The current 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, it is claimed.
In England 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.
Now, land agent Aston Mead is warning that at a time when smaller and medium sized builders are regarded as being crucial for delivering much needed new homes, they cannot, like larger developers shrug off such costs.
‘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,’ said Aston Mead land and planning director Charles Hesse.
‘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,’ he pointed out.
According to the firm the costs to the bottom line can be substantial. An example is a new development of three flats above a shop in Elmbridge in Surrey which the firm is working on. ‘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,’ Hesse explained.
‘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,’ he added.
There are concerns that the ability of small and medium sized developers to contribute tens of thousands of properties to the national housing stock and help meet Government targets of 300,000 a year by the 2020s, are being held back by unnecessary red tape along the way.
‘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,’ said Hesse.
‘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,’ he concluded.
