Property development involves as many challenges as it does opportunities. And while the vast majority of challenges may vary from development-to-development, there’s a cluster of common pitfalls that almost always tend to catch developers out.
In this article, we reveal what these common challenges are so that you can be aware of them and, more importantly, avoid them.
Common challenge 1: Weather-related delays
You would be surprised how often the potential impact of bad weather on the progress of any project is not taken into account. Strong winds, persistent rain/flooding, snow and ice have the potential to not just drastically delay construction timelines, but create indefinite setbacks. Challenging weather conditions can lead to sites being abandoned and tools being downed for days and weeks at a time.
Challenging weather conditions can also detrimentally impact supply chain deliveries and the associated transport infrastructure networks. For instance, in areas like the Isle of Arran, materials are often delivered via road and ferry. But if stormy weather prevents the ferry companies from operating, then projects can quite easily indefinitely grind to a halt.
Action: Where possible, always factor in the weather (good and bad) at every stage, making sure you put the relevant contingencies in place to prevent wind, rain, snow, ice etc. putting a dampener on your overall project plans.
Common challenge 2: Supply chain issues
Global events, such as the pandemic and the Russian-Ukraine war, have significantly lengthened supply chains and driven material prices up, further complicating procurement strategies.
While recent reports have revealed that the cost of some building materials are starting to stabilise, the industry-wide supplies of core products, such as concrete blocks, sand, gravel and ready-mixed concrete, are still in decline.
Planning ahead from a financial and materials-ordering perspective has therefore never been so crucial in avoiding unexpected price hikes and overcoming construction material delays.
Action: Order materials, such as windows, kitchens and bathrooms, as far in advance as possible to avoid those inevitable supply chain bottlenecks and wider issues. Consider using buying services which leverage the power of bulk-buying and large trade accounts to secure the best prices and delivery times.
Common challenge 3: Increased costs
As we’ve just mentioned, the cost of most property development-related materials, including softwood lumber, steel and aluminium, has soared in recent years, adding to the financial pressures that already exist when building developments of all sizes.
But there other additional costs you might encounter, especially due to late completions which can lead to penalty fees, additional interest payments, and in some circumstances, push projects over budget.
Action: Build a buffer of at least six months into your schedule for sales, refinancing and marketing activity. Communicate with your lender all the way through the project so they can work with you on the most efficient way to manage and minimise the potential costs of over-running.
Common challenge 4: Unreliable tradespeople
Securing trades support is central to not just delivering your project, but delivering it to the right standard, within budget and on time. But if you are working with tradespeople who don’t turn up on time and don’t work efficiently, your development timescales can quickly get delayed.
If you’re new to property development, ask other developers for trusted recommendations. And if you’ve been in property development for a while, then you will hopefully have already created a list of dependable tradespeople you can count on when you need them.
Action: Attending property networking groups can connect you with fellow developers and tradespeople. Only work with reputable tradespeople who will help you deliver your development within the required timescales. They will invariably be extremely busy, so book them as far in advance as possible.
Common challenge 5: Utilities and infrastructure-related requirements
Utilities such as water, electricity and gas, can easily become a major source of delay if they aren’t handled correctly. Getting developments connected to the required drainage systems can take months, especially if the local authorities and utilities providers are already working through a backlog of projects.
However, as we all know, developments cannot progress within having the associated utilities in place, which must happen before breaking ground. The appropriate traffic management systems, i.e. road closures and diversion, will also need to be implemented prior to the utilities starting work.
Action: Co-ordinate with the relevant utility companies at least six to 12 months in advance of work starting on-site. This will ensure the connections and installations you need are scheduled with the right companies at the right time for your project.
Common challenge 6: Pre-commencement conditions
Pre-commencement conditions set by local planning authorities are capable of halting work before it’s even started. For example, if the drainage strategy hasn’t been approved, or if certain environmental regulations, such as avoiding bird-nesting season, haven’t been met, projects can falter before they even get off the ground.
We know of a developer in Birmingham, who had to delay their start date by 5 months because they hadn’t completed all of the pre-commencement conditions.
Action: Conduct site clearances around the bird-nesting season (March to August), remembering to consider any surveys or approvals required to avoid disturbing local habitats.
Common challenge 7: Highways and access approvals
Over the years, we’ve heard of numerous developers overlooking highway and access approvals. However, all projects that require new access to a main road must be approved by the Highways Authority.
Depending on the size and location of the development, the site may also need local authority approval for Section 38 or Section 247 agreements to ensure proper road access is provided and the route is properly maintained.
Action: Highways and access approvals take time to obtain, so initiate discussions with the relevant local authorities sooner rather than later.
The challenges covered above have been gleaned from the conversations we have with UK-wide property developers day in, day out.
Have you encountered any of these common property development challenges, or are you looking for guidance to navigate them? Don’t let these pitfalls slow you down. Call us today on 020 3012 0166 to discuss how we can support you in overcoming obstacles and ensuring your project’s success. Let’s work together to keep your development on track.
Or apply for funding in just five minutes and get an instant Decision in Principle* today.
*Instant DIPs will not be issued for projects where the loan amount is greater than £3.5m (or £3m if bridging), the profit on cost is below 5%, the loan amount is less than £100k, the loan term is greater than 24 months, if any required data is omitted, or the loan type is portfolio acquisition, special situation, planning gain, or project refinance.
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