Develop your Business Plan

Writing a Business Plan will help you to clarify what your group aims to achieve and how. It does not need to be a lengthy or complex document and you will be adding to it over time, so it will change. Don't worry about getting it all right first time - just get started.

In order to start writing a budget you need to have a pretty clear idea about the number and size of houses you plan to build, how much the site will cost to buy and prepare, and what your longer term income picture is. Understand the market rent and go from there. You should discuss whether any of your assets will eventually be sold, to pay for some of your work.

Photo: Act Cumbria meeting

The Hub can

  • Provide Business Planning guidance and templates
  • Help you choose the right legal structure for your aspirations
  • Signpost you to technical support to help get good information into your plan

The National Community Land Trust Network has some information on this in its toolkit. The toolkit is free for members or you can buy a copy.

Business Planning

Working out answers to the questions below will influence the type of organisation you choose to be and the financial viability of your project. You may be assessing various Sites at the same time as developing your thoughts about cost. Our Sites information will help you check basic legal and technical points for feasibility.

You should take advice from professionals where you need to, to have the best information available for your plan. You are not expected to work this all out for yourself - please contact us for advice or guidance. There are lots of excellent resources available, and there is a network of Advisers with experience in the Community Led Housing sector who can help you.

How many homes do you plan to build, and how much will they cost?

Make a plan of how houses will be laid out on the site working with all the information you have so far. If you are converting buildings, you should show how the homes will fit into the buildings. You can get help with these conversations from a Planning Consultant, Architect or experienced Building firm.

Based on standard building industry information, Builders and Architects can estimate how much it will cost to build or renovate your homes.

How much will the houses earn from rent?

Rent charges can be estimated based on the size of the homes, the number of bedrooms and rent charged for similar properties in the area. Information from local estate agents and letting companies will inform this 'market rent' estimate for your properties. For affordable housing, the rent you charge can be no more than 80% of this market figure.

How much will it cost to manage the housing?

Rented houses will need to be managed which means carrying out property repairs, servicing heating and cooking equipment and any gardening you retain control of. There may be costs associated with finding tenants, letting the houses and collecting the rent.

Make allowances in your Business Plan for estimated 'void' times in-between paying tenants. Allow for legal costs like preparing tenancy agreements and dealing with any disputes with tenants. Legal and Financial Advisers can help with understanding likely costs.

How much funding do you need?

When you have an estimate of land purchase, build and management costs, and some idea about the income from the rent, you will have a clearer picture of the money you need to find through loans and grants.

The amount you can borrow will be based on what you can pay back through predicted income - from rent. If the rent is lower than market rent you may not be able to borrow enough and you will need a grant to make up the difference. Showing these calculations in your Business Plan means you can use it to support applications for loans and grants.

It's worth running through a number of scenarios and being flexible in your approach. If the total project cost is unrealistic, you should reconsider your approach, look at a different site or both.

Sometimes the Council will only give planning permission on a site because you are developing it for affordable housing. In such a case the land will be valued for its pre-existing use, which may be lower than development land. Your Planning Adviser should be able to help with this.

Grant funders will sometimes allow you to pay slightly more than this to make it worthwhile to the owner of the land and persuade them to sell.

The Community Land Trusts Network produces a financial appraisal tool for this and supporting guidance.

Homes England also has a toolkit that can be used to work out land values, but you will need to know how this works and you therefore may need a Planning Consultant or Valuations specialist to help.

Housing Associations

You may choose to develop your scheme in partnership with a Housing Association. 

Housing Associations, sometimes referred to as Registered Providers or Registered Social Landlords, are non-profit-making organisations which provide homes for rent or local cost ownership which are considered 'affordable'. Most Housing Associations are registered with Homes England and must follow standards and procedures set out by this regulatory body.

Housing Associations can work with community groups in various ways:

  • They are able to offer professional advice on how to develop housing schemes and some offer grant assistance for community groups.
  • The majority of Housing Associations are signed up as Investment Partners and Registered Providers with Homes England which is the Government's housing, land and regeneration agency. This means they are able to access grants (which un-registered groups cannot) which can be used to build housing in partnership with community groups.
  • Housing Associations can manage housing schemes on behalf of community groups who own the housing but do not want to have a housing management role.
  • They can provide communities with a 'design and build' service, providing a complete construction and management service working in partnership with community groups to advise on how the properties are rented or sold.

Relationships with Housing Associations should be developed and managed carefully to ensure that all parties benefit from their involvement. They need to be paid for the work they do, and they need to respect the long term aims of the community. The role your group wants them to take must be established very clearly to avoid frustration on either side.

Housing Associations who have expressed an interested in working with communities in Cumbria and Lancaster are listed here. We would love to hear of more!