The effects of Covid-19 and Brexit on the property industry’s ability to complete projects are well-documented. Material and labour shortages have seen major developers face myriad challenges that are not expected to go away anytime soon.
But it is not just large-scale new-builds and major infrastructure projects facing these problems. A number of smaller-scale grant-funded heritage schemes are also finding themselves at an impasse as the completion date deadlines set out within the terms and conditions of their funding are nearing.
In 2019/20, Historic England gave £23.45m worth of grants to support development and the restoration of historic buildings. But as the pandemic slowed construction output and project starts stalled, many of those schemes are now potentially undeliverable. These often complex but important projects are finding themselves at risk of being left in no-man’s land and, at worst, liable to pay back the grants originally given, irrespective of how much money has already been spent on the project to date.
So, how can developers overcome this?
For those currently in this position, putting in new business case funding applications especially in areas of public sector programme underspend is key to avoiding a potential pay-back penalty. We recently worked with a local authority that had received £6m from Historic England for the restoration and expansion of a landmark grade II-listed building for cultural and learning uses. Due to circumstances out of their control, the project had overrun and costs had escalated, and the local authority was liable to pay back its grant. We helped the applicant develop a new business case to the local LEP and secured the local authority a further £1.4m to fully complete the works.
For developers or local authorities putting in applications for funding now, however, it is important to head off these risks early on. Developers need to ensure business case and funding applications take into consideration current and future project costs based on external factors like Covid inflation and Brexit, while working in adequate contingency.
Grants from organisations like Historic England, LEPs and Combined Authorities are key to renovating the heritage assets that are central to the success of our towns and cities, so ensuring the correct case is developed ahead of any funding application is key if we are to make the most of them.
Andy Rumfitt is senior director, head of business cases and funding at Turley
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