The economic benefit of development to the local community

Some people call us greedy and some call us ruthless, but really developers helps communities grow which fuels economic growth. A lot of people fail to recognise how far the economic benefit stretches with the creation of new developments. Many people just assume that it is merely a percentage of housing that is allocated to the council for social housing, under the section 106 affordable housing act, but really it’s so much more than that. For many property developers it is very frustrating, as they are penalised for being greedy and bringing too much change into a community, but people do not see the bigger picture and the economic growth we create.

The house building industry is a massive driver of the UK economy and makes a huge
contribution to communities across the country. While delivering much needed new homes of all tenures, house builders are quietly creating and sustaining jobs, boosting investment in infrastructure and amenities in village, towns, and cities. As well as becoming ever more reliant on private builders to deliver affordable housing through planning agreements, vast sums are ploughed into new roads, schools and community facilities each year. Below we talk about the economic footprint provided in the UK of the property development industry.

1. Before a site has even been acquired, a company has many employees working in
house, depending how large the company is. As you can see already there are jobs
created and business rates paid even before the development takes place, this could be
anything from graduate to apprenticeship jobs helping the community grow.

2. Acquiring a development site is a key stage and the beginning of the property
development process, there are many systems in place to help to source a site, which is
normally done in house. Once this is found, each party has to have a legal
representative which they will outsource to a local law firm.

3. Development appraisal forms the backbone of the financial side of property
development and is arguable the most important step within the property development
process. A developer will know their appraisals inside and out and be able to quickly and efficiently put together an initial site appraisal and cash flow. This will be done in house, and is the deciding factor as to whether the site is worth purchasing, where many different considerations will be taken into account. This is the start of outsourcing the project to different expertise in the field. This could be a planning consultant, architect, solicitor, engineer. This changes from site to site, but there is always lots of jobs to go around in the local community.

4. A development cannot happen or go ahead without funding. Money is one of the 3
pillars of property development and is an area new and inexperienced developers struggle with the most. For each site that you look at, you need to understand how you
will fund it and how to structure the financial side. Each site is different and will require
a different set of funding criteria, and because it’s become increasingly difficult for
developers to get funding, they have to sometimes work with different funding
partners, this can lead to inefficiency and become very expensive.

5. One of the 3 pillars of property development is planning, and the required permissions to actually be able to start and finish a development project. As a property developer, we need to manage the process to ensure all the permissions are in place and that we have a scheme designed that is viable. A developer will know how to optimise and maximise every single square foot on a site to achieve the maximum amount of profit the sit can yield, which in fact means more affordable housing due to being a percentage measurement. There are many other permissions required, not just
planning. For example, building control and party walls. These all need to be managed
along the process to ensure that a development can actually go ahead and happen.

6. Reaching the construction step along the property development process is a major
milestone and there will have been some serious work, effort tune and money invested
into the project. There are many ways to contract with a builder, and this will also
depend on the role you are taking during the construction process.

7. Once the development is finished, it will then be sent off to different estate agents
around the area, but also the development company itself may choose to market the
properties. Sometimes they may hire private marketing companies around the area to
give it that extra push, or work with local newspapers and PR companies.

As you can see from the above, no matter what angle the development is going there is always a need for outsourcing jobs in certain expertise. What people do not understand is the idea of job creation for so many local businesses from development companies. It being a major boost for the local economy, providing modern and attractive spaces for businesses, creating new jobs and encouraging more visitor numbers into the town throughout the year. Below you can see some statistics put together from Litchfield’s of the economic footprint of developers around the UK.

• A total of £38 billion for the economy is generated by house building each year.

• A total of £4.2 billion is either given from developers to help provide affordable housing
in the local area.

• There are over 698,000 jobs created each year from a variety of fields of expertise.

• There is an around £2.7 billion in tax paid each year, which comes from a Council tax, Stamp Duty tax, Corporation tax, National Insurance, Pay As You Earn tax.

• A total of £5.9 billion spent in local shops and services by residents of new homes.

• A total of £1.2 billion is spent on tenants making their houses feel like home
i.e. furniture