Lessons of Planning Experience - Expert Advisers, Consultants, Local Politics, Risk and Money

[Ferdinand]

This post has reposted from an Ebuild thread called "Planner's Commission". 

It is reflections on the use of Expert Advisers, which ones may be needed, and how to get the right people, and how to reward / incentivise them, based on the experience of taking a larger project (site for several dozen houses) through planning, and other aspects of the Planning Process. We used a full gamut of advisers, through an excellent Planning Consultant.

It is based on experience of taking a larger site through Planning. I hope there are useful insights for smaller projects, too. My aim is to help others avoid elephant traps which are not obvious at first site.

The context is a question from poster Grifter74 about a Planning Consultant asking for a substantial percentage bonus in return for them "covering costs":

Quote

" We've got a couple of fields which are likely to go for housing in the near future. We've enlisted a local planner to help us go forward with the project and he's suggested a Share Agreement rather than paying fees.

This seems fine as some personal interest in the outcome will mean more effort will be put in than if we just hire him, but he's suggesting he gets a 25% cut of the market value of the land once permission granted."

These are my reflections on the real costs likely to be involved in a larger Planning Application, and some of the risk/reward balances and elephant traps with which you will need to deal.

In a largish project, there are a lot more people who get a pound of your flesh than the Planning Consultant. On a 10 acre site the fee for submitting an Outline PP application to the Council will be around £18000 in 2015 - that is merely to cover the Council's cost to process it. If you are going for Full Detailed PP that fee will be more like £40k-£50k.

Your whole Planning Application and Appeal budget will need to be more like £600-1000 per potential plot for Outline. Perhaps that figure if you are doing Detailed. That is your stake in a game of Planning Poker, and you need to be able to afford to lose all of it without crippling damage to your finances or family.

A large developer can lay that risk off across 8 or 10 applications per year. Are you in a position to take it on personally for a single site?

See http://www.planningp...neFeeCalculator .

On top of that you have everything from Bat Reports to Tree Reports to Traffic Surveys to (potentially) Ground Sampling to Flood Simulation to Entrance Design to blah de blah de waffle de gubbins. We had about a dozen consultants and their reports. Don't forget the Woodlarks and the Nightjars, and if somebody found a bronze age arrowhead 3 miles away in 1864 an archaeologist may be involved too.

Our Planning System can be well described as "Teutonic". It also changes like a Kaleidoscope month to month, and only Pros can keep up. An important role is for the Planning Consultant to notice that any one of the 436 people involved in processing your plans in the 40 different organisations consulted has c*cked up a detail and said no because they didn't read one of the 437 documents properly wrt to current Guidance, and to get things back on track - ie attention to detail followed by polite, knowledgeable bullying. That is one reason why success fees can be a helpful incentive.

Your key role wrt everyone is to make sure that your consultants are going in the right direction and making sure that your detailed knowledge of your site and its history (which your team won't have) is folded into the process effectively which may involve insisting that certain things are checked because of your gut feel. I have had a small number of occasions when stuff I know from decades ago has turned out to be significant, which might eg be proving previous land use from family documents, or knowing where a fence was in 1986 and the current address of the previous neighbour who can make a sworn statement about it.

I would suggest that going for Outline on eg a 10Ha site you need to budget £100k plus a £25k contingency for Planning Application plus a possible Appeal as a minimum.

If you are going for Detailed that budget needs to be at least doubled.

You may not need it all (but you will need half of it), but it needs to be there at short notice when it is needed. Since you may lose you need to be willing and able to afford losing it all. Giving your Planner a share may help manage your downside risk. Only you can judge the balance.

You don't say whether your site is controversial, or where it is. If PP is likely and the area is popular with developers (read roughly: South West of a Line from the Wash to Chester in 2015) or is metropolitan or posh, then you may get a developer to take it on from scratch, but they are all hugely risk averse. They *will* want 25% or more of the uplift and a 5 or 7 year option. That may be a good deal depending on umpteen factors.

What is worth more to you - 100% of a field with cows or 50% of a £10m housing site?

Your Planning Consultant is perhaps trying it on if it is a likely site eg if it is in the Local Plan. If it is a difficult site it is very high but if it is your only option then that may be acceptable.

You need to know *precisely* what "covering costs" means. It does *not* mean Section 106, which will simply be deducted from the sale price by the potential purchaser eventually. It will mean your Planner's Professional Fees (10-20% of total budget); it may or may not mean fees of consultants (50-70% of total budget); it is unlikely to mean the Council Fee (20-30% of total budget).

The process will take 2-4 years overall.

No developer will do more than talk until the dust has settled after the Election unless your site is gold-plated, but you should take 6 months investigating and ruminating anyway unless there is a specific reason. Depending on the next Govt, you may be able to sell it into some sort of State Housing Programme at a price yet to be determined.

