Features PENTHOUSE DEVELOPMENT
Assuming the values do stack up, the board needs to make some policy decisions and consider if they should canvas the wider resident/shareholder community for opinion before proceeding. If so, a meeting to discuss the principles should be arranged and a resolution to proceed - or not - made at the end. If this provides a mandate to proceed then the next stage will involve procuring professional advice.
Legal advice will be needed to clarify whether the leases permit such development and, equally, if the company constitution allows for such expenditure. A surveyor or similar professional practice will also be needed to develop the outline technical aspects of the project, so a firmer feel for what might be attainable can be presented to residents. Leaseholders should however be aware that any costs incurred may not be legitimate service charge expenditure.
Alternatively you could approach one of the specialist construction companies or
developers, who will be able to provide holistic advice and guidance, as well as perhaps start some commercial negotiations directly.
There are several ways to proceed:
Go through the whole process and deliver the project yourselves. This maximises return but is highly risky and a cash thirsty approach. Usually best avoided as the risk can outweigh the benefits. Develop the project to planning stage and sell to a third party, letting them complete the build. Enter into a joint venture with an experienced developer where the company provides the space and the developer fronts the design and build costs, thereafter splitting profits on a pre-arranged percentage basis upon sales.
There are many horror stories surrounding blocks with poorly handled works, causing a nightmare period for residents and thereafter a legacy of resolving shoddy workmanship in
the longer term. So whatever option is chosen, it is important to retain professional input in a monitoring capacity. Proposals should be carefully vetted as work progresses. The final aspect to consider is that the funds released will be subject to taxation and therefore early advice needs to be taken from tax advisors.
If your block has a roof that you and your fellow leaseholders think may be suitable for development – and you can get buy-in from your fellow residents - then it is certainly worth investigating the possibilities. When it comes to rooftop development, the sky (and your lease) really is the limit.
On the following pages Flat Living talks to one company, First Penthouse, which specialises in rooftop development, providing clients with a one-stop development service. Turn to pages 34-36 to find out more.
Kevin Marshall is managing director of Cardoe Martin Burr, a wholly-owned subsidiary of Rendall & Rittner.
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