A quarter of investors have bought a property with a view to carrying out an extension or conversion only to be denied planning permission, research from SearchLand has found.
SearchLand’s own data showed nearly a quarter (24%) of applications for residential schemes of one or more units were refused in the past five years.
Investors are wary of buying and then not being able to conduct the works they want, as two fifths (40%) said the viability of obtaining planning permission was a major stumbling block when searching for a property investment.
Hugh Gibbs, co-founder of SearchLand, said: “Our research shows just how big of a hurdle planning permission can be for investors, with over a quarter making purchases with the express view of carrying out works to convert or extend the property, only to be denied permission.
“The findings are hard evidence of the opaque nature of the planning system and are particularly concerning given the government’s current moratorium on planning reform.
“The viability of obtaining planning permission is becoming a major stumbling block for investors – likewise developers – and the current refusal rate carries far-reaching implications for the businesses who we depend on the most to bring forward new homes.”
Despite the issues it seems plenty of investors are determined not to be put off by planning permission issues.
Indeed, almost half (44%) of UK property investors have vowed to invest in more properties or plots of land in the coming year.
Almost a third (31%) of respondents said they are currently considering investing in commercial and semi-commercial properties that could be converted in residential premises.
Last year the government released its ‘Planning for the Future’ white paper in a bid to remove red tape from the housebuilding process, but it’s reportedly been put on hold by new housing secretary Michael Gove.
Gibbs added: “At SearchLand our aim is to overcome these roadblocks by making data transparent. Our site sourcing solution provides investors and developers with the information they need to be able to identify unviable sites before they go as far as a submission.
“The study also highlights an interesting trend within the real estate sector, with many investors now looking to potentially convert commercial properties into residential premises.
“The rise of remote working has lessened demand for office space, leaving many commercial buildings empty – understandably, investors are considering whether this could present them with new opportunities.”