Burning questions: ask the expert

Bringing life and investment to the UK’s towns and cities has never been more important than it is today. As the economy refinds its feet and the world settles into a new normal post a flurry of crises, from the impact of Brexit to the global pandemic and the rising costs of living, public and private sectors need to get much better at working together to deliver not only for our nation’s people but for UK plc too. Here, four experts from Avison Young share their advice on some of the biggest questions facing our towns and cities today. Jo Davis, managing director, place & UK executive chair “Navigating the ever-changing political and policy landscape in 2024 will require a bespoke planning and engagement strategy, so how does a developer navigate the planning process in 2024?” Answer: Political change creates uncertainty and is a potential risk for a planning application. While there are unknowns, a well-coordinated consultation strategy that layers cross-party political, stakeholder and local community engagement alongside technical assessment will give a good foundation to manage change. We are anticipating further changes to the National Planning Policy Framework as well as consultation on National Development Management Policies. Ask your advisers to monitor these changes and inform yourself on aspects of consultation that might affect your development. There will be a transition period when local planning authorities are also getting to grips with how policies should be implemented. As of February 2024, developers now need to show 10% biodiversity net gain on most new major development projects. Consider this early in the design process and factor it into your development appraisals. Instruct an ecologist in your design team as early as possible to provide a baseline assessment and input into landscape proposals. The latest standard method for calculating housing requirements includes an uplift that applies to certain cities and urban centres. This has deepened the need for these cities to be more ambitious in building taller and increasing density. Understanding the planning policy context for density and intensification is crucial. This will inform the level of assessment expected for your application. Be aspirational in design and don’t leave out the quality of the public realm when advocating for your scheme. At the outset, robust assessments focused on living conditions and microclimate will also give you the best chance of demonstrating a high-quality design. Ishdeep Bawa, principal, real estate finance “Working in partnership with the private sector is and will continue to be a critical route to the successful delivery of housing, regeneration and infrastructure projects. The biggest question for our clients is how do we secure the right partner and the optimum partnership structure?” Answer: Find a partner that aligns with your strategic objectives. Projects should be specific and recognise that partnership isn’t a silver bullet that can deal with all local authority challenges. Understand the commercial realities of the project and the expectations you are asking the market to respond against. Objectives shouldn’t be discarded, but should enable future business plans to respond. Being outcome-driven as opposed to output-driven leads to a greater chance of success. Ask yourself what type of partner you need. You have to understand the commercial models of potential partners and how they align with the development project you want to deliver. You could pick a partner today that can deliver the scheme on paper but over the long term their business model may no longer be appropriate for the project in hand. Ensure the proposition is robust and worked through from a commercial, legal and financial standpoint, with a well-thought-out procurement process. Nine times out of 10 you will end up spending more time and money revisiting aspects that were not given due consideration at the outset. Know your redlines. Only fix the absolutes that you cannot deviate from when considering the outcomes you want to achieve and risk exposure you can manage. Enable the market to provide alternative solutions. Use the process effectively – building lasting relationships at the outset is crucial. Procurement should be used to build trust with potential partners. Ensure that the council team is involved throughout. James Dair, principal and head of real estate finance “What is a Section 114 notice and what does it mean?” Answer: A section 114 notice refers to the provisions made in the Local Government Act 1988, empowering the local authority chief financial officer to issue a notice if they believe the authority will or has incurred a deficit budget. The notice imposes restrictions on the authority’s expenditure to prevent further financial deterioration. The issuance of the notice signifies a severe financial crisis with the local authority which requires urgent resolution. A “severe financial crisis” is not the same as bankruptcy, which has been widely reported. In response to the notice being issued, the local authority has a fixed time frame to formally respond with an agreed and credible strategy. The secretary of state will review the strategy and if they have concerns may appoint commissioners to support the local authority in implementing it. In most cases, local authorities agree additional short-term borrowing. This enables the authority to fund some annual costs through borrowing, reducing the revenue budget gap. During a live section 114, local authority resources may be prioritised to help deliver the agreed strategy. In some cases this can lead to delays in decisions being made in other areas, leading to frustration for the private sector. An authority’s response to a section 114 tends to start with how it can reduce the annual borrowing liabilities, which in most cases is linked to assets it owns. This enables the local authority to respond positively to the challenge and provides it with some grace in considering more structural solutions to improve the revenue budget in the longer term. One of the biggest risks for the local authority is a rush to dispose of assets to repay loans without proper consideration of the longer-term revenue implications. Implementation of the strategy developed must be supported by a clear and robust governance process that enables the authority to move towards a more sustainable position. Martyn Saunders, principal, place “Councils are under increasing pressure to make best use of their assets. As many historic town halls become surplus to requirement, there is an opportunity to repurpose and secure best value. How can a local authority maximise the value of a redundant town hall?” Answer: Know what you want to achieve. Setting clear objectives across financial, environmental and social outcomes will enable transparent decision-making and establish a robust business case. Understand the building. Town halls are bespoke to their original use, and often designated heritage assets. This can create unique opportunities but also challenges. Understanding these at the outset will help manage value expectations, improve decision-making and ultimately achieve a “best value” return. Be realistic about time frames. Repurposing can take time and the returns may not be realised immediately, meaning projects can extend beyond arbitrary political timescales. A clear programme that establishes timing of costs and returns will manage expectations and improve financial decision-making. Identify the need for any future use. Getting that right will maximise future value and benefit of the property, ensuring it has a future. Given their prominent high street locations, assets can play a wider role. Workspace, education or community uses may be more impactful than residential but require a different delivery. Test all your options. Based on a better understanding of the property, testing is vital to establishing the business case. Including a genuine “do nothing” will show the costs and liabilities for future operation and maintenance for which the council will be liable, setting the context for understanding the true benefit of any alternative approach. Working in partnership with developers, community groups and space operators can achieve returns that outweigh the capital option – and also benefit communities further. Images: iStock; Avison Young