Why access rights, title restrictions, infrastructure and unexpected costs can turn an attractive property opportunity into a difficult development project.

A property or parcel of land with development potential can present an attractive investment opportunity. An existing building may offer scope for conversion, a redundant commercial property may be suitable for redevelopment, or a piece of land may appear capable of accommodating new homes.

However, potential does not automatically translate into a viable development.

An opportunity that looks promising during an initial inspection may conceal legal restrictions, inadequate infrastructure, difficult ground conditions or obligations that materially affect its financial viability. These issues can increase development costs, delay delivery or, in some circumstances, prevent the proposed scheme from proceeding altogether.

For property investors, the challenge is not simply to identify what a property could become. It is to establish whether the proposed development is legally achievable, technically deliverable and financially worthwhile.

This requires a thorough assessment before committing substantial capital.

1. Access Rights: Can the Development Be Reached Legally?

Access is one of the fundamental considerations when assessing a property or development site. A site may appear accessible on the ground, but that does not necessarily mean the owner has the legal right to use the route.

This distinction can have significant consequences for development.

A property might be reached via a private road, a shared driveway or land owned by a neighbouring property owner. Although the route may have been used for many years, the legal rights governing that use may not support the proposed development.

For example, an existing residential property may have a right of access over a private driveway. The owner may subsequently identify an opportunity to demolish the property and construct four houses. However, the existing access rights may not clearly permit the increased traffic, construction vehicles or additional residential use.

The owner could then face negotiations with neighbouring landowners, legal costs or the need to secure additional rights before the scheme can proceed.

Access must also be considered in relation to the proposed development rather than simply the property’s current use.

Important considerations include:

Whether the property benefits from a legally enforceable right of access.

• Whether the access route is adopted highway or privately maintained.
• Whether the rights extend to construction traffic and the intended future use.
• Whether the width, visibility and condition of the access are suitable.
• Whether highways approval or improvements may be required.
• Who is responsible for maintaining private roads and accessways.
• Where a site depends on land outside the ownership of the investor, the position requires particular attention. A third party may need to grant additional rights, and there is no guarantee that agreement will be reached on acceptable terms.

The investment consideration:

A site with restricted or inadequate access may require additional expenditure, lengthy negotiations or a fundamental redesign. In some cases, the access constraint may make the opportunity commercially unviable.

2. Restrictive Covenants and Title Issues: What Can the Owner Actually Do?

A property’s title establishes important information about ownership, rights and restrictions affecting the land.

However, ownership does not automatically provide unrestricted freedom to develop.

Restrictive covenants are obligations affecting land that may limit how it can be used or developed. Depending on their wording and legal status, they may restrict building, limit the type of use or prevent particular alterations.

For example, an investor may identify a large residential garden that appears suitable for a new dwelling. The planning position may look favourable, and the proposed house may fit comfortably within the available space.

However, the title may contain a covenant restricting the construction of additional buildings or limiting the land to a specified use.

Planning permission would not, by itself, remove that private legal restriction.

The investor may need specialist legal advice to establish whether the covenant is enforceable, whether consent can be obtained, or whether another legal solution is available. Any potential remedy would need to be assessed on its individual merits.

Other title matters can also affect development, including:

• Rights of way benefiting neighbouring properties.
• Easements for drainage, water, electricity or other services.
• Existing leases, tenancies or occupational rights.
• Restrictions on alterations, use or disposal.
• Boundary discrepancies and uncertainty over ownership.
• Third-party rights affecting parts of the site.
• A title plan is useful for identifying the general extent of registered land, but it does not necessarily establish the precise position of every boundary on the ground.

Equally, a site inspection cannot establish the full legal position. The relevant title register, title plan, filed deeds and other supporting documents may need to be examined by a property solicitor.

The investment consideration:

Legal restrictions can reduce the flexibility of a proposed scheme, increase professional fees or require changes to the development. Investors should establish the legal position before relying on a particular development layout or valuation.

3. Drainage, Utilities and Infrastructure: Is the Site Properly Serviced?

A site may appear physically suitable for development while lacking the infrastructure needed to support the proposed scheme.

Water, electricity, gas where required, telecommunications and foul and surface water drainage can all influence development feasibility.

The existence of nearby infrastructure does not guarantee that the site can connect to it on acceptable terms.

For example, an investor may identify a commercial building suitable for conversion into ten residential apartments. The existing property already has electricity, water and drainage connections, creating an initial impression that servicing should be straightforward.

However, the existing connections may have insufficient capacity for the additional demand. An electricity network upgrade, a new drainage connection or reinforcement of existing infrastructure may be required.

These works can introduce costs and delays that were not reflected in the initial appraisal.

