The founder who built fast and learnt the hard limits of growth

Dorian Payne is a high-energy operator. He pushes. He prods. He challenges. He is the engine. But he is also learning that relentless momentum can become a threat if it pulls the business out of its lane financially, strategically and even personally.

He founded Swansea-based developer Castell Group in 2019 to tackle one of the UK’s most urgent issues: the shortage of affordable social housing. The company is designed to build homes at fixed prices for housing associations and local authorities, although in an inflationary environment, fixed prices can become a trap (more on that later). Payne’s route into property came from close to home.

His father was a builder who ran a property development business with his wife. Payne helped out and got an early understanding of the sector and of running a business. At 16, he set up a lettings company. His next venture wasn’t simply a bigger version of what came before. He wanted purpose built into the model from day one.

“That’s the area I wanted,” he says of social housing. “I felt like I could make a difference and what I really love is not only that I can build a big business, but I really feel like we’re making a difference. I can see it firsthand, the people we’re helping, the impact we’re making across local communities and the people who can move in that have been in hotels for years.”

While the business was started in 2019, Castell officially began trading in June 2020, just months into the Covid pandemic. This was a moment, as Payne puts it, when “the world tipped over the edge a bit”.

“It’s been an explosive journey,” he says. “We started from scratch. No pipeline and no investor. But as of today, we’ve delivered successfully over 250 homes and are constructing a further 300 across South Wales. We also have a pipeline of over 1,000 homes.”

Castell’s business is led by clients’ needs. The team speaks to housing associations and local authorities to understand the local community’s needs, then identifies suitable development sites, often on brownfield land, and structures deals to minimise the capital that is needed upfront.

“We will tie [the land] up on an option agreement or conditional contract,” Payne explains. “We could control, say, a £1m piece of land for maybe £10,000 and we have two years to get all the permissions we need.”

The clever part comes at the point of purchase. “By the time we get the permissions, the housing association or the client will buy it on the same day we will buy it, so we’re back to backing it. Then they’ll give us a build contract and pay us monthly to deliver it, so we get positive cash flow.”

It’s a model that can scale without huge balance sheet strain – in theory. In practice, Payne has one recurring weakness: he doesn’t like to let opportunities go, especially those that don’t fit neatly into the capital-efficient playbook. It’s an area he admits he needs to work on.

Another area is expansion. Payne wants to expand, beginning with the West Midlands. His plan is to replicate the model of a housebuilder, but with a partnership approach.

He sees three routes: the capital-efficient option model, buying land with investors, or joining frameworks and acting as a traditional contractor on client-owned land. But Castell isn’t set up to compete as a commoditised builder. The value lies in being an end-to-end service that includes land sourcing and control, planning and construction.

“You don’t really make lots of money on the land side but on the package price, doing the actual delivery,” he says. But even here, there’s a structural weakness. Castell signs fixed-price contracts. Unlike private housebuilders, it doesn’t benefit when the price of land and housing rises, which is particularly an issue over a long build period.

“If we’ve agreed £300,000, it is £300,000,” Payne says, “so cost becomes the risk.” That risk hit hard between 2021 and 2023. Payne calls it the “high inflation era” as he highlights the business’s Achilles heel. “You sign a contract at a fixed price and if the costs go against you, you’re left with that cost,” he says.

Castell survived but the lesson was learnt: complexity and leverage can derail a business faster than slow growth ever will. To expand into another region, Castell needs capital. Payne has already sold 30 per cent of the equity to raise investment – he is now a 70 per cent shareholder. Talks are underway for a new funding facility of around £6m. He describes a deal that would refinance expensive existing debt and provide funds to expand into the next region. But it comes with a condition: minority equity.

Common advice on how to handle this is simple: don’t wait until you’re out of cash to raise money. And if you do take capital, consider more than money: find expertise. “It’s about where I can get support to take this business where I know it can get to,” says Payne, “and hopefully somebody that can provide mentorship and guidance along the way.”

Castell’s growth has been rapid. By the end of its current financial year, it will have revenues of between £30m and £34m. Next year, that revenue is forecast to be £47m, the following year £70m. If it can expand into the West Midlands, the aim is to break the £100m revenue barrier. The long-term vision is a multi-region business delivering thousands of homes annually. He frames it not just in commercial terms, but economic and societal ones.

“There’s a stat out there that for every £1 invested in social housing, there is about £2.50 of positive economic benefit,” he says, listing reduced NHS and temporary accommodation costs. For Payne, Castell is a “for-profit social business”.

He wants scale because the crisis is national. But he also knows the business must be built in a way that doesn’t buckle under the weight of the founder’s own ambition.

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