In a previous post, we explained what real estate due diligence right means. This article explains when an urban development survey is useful for a real estate investment. We then explain the course of the urban development survey for real estate in Flanders based on four steps.
When is an urban planning study appropriate?
Urban planning studies are recommended in the following cases, among others:
1. The property is subject to a construction violation or construction offence
This is a common problem in Flanders. Indeed, it regularly occurs that certain working without permission were carried out. Sometimes even no permit is available at all. In that case, it is useful to explore options, for example regularise the construction offence or construction violation.
You are buying a property with a building violation. What should you pay attention to?
2. The property is not located in the correct zoning zone
This problem is particularly acute for homes in outlying areas. For instance, these houses are often located in agricultural areas, forest areas or in nature or park areas. These areas are basically not intended for housing. Only limited works can be carried out on these houses. In addition, these works are also subject to strict conditions. You can therefore don't just rebuild. In this case, it is useful to check what is and is not allowed before purchasing the property. Especially if you are planning conversions or thorough renovations.
Read more about zoned housing options.
3. You wish to give the asset a new purpose
Not all uses are allowed everywhere. For example, you cannot simply convert a house into a commercial business. Nor can an old farmstead be converted into a B&B just like that. A farmstead may also not simply be divided into several dwellings. In this case, it should be examined whether the new use is allowed in the area in which the property is located.
Read more about applying for an environmental permit.
How is the urban planning study proceeding?
An urban planning study proceeds in four steps.
Step 1: Retrieve missing information
The seller will initially share the information he has about the property with the buyer. Initially, we will check the completeness of this information. We can then request any missing information from the seller.
In an urban planning due diligence, it is important that we have the following documentation:
- Extracts from the plans and permits register.
- Permits granted.
- Information on urban planning violations.
- Soil contamination data.
- Information on the presence of asbestos.
- Details of the location and current use of the property.
To the extent that the seller does not hold this information, he can request this documentation from the government. For example, we can request extracts from the plans and permits register from the municipality for a fee. We can also obtain previously granted permits from the municipality through the open records procedure. Furthermore, you can also contact the municipality for information on any urban planning violations. If necessary, criminal records can be requested from the public prosecutor's office. For information on soil pollution, please contact OVAM. Keep in mind that requesting this information from the government may take some time.
Additional information will also be obtained from the seller at this stage. After all, the seller has the most information on the property. For certain risks, declarations by the seller can be used. These declarations can be included in the final agreement.
Step 2: Analysis of available information
Once we have a complete file, the analysis starts. In this phase, based on the available information, we check which planning risks rest on the property. For example, in the presence of a building offence, we can look into the possibility of regularising this building offence. We also analyse whether the project you want to realise as a buyer is urban development feasible. It is therefore important that you inform us fully in advance about your plans and objectives.
It also considers how to deal with the presence of certain risks. This can be done, for example, by including statements from the seller in the sale agreement. Reducing the purchase price or paying compensation are also options. It is also possible to opt to eliminate certain risks before concluding the agreement.
Step 3: Writing out the findings in a report
We write down the result of the urban planning study in a report. In it for each risk shows what the risk entails and how to deal with it. For example, consider the risk of challenging your planning permission or the potential for a regularise construction crime or construction violation.
This report can take the form of a written-out text or a summary in the form of a presentation. In the case of a vendor due diligence the seller can use this report to fulfil its duty of disclosure. This report can also serve as a basis for negotiations.
Read more about contesting planning permission.
Step 4: Processing the findings in the purchase agreement
Finally, the last step consists of turning the contents of the report into an agreement. Here, as indicated earlier, one can work with statements by the seller, clauses regarding compensation or any conditions precedent which must be met to make the sale final. That way, you safeguard your interests to the maximum.
Do you have questions about a real estate project? Confianz will assist you with all your urban planning questions. Feel free to contact on.
