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Managing Risk in Property Development

Ritchie Clapson, co-founder of propertyCEO, comments

To be honest, this probably wasn’t the catchiest article title I could have come up with. It all sounds a bit dull and worthy, up there with “101 Compliance Tips” or “The Hottest Hi-vis Colour For 2023”. But I can’t get away from it; it rather cuts straight to the chase. Property development is inherently risky, and managing that risk is one of the developer’s most important jobs. So, here’s an article that, in a moment of Ronseal-ness, does exactly what it says on the tin.

I should probably set a few expectations at this point. The devil is in the detail when it comes to development, so I won’t be able to steer you through every risk in the few words that I have here. But hopefully, I’ll be able to cover some of the more important points and keep you on the straight and narrow. I want to guide you through some critical areas that combine the most significant risks and the ones I see people get wrong most often. Let me start with one of the most significant risks of them all, which is good old planning.

In case you’ve been living under a rock or have recently arrived from another galaxy (hi and welcome), I should tell you that the country’s planning system is broken. This is an immutable fact that only the brave or foolishly optimistic choose to ignore, although the path is still well-trodden by the unwary and the uneducated. Successive governments have consistently failed to grasp the nettle in fixing the problem since doing so invariably involves getting stung, at least at the ballot box, which is a singularly painful experience if you’re a politician. Everyone wants to end the housing crisis, and no one wants new houses built anywhere near them. This dichotomy logically left us with two potential courses of action; either we build some huge new towns and cities in the middle of nowhere, or the powers that be sit on their hands and kick the can down the road. I’ll let you guess which option we ended up with (clue: Milton Keynes b.1967 is still the biggest new town in the country). The required solution is to build lots of houses where people need them, but no one really fancies taking that one on politically, lest we add to the current record tally of deposed housing ministers.

So, we are where we are, at least for now. The prevailing situation is one where we have an outdated planning infrastructure that originated in the 1950s and a nation of local planning authorities that are under-resourced, over-stretched, demotivated, and where nearly all the most experienced people have long since left. And while your planning application form promises to be assessed within eight weeks (13 weeks for larger projects), the reality is nearly always a much longer wait. These days it’s all too common for applicants to be told seven and a half weeks down the line that they need to submit further information, e.g., by undertaking a survey of some description. 

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