I Am A Property Developer – Ask Me Anything!

Thanks Tony.
Yes, I am talking about an insurance claim. Unfortunately some cannabis farmers nearly burnt our house down, but the actions of a neighbour and the trusty fire service stopped them in their tracks and so the damage isn't so severe..
Unfortunately though. I have allegedly under-insured the house - because I wanted to keep the premiums down (which went really high after a neighbour flooded one of our other houses a couple of years ago and our insurance company couldn't get his insurance company to pay up - long story).
The loss adjuster in the current claim has now asked why I valued the house as I did and I said because I know I could build a house for the amount I insured it for. Which is true. Call me a maverick, but if I can get a house built for a certain amount, why should I insure it for more? Equally, regarding the contents I insured them for £10,000, which is more than the value of the contents in the house.
This has meant however, that I now have to justify my decisions to the insurance company and just wanted some ideas regarding some things I know nothing about like 'shoring up' an adjacent house. Maybe someone else on the site might know what is involved? I'm picturing long poles set at an angle holding up the side of a house in case it falls down! I don't want to go to the expense of consulting professionals as I already will not get the full claim, having also taken out higher excesses after the other incident mentioned in parentheses.
Anyway, it was just a long shot. I shall now get back to my builder and see what he has to say....

Ros, Shoring is a specialist technical job, depending on the nature of the structure and the damage being repaired. It can involve relatively simple wooden supports pressing against the outside of a wall, but given the inter-connected nature of terraced houses and the extent of the damage it might also involve the insertion of acrow props and even steel beams to support your neighbour's floors. The cost is really not something that can be estimated by someone on a website who cannot see the actual project. It may also not be suitable for a builder's estimate either. What if he or she miscalculates or causes damage to your neighbour's property by trying to cut corners? I predict your neighbour, their mortgage provider and the insurer are all going to insist that you pay for a proper study and a detailed work and safety specification by a qualified structural engineer before the builder even touches the site.

I'm afraid you are in a difficult position here: it is not easy to calculate the repair and rebuild costs of an old property, especially a terraced one linked to other properties, so you should always err on the side of caution if you want to be fully protected by your insurer. If the loss adjuster is only prepared to fund part of the repair costs, this may be something you have to take on the chin, as the price to be paid for thinking you knew best on the rebuild costs. In future you may want to look at insurers that don't expect you to estimate the rebuild cost, but give you a maximum cover figure and guarantee to pay up to that figure.

A quantity surveyor will only cost you a few hundred pounds, so depending on the size of the project it may be worth the expenditure because it will save you money in terms of time, materials or project management. Their report will also provide you with a useful point of comparison when you come to tender the project to different builders. QS work also often shades into project management, so you could pay your QS to act as honest broker and adjudicate between the different quotes, and discuss the project with your preferred builder to find ways to get the best value for money.

Thanks Tony.
Of course the actual fire damage was limited to a few floorboards and joists, a fallen-down ceiling below this, a burnt doorway and a metre or two of plaster on a wall. Other damage is things like holes in walls and ceilings for the cannabis farmers acoutrements. None of this would in any way affect the neighbours. The question here is hypothetical - referring to a catastrophic event at the property which necessitates the dismantling of the building brick by brick...
Incidentally, I am just about to negotiate my mother's building insurance on her two-bed house in the South Wales valleys and the rebuild figure there (which I haven't touched! and which I presume is index-linked) is £65,000. According to the process I am currently going through it should be £165,000, if one is to take account of all these things like dismantling drains, removing the whole house from the site, 'shoring up' her neighbour's house, paying an array of professional fees and so on and on. At this rate there must be millions of people who would fall short according to the insurance companies.
Also, for example, if I had over-insured by 25%, would they have paid out an extra 25%? I think not. In fact, if my rental house had had to undergo this procedure of demolition and rebuild, presumably the insurance company would have had to pay me the amount I had insured the house for and then it would be my own hard luck if it came to more? That would seem logical to me.
Anyway, things are never easy with insurance companies... I'll just see how things go.

Hi Tony!

