"The current costs and obstacles in the development process are certainly considerable, but the way forward to mitigate them is through a general approach of partnership and collaboration between lender, developer, and legal"
- Dipinder Surey - Atelier
The growing cost of development
Whether it’s Section 106 agreements, planning guidance, title queries, or borrower agreements, there is a myriad of legal issues that can arise during the course of arranging development finance. This, coupled with the continued rise in the cost of development, means anything that can save time and money will be welcomed.
In today’s complex lending environment, legal queries can stall even the best-planned developments. With this in mind, it is perhaps surprising that more lenders are not opting to help developers navigate an increasingly complex legal landscape.
Saving legal time and money
The issues that are plaguing developers are increasingly legal in nature, whether it’s Section 106 agreements, compliance with the Building Safety Act, or handling planning issues. Having a close proximity between lender and lawyer greatly soothes the issues that developers face time and time again.
Lenders and their clients can be provided with far greater certainty, and the value of this cannot be understated. Even if legal issues prevent a development, a legal team can identify this at the earliest opportunity and prevent borrowers from wasting time or money.
One such legal issue is the intricacies of Section 106 agreements. Often, managing these obligations can be particularly onerous for SMEs, who do not have the same legal resources to throw at the obstacle.
From my experience, it greatly expedites the process to have lending and legal teams closely aligned to find creative and commercial solutions to the recurring issues of Section 106 agreements. This saves time and money for developers who, especially at the initial stages of a development, are often low on financial resources.
Developers are also frequently coming unstuck when faced with the current delays presented by the Gateways in the Building Safety Act. While there is no panacea for the current delays, the process can be made as simple as possible with the correct preparation of documents as early as possible.
Developers can, therefore, control what can be controlled and ensure they are not hindered by further wasted time on top of the already onerous Gateway bottlenecks. Addressing all the requisite contracts and documents early ensures that issues won’t crop up further down the line.
Collaboration and communication
The current costs and obstacles in the development process are certainly considerable, but the way forward to mitigate them is through a general approach of partnership and collaboration between lender, developer, and legal.
Lenders that don’t adjust to client needs and expectations will be doing so to their client’s detriment, and the crucial element in any potential success in the current market is crafting solutions unique to a client’s scenario. Formulating these commercial solutions is far easier with the combined input of judicious credit and legal teams.
It seems obvious, but having close communication and responsiveness between lenders, developers, and their legal teams cannot be underestimated.
