Six crucial tips for public sector land disposal
Fri 20th September 2013, 10:56 am
Read our top tips for the public sector to help accelerate the release of surplus land.
Sitematch aims to bring the private and public sector together to discuss development and the disposal of surplus land. The pressure is on the public sector to rationalise estates and free up funds by disposing of assets. These tips are aimed at those public sector organisations looking to improve their chances with developers.
If the public sector body owns a site, detailed planning permission should not be obtained. An outline permission or presumption to develop of the appropriate type is more than often enough. The view a public sector body or its architect takes of a site may not necessarily be shared by developers and the market. Developers have turned down projects due to restrictive planning permissions and no intention of going through the process again.
Risk is an important factor in development, and developers will prefer to work with organisations that understand this and are willing to share some of that risk. For developers, risk is often related to what can be found underground: pipes, utilities, drainage, contamination etc. Developers will take these risks into account and put a price on them.
This is a crucial point for developers - it can cost developers between £50,000 and £100,000 to make a bid on a project. This is too much. The developers' regional offices have upper limits for bid costs, and will not enter any bid that comes above that threshold. There is no need to make the bidding process complicated. Pre-qualification documents that are dozens of pages long will not be appreciated by developers.
If public sector bodies look to receive any cash up front, they can expect to make less in the long run. Developers prefer public sector bodies to offer deferred terms. This will allow developers to bring more cash on the table, and even offer overage if the value of land appreciates during development of a site.
Certainty of delivery
Developers do not want to get involved in a project that requires months of competitive dialogue only to find out that in the end the project does not go ahead. Public sector organisations should work on having ensuring they are seen as an organisation that can make decisions. If a decision is promised but eventually falls through, it will ruin a reputation.
Choice of consultant is crucial for maintaining relationships with developers. Adversarial legal advice will only serve to push developers away and damage reputation. The same is true for architects. Consultants acting on behalf of the public sector should understand the private sector, be able to manage relationships and make effort to make a deal work. Consultants who believe the best way to represent the public sector is by fighting for it may prove detrimental to the interest of any public sector organisation.
If you can think of any other tips, please send them to the Sitematch team. We would be happy to consider any contribution from our readers.