Sunday 20 May 2012
Extend the Life of Planning Permissions-NAMA could save €4.8bn
September 2009
Extend the Life of Planning Permissions-NAMA could save €4.8bnThe stagnation in the property market means that most sites with planning permissions are lying idle pending an improvement in market conditions. Unfortunately, planning permissions have (in almost all cases) a life of just 5 years after which the planning permission is no longer valid and a developers need to re-apply.
The Government should quickly review planning legislation to grant extensions to existing permissions. Failure to do so would otherwise further undermine the value of development sites, with the biggest loser being NAMA!
In my opinion existing permissions should be extended by 5 years minimum to underpin values and ensure that sites are capable of development when the market picks up without having to go through the cost and time delays in re-applying. The planning process regularly takes 12-18 months, and significantly longer for large schemes, and can typically cost 2% of development costs-equivalent to approximately €200,000 for a €10m scheme.
There would also be additional borrowing interest on the site cost during the planning process-say 6% pa for 18 months on a site costing €2.5m, an additional cost of over €200,000.
The granting of a planning life extension would therefore save at least €400,000 on a typical site costing €2.5m.
If one applies this to NAMA's expected development landbank of €30bn then the saving to NAMA, ie the taxpayer, by extending the life of planning permissions could be up to €4.8bn!
Author: Pat