Given that you won’t be able to secure commercial funding until permission is granted, you’ll be funding any interim costs yourself with no guarantee you’ll recoup them if permission is refused. And if you’ve already bought the land or building in the hope of getting that permission, then clearly, there’s a possible outcome that could be rather bad for you. That will be where you can’t develop it, and presumably, you’ve now got to sell it, possibly at a loss, having racked up a load of architect’s fees and planning costs you can’t now get back.
So, am I saying that projects that require planning permission should be in your Too Difficult Pile? My advice, particularly for the new or less experienced developer, is to ditch schemes requiring planning permission and instead convert existing buildings using permitted development rights (PDRs). Not only does this mean you won’t need full planning permission to change the use, but you should also be able to secure commercial lending from Day 1. There’s been a recent explosion in the number of opportunities to convert using PDRs, with a substantial amount of the country’s commercial building stock now being eligible for transition to residential use without full planning being required. You’ll usually need to tick several prescriptive boxes via a process known as Prior Approval; however, in most cases, you will know you meet the criteria before you apply. Take the time to learn how to a) understand the opportunity presented by PDRs and b) sweat each asset to its best advantage, and you’ll be looking at a substantial breadth of opportunity.
However, I need to add a caveat here because not all permitted development rights are created equal. Some are nice and straightforward, where you know that you meet the required prior approval criteria before acquiring the property and can purchase with confidence, armed with the considered opinion of your Planning Consultant. Others carry a significant degree of subjectivity in their requirements, which means that it will be down to the interpretation of the local planning authority. And as soon as you become reliant on someone else’s opinion, in my view, you’re taking too much risk. So guess what? Yup, these should go straight into the Too Difficult Pile.
The same applies to something called airspace rights. This involves building extra storeys on top of an existing building, and these rights come in various flavours, depending on the nature of the host structure. These opportunities can look enticing because you can easily see how an extra couple of storeys would fit on, plus you could easily build a significant number of flats, particularly on larger sites. If only it were that simple. The first challenge is subjectivity in the airspace rights, which allows the planners to reject an application if they don’t like it. And so far, if we’re honest, planners haven’t appeared to be that keen. But even if you overcame that hurdle, you’ve still got to deal with an obvious question; how do you know that the existing building will be able to support your new additional storeys from a structural point of view? It means you’ll need to be calling on the services of your friendly local structural engineer to find the answer, which will involve time, expense, and no guarantee of success. Hence, in my book, these too get added to the you-know-what pile.
Contamination makes for another regular addition to my Too Difficult Pile. There’s a disused petrol station in the next village to mine, and every time I drive past it, a little voice pops into my head, telling me it would be the perfect site for redevelopment. The problem is that petrol stations have got enormous scope for contamination, but you won’t be able to see it. Those underground tanks could be in tip-top shape. Or they may have been leaking for years, contaminating all the land around them, even if they’ve subsequently been filled in. A quick glance at the site will tell you… absolutely nothing. But if you buy the site and later find you have a contamination problem, it won’t be Messrs Texaco or Shell in the dock; it will be the site’s current owner, namely you. And that can be an expensive and time-consuming problem to fix, particularly if the contamination has made it into a nearby water course. So, if you hear your own tiny voice fantasising about any site where contamination is likely to be a high risk, I would urge you to point it firmly in the direction of your own ‘TDP’, PDQ.
Now, if you think I’ve just gone and nuked half of the development opportunities in the country, then you’re probably right. However, I’m not saying these projects are impossible or, for that matter, unprofitable. In fact, all the projects I’ve mentioned are perfectly doable and could well go on to net you a tidy profit. The problem is that they’re not the easiest. As a developer – particularly if you’re a new developer – you’ll want to find a nice simple project with minimum risk and maximum certainty, which you can just crack on with.
The good news is that there are plenty of those around if you know where to look. With a little education, you can easily find out where the best opportunities lie and where there is the least competition. Just make sure you clear a small, A4-sized corner of your desk before you do.