Building Control Fees and Development Finance: Satisfying Lender Requirements

Every development finance lender requires confirmation that the proposed works will comply with the Building Regulations 2010 (as amended) and that an appropriate building control body has been appointed to inspect the works during construction. This requirement protects the lender's security by ensuring that the completed development meets the statutory minimum standards for structural integrity, fire safety, energy efficiency, and accessibility. A building that does not have building regulations approval is difficult to sell, mortgage, or insure, which would undermine the lender's exit strategy.

Building control compliance involves two key stages: the initial application or notice before work commences, and the inspections during construction leading to a completion certificate once the works are finished. Both stages incur fees, and the total cost depends on whether you use the local authority building control department or an approved inspector from the private sector. The choice between these two options affects both the cost and the service level, and lenders will accept either route provided it results in a valid completion certificate.

The completion certificate is critical. Without it, the lender will typically withhold the final retention payment on the facility, the structural warranty provider may not issue their certificate, and the purchasers of the completed units will not be able to obtain mortgages. Building control is therefore not just a regulatory obligation but a commercial necessity that directly affects your ability to exit the development loan. We have seen projects delayed by months because the completion certificate was not obtained in a timely manner, costing the developer tens of thousands of pounds in extension fees and additional interest.

Local authority building control fees are set by each council and vary across the country. The fees are divided into two components: a plan checking fee, payable when you submit the building regulations application, and an inspection fee, payable before or during the inspection process. For a new-build residential development, the combined fees typically range from £3,000 to £12,000 depending on the number of units and the complexity of the works.

As a rough guide, a three-unit residential development might incur building control fees of £3,000 to £4,500, a ten-unit scheme might cost £6,000 to £9,000, and a 20-unit development could generate fees of £10,000 to £15,000. These figures are for new-build residential; commercial developments, mixed-use schemes, and conversions may attract different fee scales. Local authority fees are published on each council's website and can be obtained in advance of submitting your application.

One advantage of using local authority building control is that the fees are typically fixed and transparent, with no hidden charges. The local authority will inspect the works at prescribed stages, and the plan checking and inspection fees cover the entire process from application to completion certificate. There are no additional charges for re-inspections unless the works fail an inspection and require remedial work, in which case a further inspection will be needed but usually at no extra cost. For developments in areas such as Greater London, Kent, and Hampshire, local authority building control departments are generally well-resourced and responsive, although turnaround times can vary.

Approved inspectors are private-sector building control bodies registered with the Construction Industry Council (CICAIR). They offer an alternative to local authority building control and compete on both service and price. Approved inspector fees for a typical residential development are broadly comparable to local authority fees, ranging from £3,500 to £14,000, but the service model is different. Approved inspectors typically offer a more flexible and responsive service, with named inspectors who are available for consultation throughout the project.

The main advantage of using an approved inspector is the relationship-based approach. Your inspector is a specific individual who becomes familiar with your project and can provide advice and guidance as the works progress, rather than a rotation of different officers from the council. This can be particularly valuable on complex developments where building regulations compliance requires careful coordination between the design team, the contractor, and the inspector. Many experienced developers prefer approved inspectors for this reason.

There are some considerations to be aware of. If the approved inspector identifies a serious non-compliance issue that cannot be resolved, they are required to refer the matter to the local authority under a process known as a reversion. A reversion transfers building control responsibility to the council, which can cause delays and additional costs. Reversions are rare, occurring in fewer than 2% of projects, but the possibility should be understood. Most lenders will accept either local authority or approved inspector building control, and our monitoring surveyors work seamlessly with both routes.

Building control fees are typically included in the total build cost for the purposes of the development finance application. This means they form part of the cost base against which the lender calculates the loan-to-cost ratio and the contingency provision. If your total build cost is £1,200,000 and building control fees are £6,000, the lender will include the £6,000 in the total cost when assessing the facility amount.

However, the timing of building control fee payments can affect your cash flow. The plan checking fee is usually payable at the point of submitting the application, which is before the first construction drawdown. This means you need to fund it from your equity contribution or from the land element of the facility if it has already been drawn. The inspection fee may be payable upfront or in stages during the construction process. Clarify the payment terms with your chosen building control body and ensure the costs are reflected in your cash flow model.

Some lenders will draw down building control fees as part of the construction facility, provided they are included in the approved cost plan. Others treat them as a borrower cost to be funded from equity. Check the specific approach with your lender at the term sheet stage, as this affects the amount of equity you need to contribute. For developers managing multiple projects simultaneously across areas such as Oxfordshire, Buckinghamshire, and Warwickshire, the cumulative cost of building control fees across several schemes can be meaningful and should be planned for in your overall capital allocation.

Development finance lenders typically include several conditions in the facility agreement relating to building control. These may include: proof that a building regulations application has been submitted and accepted before the first construction drawdown, evidence that inspections are being carried out at prescribed stages, notification if any inspection results in a non-compliance notice, and provision of the completion certificate before the lender releases the final retention or allows the facility to be redeemed.

The completion certificate condition is the most important because it directly affects your exit timeline. If the building control body delays issuing the completion certificate, you cannot sell or mortgage the completed units, and your development loan continues to accrue interest. In our experience, completion certificate delays of two to four weeks are common, particularly with local authority building control departments that have resource constraints. This delay can cost £5,000 to £15,000 in additional interest depending on the size of your facility.

To minimise the risk of completion certificate delays, maintain a proactive relationship with your building control body throughout the construction phase. Ensure that all inspections are booked in advance, that any issues identified are resolved promptly, and that the final inspection is arranged as early as possible before the loan maturity date. If you are approaching maturity and the completion certificate has not been issued, inform your broker immediately so we can manage the situation with the lender and negotiate any extension terms if needed. Submit your project through our deal room for comprehensive guidance on managing the building control process within your finance timeline.

Conversion and refurbishment projects have specific building control requirements that differ from new-build developments. Converting a commercial building to residential use, for example, requires building regulations approval for the change of use as well as for any physical alterations. The scope of the building control assessment is broader because the inspector must consider the existing structure as well as the proposed works, and compliance with modern standards for fire safety, insulation, and accessibility may require significant intervention in the existing building fabric.

Building control fees for conversions are typically 10% to 20% higher than for equivalent new-build schemes because of the additional complexity. A commercial-to-residential conversion of a building producing ten apartments might incur fees of £7,000 to £12,000, compared to £6,000 to £9,000 for a comparable new-build scheme. The higher fees reflect the additional inspection time required to assess the existing structure and verify that the conversion works achieve the required standards.

For light refurbishment projects that do not involve a change of use, building regulations may only apply to specific elements of the works, such as replacement windows, electrical work, or structural alterations. In these cases, building control fees are correspondingly lower, sometimes as little as £1,000 to £3,000. However, even on light refurbishment projects, lenders will want confirmation that any notifiable works have been properly approved and that a completion certificate will be available. Understanding the distinction between light and heavy refurbishment, as covered in our guide on refurbishment finance, helps you anticipate the building control requirements and budget for the associated costs.