Property development finance marketplace Brickflow has warned that planning delays are stretching the length of development cycles by up to two years.
However, despite widespread reports of ongoing planning delays, the latest government figures claim that 86 per cent of major applications are agreed within the agreed timescale.
Brickflow noted that planning decisions should be made within eight weeks for household and minor planning applications; 13 weeks for large or controversial developments; and 16 weeks for applications that are subject to an Environmental Impact Assessment.
When these deadlines are missed, it can have a knock-on effect on the cost and timescale of new property developments, with small- and medium-sized enterprise (SME) property developers most likely to be impacted.
“Many developers are telling us that a full development cycle is now taking four years, rather than the historical two to three years, due to delays in planning,” said Brickflow.
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“Delays to approval and project starts will always be more detrimental to SME developers than large-scale schemes.
“The most problematic effect for SMEs however is that they are likely to have their capital tied up in just one or two sites, so lengthy delays in planning can bring their development business grinding to a halt.
“Hence it is now more important than ever to be savvy about funding, finding the best deals that allow equity to be spread further, across more sites.”
Brickflow noted that SME developers will often take 20 sites to deliver 200 homes in comparison to the larger developers who can build 200 on one site. This means that smaller developers are subject to 20 times more applications, delays and discretionary decisions.
The platform added that the several London councils have added blanket caveats to their websites and communications asking for patience as they work through backlogs. In some cases these backlogs can take more than six months to process.
Brickflow suggested that the government’s 86 per cent approval rate is being calculated based on when the application is on the system, and doesn’t take into account any initial delays to the filing process.
“With developers now factoring in four years for a full development cycle, the number of schemes that they can complete over the span of their career is significantly impacted,” Brickflow added.
“When the average cycle for a development is two to three years, a developer will typically complete 10 projects over a 25-year career to meet their financial goals for retirement as well as how comfortably they live in the meantime. With planning delays reducing the number they can complete from 10 to six, it puts immense pressure on profit in a less profitable market.”
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