Common Mistakes
& How to Avoid Them

The mistake: Falling in love with a site and paying too much, leaving insufficient profit margin for the development to work financially.

Why it matters: Land cost is the single biggest variable you control. Overpay by 10% and it can wipe out your entire profit margin. Once you've exchanged, that money is gone.

How to avoid it: Always work backwards from GDV. Run the development appraisal first, then determine the maximum you can pay for the land (the "residual land value"). If the asking price exceeds that number, walk away.

The mistake: Using optimistic build cost estimates — or worse, no QS report at all. Then finding out halfway through that costs are 15–20% higher than planned.

Why it matters: Build cost overruns are the number one cause of development failure. If you run out of facility, you need to find more money at short notice — and that's expensive.

How to avoid it: Get a proper QS (quantity surveyor) cost plan before you commit. Include at least 5–10% contingency. Don't use "build cost per sqft" figures from 2 years ago — costs have risen significantly.

The mistake: Running a "back of envelope" calculation that includes land + build + sales = profit, but forgets about interest, arrangement fees, legal fees, valuation costs, and broker fees.

Why it matters: Finance costs typically represent 8–12% of total project costs. Ignore them and your "25% profit" is actually 15% — or less.

How to avoid it: Use our development appraisal calculator to model the full cost picture. Or better yet, let us write the appraisal for you — it's part of our service.

The mistake: Going with the cheapest quote, or using a contractor who's great at refurbs but has never done a new-build. Or worse — a friend of a friend.

Why it matters: Your contractor is the single most important relationship in the project. A bad contractor means delays, cost overruns, defects, and potentially a failed project.

How to avoid it: Get 3 competitive tenders based on the same specification. Check references from previous developments (not refurbs). Visit a site they're currently working on. Ensure they have appropriate insurance and ideally a performance bond.

The mistake: Specifying high-end kitchens, luxury bathrooms and bespoke finishes in a mid-market area. Or designing architecturally ambitious schemes where a simpler design would sell just as well.

Why it matters: Over-specification increases build costs without proportional GDV uplift. A £15k kitchen in a flat worth £250k doesn't add £15k of value compared to a £6k kitchen.

How to avoid it: Research what's selling in the area. Match your specification to the market. Be practical, not aspirational — this is a business, not Grand Designs.

The mistake: Running the appraisal with zero contingency, or putting 2–3% "because the contractor said it'll be fine."

Why it matters: Something always goes wrong. Bad ground conditions, material price increases, supply chain delays, design changes — if you don't have contingency, these become crises instead of inconveniences.

How to avoid it: Budget 7.5–10% contingency on build costs for new-build, 10–15% for conversions and refurbishments. Lenders expect to see contingency in your cost plan — and so should you.

The mistake: Using the highest comparable sale you can find and projecting that across all units. Or assuming values will rise during the build period.

Why it matters: Lenders will get an independent RICS valuation. If their valuer comes in 10% below your numbers, the funding shortfall has to come from somewhere — and that's usually your pocket.

How to avoid it: Use realistic, conservative GDV based on multiple comparables. Get an agent's letter early. Don't rely on one exceptional sale — use the average. Never build in house price inflation.

The mistake: Buying a site with "planning potential" rather than granted planning permission. Or not reading the conditions attached to the planning consent.

Why it matters: Planning conditions can include affordable housing obligations, Section 106 contributions, CIL payments, or specific build requirements that dramatically affect your costs and viability.

How to avoid it: Read the planning decision notice and every condition. Understand your Section 106 obligations. Get a planning consultant to review if you're unsure. Don't exchange on a site with unresolved planning issues.

The mistake: Approaching the first lender you find on Google, or going to your bank because "they know me." First-time developers are especially vulnerable to accepting poor terms because they have no frame of reference.

Why it matters: Development finance rates and terms vary enormously between lenders. The difference between the best and worst offer can be £50k+ on a £1m project.

How to avoid it: Use a specialist broker (like us) who can access the whole market and negotiate on your behalf. We know which lenders are competitive right now, which ones lend to first-timers, and where the best terms are.

The mistake: Attempting a 20-unit new-build as your first ever project. You've never managed a build before, never dealt with a development lender, and you're betting everything on getting it right first time.

Why it matters: Large schemes have more things that can go wrong, more capital at risk, and more complex lender requirements. They also take longer — which means more interest cost if anything delays.

How to avoid it: Start with something manageable — a conversion, a small new-build, or a refurb-to-sell project. Build your track record, learn the process, and scale up from there. Lenders reward proven experience.