aka: paying to negotiate against yourself.
Negotiating #agreements with public authorities is common in new housing projects. Think Councils via legal instruments such as Section 173 or Voluntary Planning Agreements (a misnomer, of proportions), or other authorities with works in kind, access, transfer or funding agreements. Think of something you want to do that touches a public asset or needs approval, and inevitably there is some type of agreement required.
What most people don't know is the developer typically covers the full legal costs of preparing the agreement. Not just their own, but also for the party with which they are negotiating. On essentially dictated terms.
Think about it: public servants, spending your money (not theirs or their organisation's), to ensure the most risk-averse and uncommercial outcomes on behalf of their entity. And panel law firms which are not incentivised to keep an eye on the clock. What could possibly go wrong?
🚫I'll tell you what goes wrong: negotiations become protracted, complex, often irrational, and without any recourse whatsoever to the individuals tasked with resolving them. There is zero incentive to make quick and logical decisions, and negotiations can drag on for months and years.
❔I put it to you: would attitudes and timeframes shift if authorities had to bear their own legal costs?
It’s one of those hidden inefficiencies in the planning process. It's not just the legal costs, which can be perfectly reasonable in many cases. The bigger problem is the time often lost in what are treated as one-sided negotiations, which in most cases, are a prerequisite to development approval or starting work in the first place.
The image accompanying this post is a fee letter, sent to us by a major legal firm on behalf of a particular State Agency to negotiate an agreement. I've redacted details about the authority, firm and project – and the all-important fee schedule.
If you've never seen one of these you might be surprised at the tone and content of the letter, which includes things like: • "Minimum Fixed Fees" – payable before commencement • Unilateral notification that the said Minimum Fixed Fee is not high enough due to it being deemed "complex" by said law firm • Confidentiality requirements – amusing, given I'm certain you can't be forced to agree to confidentiality at the time of receipt of a letter.
⌛What's apparent is that there is no incentive to minimise time or cost here. Six-minute intervals, baby.
Is this the biggest issue facing #housingsupply currently? Clearly not. But it's one bit of the myriad #redtape needing attention if we want to speed up timeframes and get more homes built sooner, especially in larger-scale projects.