A recent report from Halifax found that planning applications for basements had risen by 183% since 2012.
“Done correctly, a high-quality basement conversion can add substantial value to a property; done incorrectly and there can be the opposite effect,” said James Bloom, managing director of development finance at Masthaven.
After speaking to industry experts, Development Finance Today has highlighted three main points which developers should consider before undertaking a basement development.
1. Obtaining planning permission
Securing planning permission for basement developments can be controversial
Securing planning permission for a basement development can prove difficult to obtain.
Last year, Westminster City Council claimed to have launched the UK’s first ‘subterranean squad’ to tackle nuisance basement developments.
Simon Bennett, director for the structures division at architect Woods Hardwick, said that basements in London, in particular, had become highly controversial due to the disruption they caused during construction.
“As a result, many London boroughs now require engineering statements to be prepared in some detail to support planning applications.
“…But even where such reports are not required, my advice to clients would be to commission an appropriately qualified structural engineer and architect early on.”
Nick Oakley, director of structured finance at Castle Trust Capital, felt that one thing which couldn’t be overlooked was the neighbours.
“Not only is it important to be considerate during the build – which is invariably noisy and causes disturbance – but it is also vital to ensure that you get the best professional advice when it comes to party wall agreements.
“This is not just another box to tick – with basement developments, in particular, there is a greater likelihood that neighbours would have been unhappy that planning was granted at all, so will be more inclined to take issue with the slightest matter and this could prove time consuming and expensive.
- Basement planning applications up 183%
- Basement conversion could increase London property value by almost 50%
- Council tackles nuisance basement developments
“Make sure that your party wall agreement is as robust as possible – it could pay dividends in the long term.”
2. Make sure the development is structurally safe
Developers must be wary of structural issues
Simon warned that poor planning can interrupt the flow of ground water and, therefore, cause problems for the building and neighbours.
“As a basement is constructed below ground, a thorough site investigation needs to be undertaken at an early stage.
“Accomplishing this can help avoid expensive and time-consuming problems when unexpected ground conditions are encountered during construction.”
Scott Marshall, managing director at Roma Finance, said that depending on the surrounding area, developers may need to ensure the structure of any buildings overground won’t be in jeopardy from any works being carried out.
"If there are unforeseen delays, this could not only put the conversion at risk, but the main dwelling, which could lead to the whole property being condemned by the local authority.
“In this regard, an experienced, reliable and financially sound building firm is essential.”
James warned that basement digs were very specialist and complex as they impacted the stability of the building and adjoining properties.
“Not correctly supporting the structure of the building during and after the work can lead to substantial building movement and major problems with the building, so the importance of correct planning and engineering cannot be underestimated.”
3. Being aware of the costs
The financial costs for basement developments can't be underestimated
“Since basements are more expensive to design and construct than similar volumes above ground, it is important that developers recognise this and factor it into their budget,” warned Simon.
He also added that attempting to achieve such a development on the cheap was only likely to result in problems.
Paul Riddell, head of marketing and communications at Lendy, added: "Usually, in any development, significant costs and/or problems can be generated/found in the ground.
“For example, the ground may be contaminated or may be unsuitable for development without significant 'piling' or preparation.
“Therefore, preparing the ground/site for development can be one of the most expensive elements of any development.”
Sam Howard, COO of Regentsmead, said that building basements often threw up problems that delayed projects and added to the costs
He pointed out that he had seen some projects where a basement development had increased the GDV and others which would have been better off without them.
“It will always come down to the added value by increasing the square footage versus the added cost and time.
“Unless it can be shown that basements in developments are common to that street and add real value, at Regentsmead, we tend to dissuade our borrowers from including them as they are [often more] trouble than they are worth.”