Newts, badgers and the small developer: Why building still adds up – Hall
How much can one newt cost you?
I ask because a developer building his own home recently found out. His plot had three ponds, which with hindsight was asking for trouble. In one of them, an ecologist found a great crested newt. One newt. The bill for safely rehoming it came to £15,000 – which, pound for pound, makes that newt considerably more valuable than gold.
And newts are far from the only surprise residents. Another site he knew of turned out to be home to four badger setts, and the cost of resettling the occupants reached £120,000, nearly enough to make the whole scheme unviable. Bats, by comparison, are reasonable tenants: if they’re roosting on your site, you simply have to build them somewhere new to roost. A bat house. Although I’m told they never write to say thank you.
I should confess at this point that I genuinely love wildlife. I was a keen birdwatcher as a boy and never grew out of it, and I’ve picked up more knowledge of ecology surveys in the past year than in the rest of my career combined. But even I can see that these stories are only funny until it’s your project, your contingency fund and your profit margin. And they illustrate a wider truth about small-scale development right now: the costs you can see coming are challenging enough, and the ones you can’t are lurking in the pond.
Land value challenges
Let’s be honest about the visible ones. Land values remain stubbornly high in many parts of the country.
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Build costs have risen significantly in the past two years and keep rising, with materials inflation pushing up the price of everything from bricks to boilers. Good tradespeople are hard to find and harder to book – the best builders are committed months ahead, and a slipped start date has a habit of cascading through an entire programme. Despite the government’s stated efforts at reforming the system, planning moves at its own pace.
Squeeze all of that together and viability margins are tighter at both ends than most developers would like.
Delays in the process
The knock-on effect is time. Projects that used to run on a 12-month cycle from enquiry to drawdown are stretching to 18, often because developers are waiting for one scheme to sell before the next can begin, a domino run where the first domino is taking its time to fall. That’s frustrating, and it changes how everyone involved needs to think.
And yet. The demand for housing isn’t going anywhere, and neither is the fundamental arithmetic: a well-bought site, a well-run build and a realistic view of gross development value can still produce a thoroughly healthy return. Small developers remain some of the most adaptable people in property.
They’re the ones taking on conversions, hybrid schemes where they build one home to live in and others to sell, timber frame and modern methods of construction, listed buildings… the awkward, characterful projects the volume housebuilders won’t touch, but these projects tend to make the money.
The right funding structure
Adaptability applies to funding, too. The old default was to leverage as far as the lender would allow, because cash is king.
Increasingly, the smarter conversation is about whether maximum gearing actually serves the project. Sometimes borrowing a little less, finishing a little faster and recycling capital into the next scheme sooner does far more for overall returns. Those are conversations worth having early, and they’re a good test of a lender: a funder who’ll only talk about loan size isn’t really talking about your business.
Because with lead times this long, the lender relationship matters more than ever. The developers coping best are working with funders who behave like partners in the build rather than spectators: a relationship manager who knows the scheme, understands that six weeks of rain is nobody’s fault, structures drawdowns around the real build schedule and gives a clear early steer on rate and structure so everyone knows where they stand before the serious money is spent.
Ideally, that’s someone alongside you for the whole journey: from the land purchase, sometimes before planning is even in place, through the build and out the other side.
It’s also worth asking where a lender’s money actually comes from. Funders backed by retail savings deposits, like building societies, aren’t dependent on a third-party funding line that can get cold feet halfway through a build or reprice the moment markets wobble. When a deposit-funded lender commits, it’s their own money on the table and they’re in for the duration. For a developer, that certainty is worth at least as much as the headline rate. Nobody wants to discover, with the roof on and the money spent, that their funder’s appetite has quietly migrated elsewhere.
It will always be a complex project
None of this is getting easier, and the newts certainly aren’t going anywhere – nor, as a lifelong wildlife lover, would I want them to. But small developers aren’t going anywhere either. They’re among the most resourceful people in this industry, and a good project, sensibly funded, still stacks up.
What makes the difference is a funder prepared to stand alongside them for the whole journey, surprises included.
Get that right, and there isn’t a newt in the country that can stop you.
