The Intermediary – September 2025 - Flipbook - Page 67
SPECIALIST FINANCE
Opinion
Buying without
planning
H
ow many small to
medium (SME)
developers say
planning delays are
their biggest barrier
to growth? 93%,
according to the most recent Home
Builders Federation survey. We all
know the story: delays, spiralling
costs, and the kind of Kaaesque
circus that makes you wonder how
anything gets built at all.
They say the system is changing, but
until then, developers must navigate it
to get much-needed housing delivered.
So, the question remains – does
your client buy a site with planning,
or without?
The ‘oven-ready’ route
Purchasing a consented site has
obvious appeal. Your client knows the
costs, gross development value (GDV),
cashflow and funding from day one.
They can break ground quickly,
avoiding months of waiting while
interest accumulates.
But these sites come at a price.
Sellers capture the planning upli,
oen with ambitious valuations, and
competition is fierce. Margins get
squeezed, and you may have to work
within someone else’s vision for the
scheme, making amendments where
possible to unlock value.
Risk and reward
Acquiring land without consent
brings the headache of the planning
system. Local authority processes
vary wildly and holding costs stack
up while interest accrues. In the worst
case, you can be le with a site with
lile or no development value.
That said, this is where much of
the profit sits. As the saying goes:
you make your money on day one.
Securing full planning upli can
deliver outsized returns. Many
developers of late have chosen not to
build out at all, but instead to cash in
on consent and bank the gain.
There’s also the upside of control –
shaping the design, density and best
use of the site to fit their strategy, not
someone else’s.
WILL CALITO
is sales executive
at Magnet Capital
The middle ground
Between the two extremes sit option
agreements and conditional contracts.
These allow your client to agree on a
price but only complete once planning
is secured. They avoid an upfront
outlay and reduce risk, although they
may pay a premium for the flexibility.
Still, for many SMEs, this can be a
smart way to build a pipeline and
secure long-term value.
The bottom line
Whether your client buys with or
without planning depends on their
capital, risk appetite, and financial
strength. Overage agreements must
also be watched carefully as they can
eat into future uplis.
What is clear is that with the
right team around you, good advice,
and a clear plan mapped out, both
approaches can work. ●
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September 2025 | The Intermediary