Drainage deserves particular attention. The proposed development may require a new connection to the public sewer, improvements to existing drainage arrangements or a sustainable drainage system for surface water.

Where a connection to a public sewer is proposed, the relevant water and sewerage company may need to confirm the connection arrangements and any capacity or infrastructure requirements. Surface water drainage may also be constrained by ground conditions, infiltration rates or the availability of a suitable discharge point.

The following should be investigated:

The location of existing service connections and underground infrastructure.

• Whether sufficient capacity is available for the intended development.
• The likely cost and feasibility of new connections or upgrades.
• Whether third-party land must be crossed to install services.
• Whether easements or wayleaves are required.
• The suitability of foul and surface water drainage arrangements.
• Any relevant utility provider requirements or lead times.

The location of existing pipes and cables also matters. Infrastructure running through a proposed building footprint may require protection, diversion or a revised site layout.

The investment consideration: Infrastructure constraints can increase abnormal costs, reduce the developable area and delay completion. An apparently straightforward conversion or redevelopment may therefore require a more substantial investment than anticipated.

4. Ground Conditions, Contamination and Abnormal Costs

The visible condition of a site rarely tells the complete story about the ground beneath it.

A vacant plot may appear level and ready for construction, while a former industrial property may look suitable for residential redevelopment following demolition. Neither appearance establishes that the site is straightforward to build on.

Ground conditions can materially influence foundation design, construction methods, programme and cost.

Potential issues include:

Made ground and variable ground conditions.

• Poor bearing capacity or compressible soils.
• Groundwater and a high water table.
• Contamination from previous industrial or commercial uses.
• Landfill gas or other ground gases.
• Unrecorded underground structures, tanks or foundations.
• Difficult excavation or the need for specialist foundations.

Consider a former commercial site where the investor intends to construct six houses. The initial appraisal assumes conventional foundations and ordinary groundworks.

Following further investigation, the site is found to contain contaminated made ground. Remediation, specialist disposal of excavated material, additional testing and a different foundation design may be necessary.

The development may still be achievable, but its cost and delivery programme could differ substantially from the original assumptions.

This is where abnormal costs become particularly important.

Abnormal costs are additional expenses arising from site-specific circumstances rather than the ordinary construction costs anticipated for a typical development. They may include ground remediation, piling, retaining structures, significant demolition, dewatering, service diversions or extensive drainage works.

These costs should not be treated as minor contingencies where there is evidence of a material site risk.

An appropriate investigation may include a review of historical land uses, a preliminary environmental assessment, a desk study and, where justified, intrusive ground investigations.

The extent of investigation should be proportionate to the proposed development, the site’s history and the risks identified.

The investment consideration: A site with significant abnormal costs may still represent a worthwhile opportunity, but the purchase price must reflect the evidence. Assuming ordinary construction costs before understanding the ground conditions can materially overstate the residual land value.

5. Planning Obligations and Third-Party Agreements

Planning permission is an important consideration, but it does not necessarily mean that a development can proceed without further financial or legal commitments.

Certain schemes may be subject to planning obligations, infrastructure requirements or agreements involving third parties.

In England, planning obligations under Section 106 of the Town and Country Planning Act 1990 can secure measures necessary to make a development acceptable in planning terms. Depending on the scheme, these may include affordable housing, financial contributions, open space provision or other site-specific requirements.

Community Infrastructure Levy (CIL) may also apply where the relevant charging arrangements are in place and the development is liable. The position should be checked against the applicable charging schedule, exemptions and relief provisions.

For example, an investor may identify land with planning permission for twelve houses. The headline purchase price and projected sales values appear to support an attractive return.

However, the permission may be subject to affordable housing requirements, highway improvements and a financial contribution towards local infrastructure. The development appraisal may not have fully allowed for these obligations.

Once the relevant costs are included, the expected profit could reduce significantly.

Third-party agreements can create further complications. A development may depend on:

An agreement with a neighbouring landowner to provide access.

• A utility easement or wayleave.
• A highway agreement for off-site improvements.
• An agreement governing drainage infrastructure.
• The release or variation of a restrictive covenant.
• The discharge of planning conditions before specified works commence.

The existence of planning permission does not establish that every legal, technical or financial requirement has been satisfied.

Investors should review the planning decision notice, approved plans, conditions, relevant planning obligations and any associated agreements. The review should establish what remains outstanding, who is responsible for compliance and what costs or restrictions may arise.

The investment consideration: Planning obligations and third-party agreements can affect both development costs and the programme. Their implications should be incorporated into the appraisal rather than treated as matters to resolve after acquisition.

6. Why an Attractive Site Can Become an Expensive Development

The risks outlined above rarely operate in isolation.

A single issue may be manageable, but several interacting constraints can fundamentally change the financial position.

