development

A developer's guide to pre-commencement conditions



Some developers fail to consider pre-commencement conditions until it is brought to their attention by lawyers, according to one development finance lender.

Pre-commencement conditions are requirements developers must take into account while building. 

They can range from environmental protection to contamination issues.

AJ Shazad, manager of credit risk at Zorin Finance, said pre-commencement conditions can cause a number of issues for developers related to time, cost and the limits to the growth of SME housebuilders.

“These problems stem from excessive and unnecessary conditions based on historical precedents often copied and pasted from other consents even though the sites have completely different characteristics. 

“Sometimes developers are solely focused on obtaining the planning consent without any further consideration towards the conditions attached. 

“The conditions only come to some developers’ attention when their lawyers bring it to their attention.”


Developers must abide to requirements such as sewage systems

Rico Wojtulewicz, policy adviser at the National Federation of Builders, said that some conditions were imperative to a development, such as contamination, but questioned the lengthy process.

“…Material schedules and landscaping are often submitted to planners at the start of the planning process and then conditioned later on. 

“Why are efforts duplicated and why so late? 

“Even the ‘deemed discharge of planning conditions’ are impacted by delays. 

“Requests for more information are often submitted days before the condition is deemed discharged.”

‘They can be a barrier to funding being obtained’


 
Funding could be cut off due to pre-commencement conditions

James Bloom, managing director of development finance at Masthaven, agreed that pre-commencement conditions were a vital part of the planning process, but felt the process for signing-off the conditions needed to be looked at.

“…In their current format, they can be a barrier to funding being obtained, and to the work getting started, which doesn’t always need to be the case. 

“Common sense should prevail regarding sorting out issues that must be dealt with before work starts – for example, an ecological survey or other more routine matters, which can be dealt with during the build.”

Ashley Ilsen, head of lending at Regentsmead, felt the biggest problem was the lack of consistency among different councils and the “painfully” slow time it took for a response.

“Pre-commencement conditions are a real bugbear for developers, and have slowed down some truly excellent schemes.

“I visited a client last week in Croydon who was asked to do an archaeological dig last year and is still waiting for the council to sign this off several months later. 

“Likewise, we have taken on some part-built schemes where lenders have ignored signing-off [the] pre-commencement conditions and poured funds into the project without really looking into the detail.”

‘There should be more harmony between different parties’

AJ hopes to see developers establish what the conditions are and how they can be satisfied, but felt a lot of the time SME developers simply did not know of the process and procedures involved.

“There should be more harmony between different parties involved in satisfying a condition. 
 


Both lenders and developers would like to see a streamlined planning process

“For example, if a developer gets in touch with UKPN (UK Power Networks) for the design and placement of an electricity sub-station within a site, then the final sign off from UKPN on this matter and the forwarding [of] the sign off to the planner should satisfy the requirement. 

“It adds additional bureaucracy when the planner needs to get in touch with UKPN separately and get the confirmation from UKPN.”

Meanwhile, Rico wanted to see better resources, but added: “…Local authorities and government need to sit [down] with developers and identify which conditions require consent and which do not. 

“Housing supply should not be delayed because we are duplicating efforts and we should not be placing barriers in front of skilled housebuilders.”

James concluded by adding that he would welcome any move to streamline the planning system.

“I’d like to see a dedicated team to deal with the setting and discharging of these conditions. 

“As the development aspect is more specialised – and needs far more detailed knowledge of the system in general – I feel the more experienced planners should deal with this aspect.”


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