The short answer: yes, but margins are thinner
Property development remains profitable in 2026, but the easy margins of 2019–2021 are gone. Target profit margins of 15–25% on cost are achievable for well-structured deals, but they require accurate budgeting, efficient procurement, and disciplined execution. The developers losing money are those using outdated cost assumptions or failing to account for new regulatory requirements.
Current profit economics (typical 10-unit scheme)
- Land cost: £500,000
- Build costs (FHS-compliant): £1,500,000 (10 units × £150,000 average)
- Professional fees: £100,000
- Finance costs (including Assesr at 0.5%): £180,000
- Sales/marketing costs: £50,000
- Contingency (7.5%): £112,500
- CIL/S106/BNG: £60,000
- Total costs: £2,502,500
- GDV (10 units × £310,000): £3,100,000
- Profit: £597,500 (23.9% on cost)
This is achievable but note the sensitivity: a 10% build cost overrun reduces profit to 14.9%. A 5% GDV reduction takes it to 18.9%. Both together bring it to 9.9% — below most lenders' minimum threshold. Contingency and realistic budgeting are the difference between profit and loss.
What separates profitable developers from unprofitable ones
- Accurate current-cost budgeting: Profitable developers use 2026 tender prices, not 2023 benchmarks. They include FHS, BNG, and all regulatory costs from the start.
- Conservative GDV assumptions: Using completed sales (not asking prices) and not relying on future price growth. If the deal needs 5% annual growth to hit target margins, it's not a deal.
- Efficient procurement: Getting competitive tenders, negotiating fixed-price contracts, managing the programme to minimise time-based costs (finance interest, prelims).
- Lower finance costs: Using AI platforms (0.5% fee) instead of traditional brokers (1–2%). On a £3M facility, this alone saves £15,000–£45,000.
- Portfolio approach: Experienced developers run multiple smaller projects simultaneously, spreading risk and generating consistent returns. One overrun doesn't sink the business.
Protecting your margin
The most important thing you can do is stress-test your deal before committing. Assesr's credit papers include automatic sensitivity analysis showing what happens at 10% cost overrun, 15% cost overrun, and 5% GDV reduction. If the deal survives these stress tests with 10%+ profit remaining, proceed with confidence.
Submit on Assesr for free — see your deal's numbers stress-tested in the credit paper, and get competitive lender offers that minimise your finance costs.