Understanding development risk
With new commitments from the government to drive forward affordable homes and free up land for development to meet the housing crisis, the likelihood of new builds encroaching on existing property will be on the rise. Paul Addison, Managing Director, DevAssist, assesses the risks and provides some examples of when the unexpected can happen.
We all know that we just aren’t building enough property to meet our chronic housing shortage and that planning rules changes have been turgid and slow at council level to get derelict or brownfield land recycled. But it’s a complicated picture – developers also want to build where it is easier, commercially more attractive in terms of yield per unit or where there is excellent infrastructure they can build into.
This makes niche plots and in-filled land in high value areas very attractive, assuming they can meet density rules from the council. It also means that prestige sites will continue to attract investment as the return per unit will be greater. Land that is difficult to manage or where significant infrastructure has to be built in is more of a headache. Equally, affordable housing does not get them the best yields, especially in high value areas.
So, we will always have selective developments which will have very local and very different impacts on the existing community. It is this highly localised effect that makes development risk ahead of exchange a very real concern for homebuyers and should be at the heart of conveyancing sue diligence.
You need to view land and access through a developer’s eye – that is what we do at DevAssist. A standard planning search will tell you about existing or past schemes, but a conveyancer will not necessarily understand how a developer will view plot potential, or how they will continually reassess sites into the future.
Here’s a great example – In the map below, Site 1 had failed planning history for the erection of 10 houses. The application was refused by the Local Planning Authority due to the scale, bulk and density of the proposed dwellings.
The DevAssess report identified this and made the client aware that a resubmission would be a very real possibility. A developer could very easily submit a new application for perhaps 6 houses instead of 10. Just because permission has been refused once it doesn’t mean the risk of development is gone. By analyzing decision notices we offer a professional opinion on the continued risk posed by those sites that fail at planning.
In this case we were also able to identify that whilst sites 2 and 3 have no relevant planning history and are therefore low risk, the existing buildings are at a similarly low density and these sites may be promoted for development in the future.
While land use zoning is a clue to what the Council thinks, these are being continually reassessed, especially in high land value/demand areas where available land can be converted. This is certainly the case in London and also in our next example:
Brighton Marina: Sea that view? Not for much longer
If you thought sea views were safe, you are sadly mistaken. The last thing you would expect to see is a 40 storey tower appearing out of the water. Well, it’s happening in Brighton Marina, where a development of apartment blocks with heights ranging from 6 to 40 storeys and a total of 853 flats has begun.
Robert Powell, from the Brighton Marina Action Group, says the development is “the wrong sort of housing” for the city, with inadequate infrastructure. He also adds that campaigners against the development maintain that Brighton Marina was “never intended to be a high-rise, high-density housing development”.
Despite friction from local residents and campaigns against the development, stage 1 is to be completed by mid 2016.
DevAssist has already informed a number of buyers in the area of the approved plans. Some buyers in Brighton Marina bought (or didn’t) in full knowledge of the dramatic change to the view and some will be in for a massive shock, with possible risks to their solicitors’ professional indemnity.
The development landscape is changing all the time – whether large edge of town estates disrupting rural views, infilled development increasing densities and traffic or large scale tower blocks in urban settings changing the character of the area.
Planning searches in their basic form do not go far enough and are not always recommended by conveyancers. Given the clear financial and emotional risks at stake, plus the comeback on conveyancers for possible lack of client care, it is essential that planning data is interpreted to get the full picture, beyond their rose-tinted vision of their new home.
What choice would you make?
For more information on how DevAssist’s range of interpreted development reports help understand risk and potential hidden value for your client, call 01342 890010 or email: [email protected]