Fruition Properties at 20

The property development landscape has become ever more challenging in the last 20 years so reaching the milestone of two decades as a SME business is a chance to reflect on our journey. A few observations from our COO, Parul Scampion.

Planning (of course)

Since starting the company in 2004, we have been familiar with navigating the planning system but the web of regulations, consultations, and approvals required by different boroughs and the Greater London Authority has become ever more complex, expensive and time consuming. There are far more steps in the process from pre-application submissions (sometimes 2 or 3) to design committees, public consultations and negotiations with many more statutory consultees, from Highways and Transport for London to the London Fire Brigade.

Previously we would be able to informally discuss applications with officers and make tweaks to enable a consent but now it is very difficult to get hold of individual case officers to understand their concerns and the process is much more structured and prone to refusal.  The “one size fits all” planning system which treats SME developers the same as the big builders compounds the issue by applying the same constraints for all major applications, with little distinction between a 20 units application and one for 1000 units – for everyone the process has become lengthier and more uncertain.  Looking at appraisals from 2004, I can hardly believe that we generally allowed 6 months to obtain planning rather than the 18 months today.

Public sentiment

Public opposition to property development has also changed and become more vociferous. Planning objections from well-resourced residents resulting in local refusals leads more often to appeals and even judicial reviews, and legal battles. In the past, people recognised that construction was just a necessary part of life in London, and accepted it, but now objections fly in – perhaps it is too easy to make an objection? Indeed, one of our developments, took six months to get a simple Construction Logistic Plan signed off by the Ward Councillors due to local opposition.  In general, there seems to be more anti-developer sentiment – perhaps because of people’s frustration at the lack of affordable housing – and many SMEs are voting with their feet and leaving the industry. I think it is key that developers and housebuilders are recognised as part of the solution if that trend is not to accelerate and we must make our voices heard as an industry.

Increased volatility

Another theme is how much more uncertain the economic landscape has become since the early 2000s. A series of shocks from the collapse of Lehman Brothers, changes to Stamp Duty, the uncertainties surrounding Brexit, the unprecedented challenges of the COVID-19 pandemic, followed most recently by the war in Ukraine and surging inflation and interest rates has turned business plans upside down. The constant flux in the political and economic environment compounds the risks inherent in development, making funding more elusive, timelines more uncertain and viability more precarious.  These macro-level shocks are compounded by an ever more hyperactive policy environment for Housing (let’s not count the number of housing ministers) with ongoing switches in emphasis, changes to the NPPF, updates to Building Regulations and most recently the introduction of the Building Safety Act 2022 and the requirements around fire-safety and a new over-arching approval body. We are developing against a constantly moving target with new hurdles seemingly added all the time.

Complexity

Construction has undoubtedly become more complex – there has always been complexity in developing in built up areas such as London, but as the availability of land has become even more scarce, sites have increasingly tighter logistics, whether in back-land development or building above existing buildings. Delivery of projects requires finesse, from managing multiple party wall awards, dealing with covenants and rights of light issues or overseeing construction management plans amidst resident concerns, whilst building on or near red routes.  We have dealt with all of the above as well as securing stopping-up orders and navigating parking limitations. Similarly, construction itself has become more complicated as additional requirements relating to fire, energy efficiency, acoustic separation and the like are introduced and have to be balanced against each other.

The SME challenge

The issues in the planning system, greater economic uncertainty, increased complexity and anti-developer sentiment have all led to a drastic decline in the number of SME developers over the last 30 years. The homogenisation of development processes, treating SMEs and large builders alike, stifles innovation and creativity. The lack of young people entering the industry threatens to exacerbate skill shortages, underscores the urgency of nurturing new talent.  Where once SME developers like Fruition Properties supplied 40% of new homes it is now only 12%.  So why is it essential for SMEs to thrive? The answer lies in SME’s ability to innovate and adapt. The cookie cutter developments of the large housebuilders simply do not suit every location and SME developers can deliver a more bespoke product and unlock smaller windfall sites.  They can help to meet housing targets and are more likely to recruit locally and keep their construction spend within the local area.

So, what next for Fruition Properties?

An advantage of being an SME is that we are adaptable; being nimble means we can work differently to survive. Our ethos has been to work collaboratively not competitively building strong relationships with our supply chain and on occasion partnering with contractors to ensure schemes are delivered. We enter joint venture partnerships with landowners, to make development a win-win for all stakeholders and can also use our depth and breadth of experience to provide Development Management services to help clients bring forward their own sites.

Importantly we have been able to embrace opportunities that larger developers might overlook as too fiddly or granular. In the past decade, we have emerged as leaders in airspace development, capitalising on the scarcity of land in cities like London by adding additional storeys above existing buildings. This innovative and sustainable approach not only addresses the need for additional housing but also provides a pathway for commercial properties to meet new MEES regulations as it can be a way of financing the necessary efficiency upgrades.

Our journey over the past two decades has been marked by resilience and adaptability in the face of many headwinds and as we navigate the challenges ahead with our experienced team, we remain confident in our ability to thrive and deliver new homes across London. After all, what’s the alternative?

This article first appeared in Green Street News.