When is a development ‘completed’?

modular homes

John Waddicker is director at Positive Commercial Finance

Some interesting site development research was published recently and, after talking to a number of brokers and lenders, it was clear that defining when a site was ‘completed’ was, well, unclear! Throw into the mix whether the scheme was being built on a brownfield or greenfield site and the timing of the ‘completion’ becomes even more interesting.

The research I’m referring to is by the Campaign to Protect Rural England (CPRE). Their report showed that of 1,040 developments with active planning consent during the three years up to March 2015, found that brownfield developments were being completed up to six months faster.

But of course this research refers to the site being ‘finished’ that is to say when the developer has finished the site, gets the practical completion certificates off the council and hands over the site to the buyer.

However, in the development finance sector, we tend to refer to ‘completion’ for brokers and lenders as the completion of the financial arrangements when the lender funds the deal. There can be stage payments throughout various key phases of the development and funds released as these targets are reached, but these are pre-arranged and are taken into account at the completion of the financial arrangements.

The CPRE research does, however, put in to focus a number of important issues.

With more and more brownfield sites becoming available, the greenfield development that has taken place in many areas is arguably unnecessary when there is more than enough brownfield land with planning permission to provide for what has been built. As the greenfield sites take much longer to ‘finish’, the government and councils should be focussing on the brownfield sites to build more houses and develop business or industrial infrastructure.

Interestingly, the CPRE research echoes our own experience in that when it comes to starting a development, we see that both brownfield and greenfield sites take about the same amount of time after receiving planning permission.

It would seem to make sense that brownfield land should be the focus for building in the future. There seems to be enough of this type of land available too, so it brings in to question the over-use of valuable greenfield land for residential or industrial schemes.

Sites do require specialist funding facilities and as a broker with access to extensive and in some cases unique finance lines, we are well placed to help developers with their complex projects. After all it’s important that financiers and developers can review the risk and rewards for each project, and, ultimately, lenders will lend.

Getting the right finance is something that’s vital for any scheme so it’s important to that developers work with specialists to ensure the finance is there when it’s needed and is structured in the right way for the whole term of the project. That means ‘completing’ the finance effectively, and for developers to ‘finish’ the site, which it would seem is far quicker on widely available brownfield land.

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