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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Understanding Development

Land and planning specialist Paul Higgs comments on the evolving property industry and why Build-To-Rent might be your next best move

Historically the property industry had been fairly clearly split between people and organisations focusing mainly on either investment (holding property for income and/or capital appreciation) or development (building and selling property to realise a quicker profit) and operating in either the residential or commercial sectors. In recent years things have been changing rapidly, and continue to change. Some of the background and history to this is set-out below.

Most recently, as a result of new and proposed tax rulings and policy changes, things are being made much more difficult for all but the largest of property companies, institutions and investors. It seems pretty clear that the government doesn't appreciate or value the important role that smaller investors play in increasing and maintaining housing supply. Many of the traditional property investment models and strategies are becoming increasingly less profitable and some not viable at all.

One growth area where I believe significant returns will be made is Build-To-Rent (BTR). Although most talk around BTR seems to revolve around large-scale schemes and institutional investors, there is also massive scope for smaller experienced investors to get involved.

The reason I specify smaller 'experienced' investors is because BTR obviously involves development. It's important to understand that development is a high-risk, high-reward activity that should not be approached lightly. Whether building-to-sell (the traditional speculative development model) or building-to-let (to hold for your own portfolio), development can be massively profitable but you must ensure you understand the risks and only work with those that are suitably qualified and experienced - that is to say they've actually been there, 'seen it and done it' themselves. Check them out and make sure.

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