Whether you heard it from TOWN’s Guy Rochez or a week later, at UKREiiF, the message is the same. Developers are facing massive viability pressure. This has been caused by higher build costs and a stagnant housing market and is being exacerbated by a “changing regulatory environment” such as the Building Safety Act and the Building Safety Levy in England that will come into operation this autumn.
Trained as an architect, Guy moved away from traditional practice early, quickly shifting into placemaking and development with firms including Brick by Brick and now TOWN where he is Associate Director.
Here are the top five takeaways from Guy’s talk.
1.The Funding Squeeze.
SME developers like TOWN operate with a limited pool of capital. If that money is locked up in the planning process for years it can prevent investment in other projects. This uncertainty has made investing in building homes feel like a “fool's game" when compared to other sectors like AI.
2. Planning consent is not the end:
Don’t assume planning consent means the hard part is over.. On TOWN’s Wolverton project, planning was the "easy bit," followed by a "five years of torturous tender process".
3. The compliance drag
High governance requirements from public sector partners can "add a real drag on the process". It's common to spend a year developing a planning scheme only for project-level decisions to be overturned higher up the ranks, forcing a return to the drawing board.
4.The Doom Loop
Developers are at real risk of a 'doom loop' of escalating costs that require repeated tendering and returning to the "huge governance process," further delaying the scheme. To break this cycle, TOWN has had to support partners through an "incredible governance process," while taking on "huge renegotiations” of Section 106 agreements.
5. Changing architects
Viability pressures and a "really tight equity budget," is forcing TOWN to take a hard look at all its costs and this includes changing architects post-planning if a different consultant can deliver the construction documentation for cheaper. Some architects are better at taking a scheme to a certain point, while others can "crank the handle" quickly for construction documentation.
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