Our deal with our Planner is that we have covered fees, including his, but there is a (small) percentage success fee on sale from which the planner's own fee is deducted. That caps our fee exposure.

Your suggested share agreement seems to make you potentially liable for paying your Planner before the site is sold.

Then you have to sell it :-). Not easy always.

What you should do.

1 - Above all, stop and think and take your time.

2 - I'd say take advice from someone you trust or who is beholden only to you. That is probably the *senior* Property Expert of an experienced local firm of solicitors or someone who routinely advises on similar projects. You will get an initial meeting free, but if you want a report with advice expect to pay £1000 to £2500 (write a one page spec. and get a quote) for an exploratory assessment report which briefly assesses the site, the context, local policy and your options to go forward. It will be a lot of work because the system is complicated. Listen to them about the process. It will be a legal or property professional, or Chartered Surveyor, not an architect.

3 - If you get any Planning Consultant make sure they are used to these big projects in your locality. You will be working with them for 3 years. Look back through similar sites. The right Planning Consultant may be your adviser, but you need to get the right one and there are quite a number of .. er .. w*nk*rs out there, often refugees / early retirees from senior positions in Council Planning Departments. Find out how many Appeals they have won on your type of project; if they can remember them all easily it is not enough experience. Be aware of their motivation and manage them accordingly - our Planning Consultant enjoyed winning the battle as much as getting the application. and could have been a good Barrister as an alternative career.

4 - A national planning consultancy may be a good idea and will be more likely to be professionally reliable and have subject experts to call on, but you still initially need your independent expert you are paying to advise you.

5 - Consider local reactions. You may have demos, petitions, and Facebook groups. You may lose lots of friends and be in the local paper as the local selfish capitalist barsteward concreting over the Green Belt.

Given our Planning Politics, this is the highly honourable and ethical activity of helping young people off the homelessness list and onto the Housing Ladder.

6 - You also need advice from a suitable accountant. The expert in 2 would advise.

There are people out there who invest risk capital in this sort of process, but you will need to find them and they all want a requisite reward for the risk they are taking, and it is not a game of leapfrog.

The two balls you need to keep your eye on in evaluating everyone's interests are Risk and Money, and the tradeoffs between the two from each viewpoint. Those two getting out of balance for any party is a red flag.

Ferdinand 

Edited June 18, 2016 by Ferdinand

[Jeremy Harris]

On the other thread  there was a diversion about planning politics.  I wrote this:

12 hours ago, JSHarris said:

Good news, but I'll be very interested to hear how long it takes before the developer ACTUALLY STARTS BUILDING!

My experience around here is that I've now sat in on three planning committee meetings, where big developers have put forward strong cases for gaining planning permission, always on the basis of the URGENT need for new houses in the area, and that the Local Authority was failing to meet its deliverable 5 year housing target.  The last one of these was 18 months ago.  So far NONE of these developments have even been started..........................

ProDave replied:

12 hours ago, ProDave said:

In a case like this, they should have the power to grant permission with an expiry of 12 months. The builder did say it was URGENT didn't he?  Then if they re apply after it has expired, refuse it because there clearly was NOT a need after all.

I replied:

12 hours ago, JSHarris said:

They should, but they didn't, in any of the three cases.  It's a game, with the prize being the uplift in value of the land with time once it has PP.  I know things are very different here from where you are, but we're in a rising market with a housing shortage, so controlling the release of new houses to the market controls the price, which in turn controls the profit.

and then Ferdinand added this:

4 hours ago, Ferdinand said:

One for another thread but it would be a devil to make work, since eg a Condition of Tree or Bat evaluations or work could add an elapsed 4-6 months just on its own if a PP came through in say April.

Would that Council caused delay be added on to the 12 months or what?

What happens in Land prices tank by 25-50% overnight as in 2008-9. when the Section 106s were deliberately impossible to untangle? That took several years for the Govt to address effectively.

What's to stop foundations being dug, and covered up again?

Ferdinand

The 106's were agreed on all three.  What has happened on two of the developments is that the access, services and infrastructure have been put in, but no houses are being built.  Presumably this has been done to lock in the PP.  The third development has been sat with no work being done at all, 18 months after PP was granted and the 106 was agreed.  The developer was forced to reduce the housing density on that one, and the local view is that work is going on to get a more application in for more houses on the plot.  It's caused some ructions, as two of the most vociferous supporters (in a village that was overwhelmingly opposed to the development, just because it's in a stupid place, on a  very steep hill) did so on the basis that they had children who were getting married and looking for somewhere to live in the village, so the "affordable homes" in the development we looked at as a way to achieve that.  One of those former supporters has now bought a small infill plot and gained planning permission for their son to build a house and work started about 6 months ago, so that's one less customer for this developer.