What the King had to say about Commercial Property Development

The new government has been in place for two weeks and we’ve had the King’s Speech. Not Colin Firth on this occasion, but King Charles, who spoke Keir Starmer’s words to the nation explaining the government’s forthcoming legislative agenda.

As a specialist law firm focused on commercial property developers and commercial property finance providers we can put most of the 40 bills outlined by the King to one side and focus unashamedly on the forthcoming planning and infrastructure bill. For many years now, SME developers have been getting a lot of flak from people who don’t understand the development industry and it’s a wonderful feeling to have the backing of the new government to go out there and build, build, build!

Details of the government’s plans are sketchy at present. We know that the new prime minister intends to unblock stalled onshore infrastructure projects and “get Britain building again”. He has also said he would “enable democratic engagement with how, not if, homes and infrastructure is built”. As a statement of intent this sounds positive for developers, but the idea will need a lot of unpacking in the months to come. Do councillors know how to build? Not many!

The press have been interviewing the volume house builders but there is very little focus on the role of SME developers whose contribution to the new housing drive is absolutely critical.

At our round table last month co-hosted with Berrys a group of industry professionals discussed the difficulties SME developers have and how they can be overcome. The main issues identified were:

• the cost, delay, excessive complexity and highly unpredictable outcomes of the planning process,
• the cost and availability of land (SME developers generally lack the land banks of the volume housebuilders),
• the adverse reaction of the insurance and banking markets to modern methods of construction,
• the effect of recent economic difficulties on contractors and subcontractors, who are going bust at the rate of 400 a month, causing knock-on effects on site, and
• the shortage of trained builders.

These five issues are all linked and will take a lot of time and effort to untangle. Here at Newmanor Law we very much support the new government’s efforts to streamline planning but with one big caveat. The Treasury and the Ministry of Housing, Communities and Local Government need to be looking at the whole system of development, not just one aspect of it. It’s easy to point to planning, which is undeniably in a mess at the moment, but high costs and high interest rates are just as relevant. Developers’ appraisals are already stretched to the limit and any thoughts of raiding planning uplifts to fund affordable and social housing is a non-starter. That would result in less development. The treasury is going to have to fund the social and affordable housing because the SME development industry is in no position to subsidise it.