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Using an Option for a Planning Uplift

Solicitor and property entrepreneur Tariq Mubarak talks with Puneet Gupta of PTF Property

In this month’s interview Tariq talks with Puneet Gupta of PTF Property to talk through a planning uplift deal that they did a few years ago. He talks through the details of the deal, how they found the opportunity along with how and why it was structured in the way that it was.

TM: Puneet, tell me a little bit about yourself, your background and how you got into development?

PG: Hi Tariq, I'm a shareholder in PTF Property. We have two main areas to our business - one is our development side and the other is our buy and hold social housing side. As for my background, I'm a qualified accountant - I trained with KPMG, then worked in banking. I became interested in property after reading, Rich Dad, Poor Dad by Robert Kiyosaki and a few related type books.

When I began my property journey, in my 30s, I trained with one of the national training companies - that’s when I realised there is a need for social housing focused Houses in Multiple Occupation (“HMO”), especially in southeast London. My wife and I started buying properties to convert them into HMOs, which we used for social housing, particularly for vulnerable adults. That enabled us to leave our corporate jobs, living off the income we created from property instead. That was great for us - it allowed us to start a family and spend more time with each other and our children.

One of the challenges with investing in this way - buying and holding - is that you have a certain pot of money to start with and once you buy some assets, you run out of money. You can try to recycle as much as possible but that is a slow process and as you know, there are challenges with that approach. We realised that if we're going to continue building wealth, we need to look at other ways - either through development or planning uplift, etc.

I started attending property networking meets regularly, particularly the event hosted by John Corey in the City. It was there that my interest in property development was ignited. There were very interesting property developers presenting at that event. That event is where I met my now business partners - Timur Ashimov and Francis Hur. Francis is an architect and runs a small practice. Timur has an investment banking background and owned some HMOs. Timur and I did a small joint venture together in Lewisham, London, and we stayed in contact since then - that was in 2016.

In 2017, the three of us decided to start PTF Developments. When we started, we were focused initially on trying to buy sites on the open market that already had planning permission. Pretty much on every single deal we bid for, we were being outbid - the prices people were willing to pay for sites with planning permission on the open market was just crazy. We couldn't quite understand how they can make the margins on those sites. It was obvious that they were using lower build costs or they had lower finance costs. A lot of our competition were builder-developers who of course have their own in-house build teams, which meant they could build projects at cost. We figured that because they employ staff on their books, they have to keep bringing in sites to keep churning projects in order to pay their staff. We realised that buying sites with planning permission on the market was going to be very difficult for us, as a business model.

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