The Intermediary – September 2026 - Flipbook - Page 68
SPECIALIST FINANCE
Opinion
The forgotten risk in
development finance
A
development
scheme may have
planning permission,
funding lined up and
favourable market
conditions, but if the
site does not have the necessary access
rights, the project may stall before
it begins.
Rights of way, ransom strips
and access disputes are oen
overlooked during the early stages
of a transaction. Yet for developers,
brokers and lenders, they can present
a material threat to development
viability and lending security.
By the time an access issue becomes
contentious, what first appeared to
be a minor title concern may have
become a significant commercial risk.
Foundation of development
A site may appear aractive from
a valuation perspective, but if legal
access is uncertain or vulnerable to
challenge, the delivery of that scheme
can be placed at risk.
Access issues should be viewed
in the same way as other core
development risks, such as planning,
environmental constraints or
title defects.
A common misconception is that
the existence of a right of way means
that a development can proceed
without difficulty. That is not always
the case.
Many were granted decades ago,
oen for much less intensive uses
than those generated by modern
development schemes.
Disputes can arise over whether the
proposed use of an access route falls
within the scope of the right granted,
or whether it amounts to excessive use
or unreasonable interference.
Whether a particular use falls
within an existing right will depend
heavily on the facts, which is why
early investigation is so important.
The key point for lenders and
brokers is that access rights cannot be
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The Intermediary | September 2026
assessed by title documents alone. The
practical reality of how the access will
be used is oen just as important.
STEPHANIE KINGDON
is partner and team leader
of Bristol property disputes
at Birketts LLP
Development leverage
Ransom strips remain one of the
most effective ways of disrupting an
otherwise viable development. A
ransom strip is usually a small area
of land that controls access to a much
larger site. On a plan, it may appear
insignificant. In commercial terms, it
may be critical.
A recent example reported in the
national press involved a councilowned strip of land required to unlock
a residential development, with
negotiations reportedly resulting in a
£4.5m payment.
If access cannot be secured, the
development may be delayed,
renegotiated or rendered
undeliverable. Even where a deal is
ultimately reached, an unexpected
access payment can materially affect
development margins.
A critical view
Forward-thinking lenders
increasingly recognise that title risks
are commercial risks.
Where access rights are dependent
on negotiations with neighbouring
landowners, the potential impact
on development value should be
considered carefully.
An unresolved access issue
can reduce marketability, delay
construction, affect sales values
and, in some cases, undermine the
borrower’s ability to deliver the
project at all.
It may also make it more difficult
to enforce security or dispose of the
site if the development encounters
financial difficulty.
For brokers, raising the right
questions before a funding application
progresses too far helps to manage
expectations. Any uncertainty should
be investigated promptly and, where
necessary, resolved, risk-priced within
the funding structure or mitigated
through appropriate indemnity
insurance before drawdown.
Mitigating risks
Fortunately, many access issues can
be identified and managed at an
early stage.
Practical steps include: carrying
out detailed title investigations
before exchange or funding approval;
undertaking site inspections to
understand how access operates
in practice; identifying any thirdparty land which controls or may
influence access; reviewing whether
existing easements are adequate for
the proposed construction phrase and
intended end use; and considering
whether construction traffic,
utility works and future occupier
access are all accommodated within
existing rights.
Access rights are sometimes viewed
as a technical maer to be resolved by
lawyers aer acquisition. In reality,
they can be fundamental to the success
of a development.
Access risk is not merely a legal
issue; it is a lending risk. Identifying
potential access problems at the
outset is invariably easier and less
expensive than resolving them once a
project is underway. Without secure
access, even the most promising
development can become a significant
commercial liability. ●