I have a problem which hopefully you may have some advice for . I have a maisonette ( bought some 5 months ago) and recently applied for a dropped kerb and was told I need to obtain planning permission first then apply to the Vehicle Crossings Dept at my Council. So I applied to the Planning Dept but was refused on the grounds that there's a resident permit holder box painted on the road.
Anyway, talking to the Vehicle Crossing Dept they said (and it's confirmed on the Council's own website) that as the driveway was built over 4 years ago and i can evidence it's been used as such, that I don't need planning permission even if it was technically illegal as there wasn't a dropped kerb there already (that's not what they said the first time I spoke to them!!).
So question is, if i just go ahead and apply to the Vehicle Crossing Team as a brand new application would it create a problem that I'd been refused planning permission even though I qualify for not requiring planning permission in the first place ? (note the Vehicle Crossing Team confirmed by email that removing the Permit Holder Box is not problem. My neighbour had it done recently too)
Thanks in advance for any suggestions

Hello Peter, Your query is hard to understand as you don't say what you were advised to seek planning permission for, but I *think* the situation is that you have an illegal driveway which was installed over four years ago, and the Council has then placed a resident parking space across the driveway entrance, blocking the access. You say "resident parking box" but I don't know what is meant by a box. You were advised to seek retrospective planning permission on the driveway, then apply to drop the kerb and remove the resident parking space/box.

As far as I can tell, the planning permission relates to the driveway, not the dropped kerb and parking space. The Vehicle Crossing Team probably falls under the category of Highways, not Planning, so all they are interested in is local and national traffic regulations and health and safety issues, not planning issues. Therefore I would have thought that if you just apply to remove the parking space/box and add a dropped kerb, this has nothing to do with the question of the driveway and its planning status. The VCT should assess your application solely from a Highways perspective and the planning refusal will be irrelevant.

Assuming you get your dropped kerb and a clear access route over the highway and footway, you should then be able to start using the driveway in the normal way. You should however consider applying for retrospective planning permission on the driveway, just to formalise its status and avoid future disputes with the neighbours or the council. A statement in black and white that you have planning permission for the driveway would also be useful when you eventually sell the maisonette, as it will add value and smooth queries between the solicitors.

Hi Tony,

I am really sorry, I should of tried to explain better my situation but in any case you figured everything out perfectly for me, I appreciate your comments and suggestions, you make perfect sense and I will be following your advice.Especially the advice of the retrospective planning permission, I never even thought about that as a potential later problem.

Thanks so much and all the very best.

Hi Tony

Can i start a limited company (developing property) if the business owns just one property? This would also be a sideline to my main source of salaried income.

eg How do you prove to HMRC that it is a business and not an investment? Do HMRC stipulate over what time frame you must buy and sell to prove that you are making profit?

Regards

Hitch

Reply to the comment left by "hitch " at "23/03/2015 - 16:01":

Hello Hitch,

Yes, you can start a limited company with £100 if you want to. I started mine with a single house which was actually in my name, but my accountant did not require me to change it to the business' name, provided all work done on the site was put through the books in a proper way and the eventual sales proceeds too. My personal investment to buy the site was treated as a Director's Loan and I owned the site "on behalf of" the company.

You prove the company's status by means of evidence. If you just hold the house, do little or no work on it, and rent it out for years on end, you will treated as an investment company and taxed accordingly. If however you do little work, rent it out, but employ architects, planning consultants and so on to secure planning to extend the house or replace it with two new houses, then those are demonstrable trading activities. If you fail at planning or fail to do any further development, you will again be treated as an investor, so it's important to show real, continuing development-like activity. To my knowledge HMRC don't have any fixed timeframe - development, especially planning, is a long-drawn out and capital-intensive business - so you should just get on with doing what you want to do and don't worry about the tax for now.

Trading also becomes important if you decide to register for VAT: a de minimums rule says that you can rent out property as well as develop, but the development turnover must be greater than the rental on a year-by-year basis, otherwise the company will be revert to being treated as an investment company.

Again, Carl Bayley's Using a Property Company to Save Tax is an excellent guide to all this. Try and use an accountant with experience of investment companies and development ones as well, as they will better placed to advise you than someone who mainly does the books for retailers or manufacturers. Houses are large illiquid assets which takes ages to build and sell, and have multiple over-lapping sets of legislation and tax treatment, so you need a good advisor.

Reply to the comment left by "Tony Atkins" at "23/03/2015 - 17:07":

Very helpful advice. Are you able to recommend any accountants./ advisers you know to be good? I'm based in Middx and want to get started.

Please see >>> http://www.property118.com/member/?id=452
.