Consider a hypothetical site marketed for £400,000 with potential for six houses.

The initial appraisal assumes that the site can be developed using conventional construction methods, with existing access and utilities readily available.

Further investigation identifies three problems:

The access requires improvements and additional legal rights.

• The existing drainage arrangement needs upgrading.
• Ground conditions require more expensive foundations and remedial works.
• For illustration, assume the additional costs are estimated at £35,000 for access works, £45,000 for drainage and £70,000 for ground-related works.

Additional cost Illustrative allowance

Access works and associated costs £35,000

Drainage upgrades £45,000

Groundworks and remediation £70,000

Total additional costs £150,000

The combined additional expenditure is £150,000 before considering any related financing costs, professional fees, programme delays or contingency requirements.

These figures are illustrative only and are not estimates for a particular site.

The implications extend beyond the additional £150,000. Delays may increase interest and holding costs, while changes to the layout could reduce the number of houses that can be delivered.

If the original appraisal allowed little room for unforeseen expenditure, the investment return could fall below the investor’s required threshold.

This demonstrates why a development opportunity should be assessed on the basis of its deliverable outcome rather than its apparent potential.

7. How Investors Can Reduce These Risks Before Buying

The objective of due diligence is not to eliminate every risk. It is to identify material uncertainties early enough to make an informed investment decision.

A structured assessment should include the following steps.

1. Establish the legal position. Obtain the relevant title documents and have a property solicitor review ownership, access rights, restrictive covenants, easements and other restrictions.

2. Confirm the planning position. Review planning history, relevant policies, permissions, conditions, obligations and the feasibility of the proposed use or development.

3. Investigate infrastructure. Establish the location of existing services and obtain appropriate information from utility providers and drainage specialists about capacity, connection requirements and likely costs.

4. Assess ground and environmental risks. Review historical uses and available environmental information. Commission appropriate investigations where the site’s characteristics indicate a material risk.

5. Prepare a realistic development appraisal. Include acquisition costs, professional fees, construction costs, abnormal costs, planning obligations, finance, contingency, programme and an appropriate development profit.

6. Test the assumptions. Consider what happens if costs increase, sales values fall, the programme extends or the development delivers fewer units than anticipated.

7. Identify outstanding matters before exchange. Where possible, resolve critical uncertainties or structure the transaction so that the investor has sufficient protection before becoming unconditionally committed.

Depending on the transaction, this may involve conditional contracts, options or other appropriately drafted arrangements. The suitability of any structure requires legal and commercial advice.

The key is to investigate the issues that could change the investment decision before the purchase becomes an unconditional commitment.

Frequently Asked Questions

Does planning permission mean a property is safe to develop?

No. Planning permission establishes that a proposal has received the relevant planning approval, subject to its terms and conditions. It does not automatically resolve title restrictions, access rights, utility capacity, ground conditions or every legal and technical requirement.

Can restrictive covenants prevent development even where planning permission has been granted?

Yes. Planning permission does not normally override private restrictive covenants. The covenant’s wording, enforceability and available remedies must be assessed by a suitably qualified solicitor.

Who is responsible for checking access rights and title restrictions?

The buyer should instruct a property solicitor to investigate the legal title, rights and restrictions. A planning consultant or property consultant may identify potential concerns during the initial assessment, but specialist legal advice is needed to establish the legal position.

How can investors identify abnormal development costs?

Early investigation is essential. Depending on the site, this may involve ground investigations, environmental assessments, drainage enquiries, utility capacity checks, highways advice and specialist cost estimates.

The appropriate scope depends on the nature of the proposed development and the risks already identified.

Should an investor walk away from a site with development constraints?

Not necessarily. Some constraints can be resolved at an acceptable cost, and they may provide an opportunity to negotiate a lower purchase price.

The decision should depend on whether the risks are understood, the proposed solutions are realistic and the revised appraisal still meets the investor’s objectives.

Conclusion: Potential Must Be Supported by Evidence

A property with development potential can be an attractive investment, but the opportunity should never be judged solely by its location, appearance or theoretical development capacity.

Access rights, title restrictions, drainage, utility capacity, ground conditions and planning obligations can all influence what can be built, how much it will cost and how long it will take.

The most significant risks are often those that are not immediately visible during a viewing or apparent from the asking price.

For investors, the objective is to establish whether a proposed development is legally achievable, technically deliverable and financially viable before committing capital.

That means examining the constraints as carefully as the opportunities, testing the assumptions and ensuring that the purchase price reflects the evidence.

A promising property is not necessarily a good investment. The difference lies in understanding what it will take to deliver the opportunity, what could prevent it from being delivered and whether the numbers still work once those factors are accounted for.