditional or construction management route, responsibilities need to be clearly understood and documented by all parties to avoid any dispute later on.
9. Build relationships: This is generic advice but applies to all active parties in the development process including LA planners, Building Control inspectors, neighbouring property owners, Estate Agents, Finance, QSs and other professionals.
10. Finance: Finance provision from an experienced development finance lender can be extremely beneficial in terms of achieving the right finance terms, the lender’s understanding of the construction/development process in case of any issues arising during the project programme. This can also be beneficial in establishing a long term relationship for future projects and evolving the business going forward.
By combining these strategies, you can navigate the complexities of the industry and achieve your goals as an SME housebuilder.
