Leading land agent Aston Mead says a system which enables councils to charge developers twice for studies into the viability of their building projects is unfair, causes months of delays, and discriminates against SME companies.
Currently, planning authorities can set an affordable housing contribution for a new scheme, which developers can challenge by commissioning an independent viability study. But even if the report comes out in the developer’s favour, the council can commission a second study, which also has to be paid for by the developer, even if reaches the same conclusion.
Aston Mead Land & Planning Director Charles Hesse said: “This situation is absurd. Developers are making little enough profit at the moment without having to pay the council to duplicate the work they’ve just carried out. What’s more, even if the result of the second report mirrors the first, they can’t claim the cost of the study back. Not only does this involve further delay, they are left paying twice for the council to come up with a conclusion they had already reached in the first place.
“Whilst this is something that the big companies may be able to shrug off without concern, it puts a real strain on SME developers, who are struggling in the current climate anyway.”
Charles Hesse says that the costs to the bottom line can be substantial. He explains: “For example, we are currently working on a new development of three flats above a shop in Elmbridge in Surrey. Despite the fact that government directives are calling for precisely this sort of scheme, the developer was hit with an affordable housing contribution of £66,000, which would have made the project unviable. So £1,500 was spent commissioning a study, which came out in the developer’s favour. But the council also required their own £1,500 study – which also had to be paid for by the developer, even though it reached the same conclusion – to be submitted with the application. That has added a total of £3,000 and another six months of delays into the process.”
Charles Hesse says that small and medium-sized developers could contribute tens of thousands of properties to the national housing stock, but are being held back by unnecessary red tape along the way.
He adds: “The ironic thing is that SMEs are perfectly placed to provide exactly the sort of small-scale, town and city centre housing stock that government directives are suggesting are needed. Yet they are constantly met with hurdles in the planning stages. It can cost thousands of pounds for site surveys, and weeks waiting for a pre-application meeting with the council, after which there’s often no real indication as to whether the project can go ahead.
“There needs to be more ownership of the pre-application meetings, more commerciality to the process, and less wasted time and costs for the SME developers – who are sometimes left wondering why they are bothering to stay in business at all.”