Key Stage 5 of Successful Property Development: SALES – Close-out, sales, and after-sales

It’s the final straight and you think you’re nearly finished. How much you’ve got left to do really comes down to how well you carried out every previous stage, how exacting your various tradespeople have been in their work, and how the economy and property market are performing.

Snagging and the completion certificate

Your site manager should have quality control front of mind throughout the entire build, but minor defects and little things like scratches in paintwork will always crop up. It’s virtually inevitable, with so many bodies carrying on their work in sometimes restricted working spaces. A painstaking inspection needs to take place, from checking for leaks to inspecting every inch of paintwork, so you can compile a complete snagging list. Fix it now or you’ll be fixing it later.

And that process is the perfect preliminary for the final testing and commissioning. All plumbing, drainage, electrics, heating, ventilation, airtightness, mechanical elements, fire safety – anything with flowing water or powered by electricity or gas or with moving parts or any inherent risk to occupant safety and wellbeing - needs to be tested. Most of these will require official testing, sign-off and certification. If your tradespeople for particular parts of the build (for example, air conditioning systems, windows, boiler and heating systems) are registered on a Competent Person Scheme, they’ll notify your local authority building control (LABC) and issue you with a certificate of completion. Of course, as well as checking all this certification is accounted for, building control needs to conduct a final inspection to be sure you’ve complied with all building regulations and the properties are up to standard. You’ll need to arrange for this to happen, so notify them when you’ll be ready.

This is not a step you can bypass. A property going to market without a completion certificate, or for that matter an energy performance certificate (EPC), may lead to enforcement notices and fines, will probably be flagged up during solicitors’ local land searches, and will struggle to get approval for purchase by mortgage lenders or insurance by property insurers.

You’ll also need sign-off from your warranty provider. They may accept the completion certificate as sufficient evidence, but it’s possible they’ll conduct their own inspection of the property. Maintain open, proactive communication with and enable easy inspections by building control and warranty providers from start to finish. Your warranty, certainly for domestic properties, is likely to cover 10 years. The first two years require your builder to make good for relatively minor defects, with the entire 10 years covering structural defects. This warranty is essential if you’re to sell your properties, and must be provided to the new homeowner(s) on purchase.

This stage can take weeks. Don’t underestimate the time it may take to chase up all your subcontractors for their certificates or even to arrange for official inspections.

Once you have your completion certificate and your warranty, your property is ready for sale.

Selling

You first spoke with local estate agents in the earliest stages, to gauge market prices and saleability before purchasing land for development. Halfway through your build programme, you should engage your preferred estate agent for the final pricing, marketing, open days, viewings and management of your property sales. It’s usually better to choose an estate agency with a dedicated new homes department; these have the best understanding of the market for new-build homes, often keep a waiting list, and are completely conversant with the full new development selling process. Engaged at the right time, they’ll be well prepared to start marketing and selling your development before it’s complete.

In order to facilitate that, you’ll want a show home or two. These are example properties that are finished and fully dressed for sale well ahead of schedule, allowing prospective buyers to view, fall in love and commit to purchasing. The idea, of course, is that the sales process starts early and your scheme sells fast. Your debt, with its accruing interest, is now at its highest. Funding tends to be released bit by bit through the development process, with interest starting to rack up as each pocket of money is released. Your income to pay it off only arrives when each sale completes. Quite clearly, the sooner you sell, the less interest you pay on any borrowing, the sooner your earnings are in your bank account and the greater those earnings will be.

Handover

It’s best practice to give each new homeowner a full operations and maintenance manual for their new property. This should include all applicable certificates, warranties and appliance instructions and guarantees, plus relevant contact details and a detailed description about the process for reporting problems should they arise. Don’t forget, in residential property, you have direct responsibility for at least two years, so making this process clear is in everybody’s interest.

I strongly recommend a walkthrough at handover to each new homeowner, conducted by your site manager. Show the new owners where the stopcock is, the consumer unit and how it works, the basics of each appliance – how to get the best from their home and how to keep it in the best condition for longer.

It can be helpful to include diagrams in your operations and maintenance manual, showing the physical location of key elements, like internal and external stopcocks, drainage access points, telephone/broadband entry points. Include an outline of you and your builder’s responsibilities, and the owner's next steps; describe how to register for electricity, gas and water supplies and inform Royal Mail of the new address, register for council tax and have bins delivered. The more helpful your guide, the more appreciative the buyer.

Producing this manual can be a time-consuming affair. You’ll cut that time down dramatically if you collect and document all the information as you go through the building process. Don’t leave it until completion!

Conclusion

At last, your property development is completed and sold and your lender has been repaid in full. Now you can calculate your true profit.

I hope you’ve found this series of articles useful. They’re not intended to be comprehensive, but they give a fair flavour of the importance of early planning and preparation and the most essential processes to follow through the development lifecycle. If you’d like assistance with prospective property development or would like to discuss being mentored in preparation for property development, please do get in touch - my email address is [email protected].