James Law of Stacks Property Search, says: “Property prices have increased significantly over the course of the pandemic, in some areas by as much as 30%, and when buyers do find something they want they’re shocked by the price. For example, reluctant to spend £1.2m on something that’s ready to move into that would have cost under £1m two years ago, they start seeking something for £800,000 that needs substantial work.
“The harsh reality is that this strategy is not a certainty. The cost of builders and building supplies have increased by as much as property, and everything is difficult to come by. Quotes are coming in at eye-watering levels, and there’s no guarantee that the price will be fixed over the course of the project as prices continue to rise due to a range of factors – Brexit, the pandemic, and energy prices to name the headliners.
“Add to that the fact that builders’ lead times are double or three times what they were two years ago, and the best ones are booked out for months or sometimes years in advance.”
So is it crazy to buy a project?
Ed Jephson of Stacks Property Search, says: “Buyers are constantly looking for higher quality, and sometimes the only way to achieve this is to do it yourself. Future-proofing from an eco point of view is becoming more important, and buyers are increasingly aware of running costs. Buying an old property that is perfect aesthetically but requires retro-fitting makes little sense, so in this respect taking on a project is more sensible in the long term.”
James offers his advice for those considering taking on a project: “Be realistic, accept that the project will take longer than you expect and will cost more. The rule of thumb used to be to add 10% contingency; this should be increased to at least 20%
“You should start researching and gathering your team of architects, builders and contractors as soon as you’ve had an offer accepted, so when you have dates for exchange and completion you can book the work in. When negotiating the purchase try to establish the vendors’ willingness to allow tradespeople to visit prior to completion.
“Buy for the long term, and if you’re struggling to get the numbers to add up, seek out a house that has the potential to be extended at a later date.
“Factor in plenty of time for Planning Permission, in many areas the process can take as much as a year as more and more homeowners look to adapt their homes. Putting in a planning application before you exchange will considerably reduce delays, but you’ll need to accept the hit on the fee if the purchase falls through. If you can get a pre-application appointment to reduce risk then do, but in most areas, these are hard if not impossible to arrange.”
