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De-risking Development

Social housing developer Dorian Payne talks with Richard Bowser

The opening response to my first question to property developer Dorian Payne underlined that he is not exactly a property novice as he explained how and why his career in property first started.

“I come from a family of ‘accidental property investors’ as my parents had built a large portfolio of single let properties over many years in south Wales. It certainly helped that my father was a builder and my mum had some spare time to deal with property and tenant management. My father had always wanted me to become an electrician and my brother and I spent a lot of time at a young age at various refurbishments of houses as he carried out the work doing what is now widely known as the BRR (buy, refurbish, rent) approach. To be honest the hands-on practical work did not really appeal to me, so I helped my mum with the office side of the business.  

“Their portfolio was built-up over many years in an old fashioned piecemeal manner as the buying opportunities came along. I left school myself at 16 and went on to study accountancy and then set up a letting agency with local landlords and then scaled that to a sales agency plus a finance brokerage. I then started buying myself, using the BRR method, and then onto doing small-scale commercial conversions and also some flips (buy to sell). This led to working with investors and doing some small new-build projects to sell onwards, which made me more wary of the risks with development as one particular project took much longer to sell than expected.”

So what have you been doing in recent years? – “I set up the Castell Group some three years ago and we have focused on creating social housing projects here in south Wales to minimise the inherent market risk with property development. I wanted to be able to forward sell our projects and having done various schemes in the last few years, we are now in the position where the RSLs (registered social landlords) will also forward fund us on developments.

“Castell Group are a land-led development and construction group. We have a land sourcing team to find our own sites and then take them through planning, and then we build them out with a sale to RSLs. Our profits come from the land uplift and the construction margins. The margins in this sector of social housing are not that substantial but this approach ensures we can grow the business whilst providing much needed accommodation in the south Wales area.”

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