Planning Applications: An Evolving Story of Hidden Costs

Much like the rising cost of living, the cost of making planning applications has also risen significantly due to an increase in planning application requirements. DHA’s Rosie Dennis and James Farmer look into the implications this is having on developers.

 

Litchfields reported in September 2023, that between 1990 and 2023, the average cost of making an outline application has increased from around £28,000 (adjusted for inflation) to £125,000, an increase of almost 450%[1]. This rate of increase can be seen across planning applications of all types.

 

As most will now be aware, planning application fees rose in December 2023, by 35% for major applications and 25% for minor applications. The Government also removed fee exemptions for repeat applications (formerly known as a ‘free go’) and introduced annual indexation of planning fees, that comes into effect in April 2025.

 

Local Planning Authorities (LPAs) are increasingly pushing for pre-application consultation with applicants, which vary substantially in cost depending on the size of the scheme and the type of advice required. We have also seen the introduction of additional requirements such as Biodiversity Net Gain (BNG), Nutrient Neutrality, rising CIL costs etc. This has added additional financial burden onto developments, and particularly for smaller schemes where increased planning costs are affecting viability and deliverability. This in turn has increased risk and uncertainty where increased costs do not always generate value (where an application is refused for example).

 

At DHA, we frequently work on small scale projects with individuals and small to medium sized organisations. Below we have provided examples of just a few key issues we face on a day-to-day basis, which stack up when calculating the overall cost of delivering a project:

 

• Biodiversity Net Gain – Achieving a 10% Biodiversity Net Gain (BNG) became mandatory on small sites that do not fall within an exemption from April 2024. Whilst there are off-site solutions (i.e. delivering a net gain elsewhere or purchasing Government credits), LPAs prefer an on-site solution. For small sites, we have found there to be a fine line between delivering 10% and leaving a sufficient amount of developable area that works for a client. Therefore, the earlier an applicant knows how to deliver BNG, the sooner they know what impact this will have on costs.

 

• Ecological Surveys and Mitigation – An application must demonstrate that development will not negatively impact existing habitats on site and that harm can be mitigated. A Preliminary Ecological Appraisal (as a minimum) is generally required for small sites. If the appraisal identifies additional surveys are required, then they will need to be completed within the relevant survey window, and submitted before the application is determined. Often protected habitats only come to light following preliminary survey work, and therefore early engagement with an ecologist is encouraged to understand potential site constraints and whether any additional surveys or mitigation is required at an early stage.

 

• Contamination – There are occasions where a development site is located on, or close to an area with known contamination, or includes a use that will be particularly vulnerable to contamination. A Phase I Contamination Survey will help determine how this could affect a development site and whether further site investigation or remediation is required. This will also provide an indication on the likely costs associated with the site’s redevelopment.

 

• Flood Risk and Drainage – Knowing whether a site is at risk of flooding is important. A Flood Risk Assessment (FRA) is required for development in flood zones 2 or 3 (heightened risk of flooding), where a site exceeds 1 hectare in any flood zone, where a change of use would be to a more vulnerable use class, or for a site where the Environment Agency has identified drainage problems. Whilst minor applications may not have to submit drainage information, where drainage is required, consideration of how this can be achieved, and whether or not it will be feasible, is important at an early stage as it can have a significant impact on the feasibility and deliverability of a site.

 

• Planning Conditions – Planning conditions can result in additional costs to an applicant as they can require a developer to submit information before development starts (pre-commencement) or the site is occupied (pre-occupation) or require works to be completed in a specific timeframe or in accordance with a specific document (compliance). Early engagement with the LPA is critical to try to negotiate the number and type of conditions required, so that we can manage expectations and minimise additional costs as much as possible.

 

• Community Infrastructure Levy (CIL)/Planning Obligations – Even small sites could be required to make contributions to local infrastructure or to provide funding or something specific to the site’s locality. Where a development is liable to CIL charges, the relevant forms need to be submitted at the application stage to demonstrate how much CIL will be payable on a specific development. Other contributions may be required by the Local Authority, and therefore negotiation with them is crucial to minimising/removing additional costs that could be placed on development through planning obligations.

 

How we can help

It goes without saying that costs can substantially vary on a site-by-site basis and can often be unexpected no matter how much input we’ve had before an application is submitted. However, at DHA, we have a multidisciplinary team who can provide input into a range of technical matters and can provide advice at an early stage to try and minimise unnecessary costs, or at the very least, manage expectations of what might be raised as an issue during the application process.

 

Should you require any help or know anyone who does, please don’t hesitate to get in contact with the team.

 

[1] Litchfields (2023) ‘Small Builders Big Burdens’. Available at: https://lichfields.uk/content/insights/small-builders-big-burdens#:~:text=This%20report%20has%20been%20commissioned,Medium%20Sized%20(SME)%20housebuilders