Building Regulations and Development Finance: Compliance Requirements

Building regulations are the minimum standards for the design, construction, and alteration of buildings in England and Wales. They exist to ensure that buildings are safe, energy-efficient, and accessible. Unlike planning permission, which controls what can be built and where, building regulations control how buildings are constructed, covering everything from structural stability and fire safety to ventilation, drainage, and electrical installations. For development finance lenders, building regulations compliance is essential because a building that does not comply cannot be lawfully occupied, cannot be insured, and therefore has limited or no resale value.

The building regulations are set out in a series of Approved Documents, each covering a specific technical area. Part A covers structural safety, Part B covers fire safety, Part F covers ventilation, Part L covers energy conservation, and Part M covers accessibility. The most recent additions include Part O, which addresses overheating in residential buildings, and Part S, which requires electric vehicle charging infrastructure. Each of these parts sets minimum performance standards that the development must meet, and the lender's monitoring surveyor will verify compliance at each inspection stage.

Non-compliance with building regulations can have severe consequences for a development finance transaction. If the building control body identifies non-compliant work, it can issue an enforcement notice requiring the work to be corrected. In extreme cases, it can require the demolition of non-compliant structures. For the lender, non-compliance means that the completed development may not achieve its projected sale prices, because buyers and their mortgage lenders will require evidence of building regulations compliance before completing a purchase. We have seen schemes where non-compliance with Part B fire safety regulations required retrospective remedial works costing over £150,000, turning a profitable development into a marginal one.

In England, developers have a choice of two building control routes: the local authority building control service or a private approved inspector. Both routes provide the same outcome, a completion certificate confirming that the building complies with the regulations, but the service model differs. Local authority building control operates on a statutory basis and charges fees set by the authority. Private approved inspectors operate commercially and can offer more flexible service levels, often including dedicated project managers and faster response times.

For development finance transactions, lenders will accept either building control route provided the developer can demonstrate that a building control body has been appointed and that the initial notice, or where using the local authority, the building notice or full plans application, has been submitted. The cost of building control varies depending on the size and complexity of the project. For a typical residential scheme of ten units, building control fees range from £5,000 to £15,000 with a local authority, and £8,000 to £20,000 with a private approved inspector.

The choice between local authority and private approved inspector is partly a commercial decision and partly influenced by the nature of the project. Complex schemes, particularly those involving structural alterations, basement construction, or work to existing buildings, may benefit from the dedicated attention of a private approved inspector. Straightforward new-build schemes can be efficiently managed by local authority building control. In our experience, the most important factor is not which route you choose but that you engage with the building control body early and maintain a collaborative relationship throughout the build. A building control officer who is involved from the design stage can identify potential compliance issues before they become expensive problems on site.

Part B fire safety is the building regulation that causes the most issues in development finance transactions, particularly since the strengthening of requirements following the Grenfell Tower tragedy. For residential buildings over eleven metres in height, the requirements are particularly stringent, including the specification of external wall materials, compartmentation between dwellings, means of escape provisions, and fire detection and alarm systems. The cost of compliance with Part B can significantly affect the build budget, and developers should ensure that their quantity surveyor has priced the fire safety requirements accurately in the development appraisal.

Part L energy conservation requires new dwellings to achieve minimum energy performance standards, including target fabric energy efficiency and target carbon dioxide emission rates. The 2025 update to Part L introduced more stringent standards as a stepping stone towards the Future Homes Standard. Compliance typically requires enhanced insulation, high-performance windows and doors, air source heat pumps or other low-carbon heating systems, and mechanical ventilation with heat recovery. These requirements increase build costs by approximately £5,000 to £15,000 per dwelling compared to the previous standards, and this additional cost should be reflected in the development appraisal submitted to the development finance lender.

Part S electric vehicle charging requires new residential developments to include electric vehicle charging infrastructure. Each dwelling with an associated parking space must have a dedicated charge point with a minimum power output of 7kW. For developments with communal parking, at least one charge point for every five spaces is required. The cost per charge point is typically £800 to £1,500 installed, and for a twenty-unit scheme with twenty parking spaces, this adds £16,000 to £30,000 to the build cost. While this is a relatively small proportion of the overall budget, it is an example of the incremental compliance costs that developers must account for in their appraisals.

The lender's monitoring surveyor plays a critical role in verifying building regulations compliance during the construction phase. At each site inspection, the monitoring surveyor checks that the works comply with the building regulations as well as the approved plans and specification. They will note any areas of non-compliance in their report to the lender, and the lender may withhold drawdown funds until the non-compliance is rectified. This creates a powerful incentive for developers to maintain compliance throughout the build rather than attempting to address issues retrospectively.

The monitoring surveyor works alongside the building control body but serves a different function. The building control officer inspects work at specific stages and issues compliance certificates. The monitoring surveyor assesses the overall quality of construction, the progress against programme, and the cost expenditure against budget. In our experience, the combination of building control inspections and monitoring surveyor visits provides comprehensive oversight that protects both the lender and the developer. A monitoring surveyor who identifies a structural defect at first fix stage, for example, can ensure it is corrected before the lender advances further funds, preventing a far more expensive remediation later.

We always advise developers to maintain a close working relationship with both their building control officer and the lender's monitoring surveyor. Providing access to site records, inspection reports, and compliance certificates proactively demonstrates good project management and builds confidence with the lender. If a compliance issue arises, addressing it transparently and promptly is far better than attempting to conceal it. Monitoring surveyors are experienced professionals who will identify concealed defects, and a lender who discovers that a developer has hidden a compliance issue is likely to take a much harder line than one who is informed of a problem alongside a credible remediation plan.

A building regulations completion certificate is issued by the building control body when it is satisfied that the completed building complies with all relevant building regulations. This certificate is essential for the developer's exit strategy because mortgage lenders and conveyancers require evidence of building regulations compliance before completing a purchase. Without completion certificates, the developer cannot sell the completed units to buyers using mortgages, which in most residential markets represents the vast majority of potential purchasers.

The development finance lender will typically require confirmation that completion certificates have been, or will be, issued as a condition of the final drawdown or as a condition precedent to the release of any retention. Some lenders require completion certificates before they will agree to release individual units from the security for sale. This means that delays in obtaining completion certificates can directly delay unit sales and the repayment of the development finance facility, potentially causing the developer to breach the longstop date in the facility agreement.

In our experience, the most common reason for delayed completion certificates is outstanding snagging items identified by the building control body during their final inspection. These might include missing fire stopping, incomplete ventilation systems, absent certification for electrical or gas installations, or deficiencies in the external fire safety provisions. We advise developers to schedule a pre-completion inspection with the building control body several weeks before the anticipated practical completion date. This allows time to address any issues before the formal final inspection, avoiding delays that could affect unit sales and loan repayment. Submit your deal to ensure your build programme accounts for these critical milestones.

The building regulations landscape has changed significantly in recent years, with new and amended Approved Documents increasing both the complexity and cost of compliance. The introduction of Part O, addressing overheating risk in residential buildings, requires developers to demonstrate through thermal modelling that new dwellings will not overheat during summer months. This can affect the design, orientation, and glazing specification of the development, with implications for both build cost and sales values.

The Building Safety Act 2022 introduced a new regulatory regime for higher-risk buildings, defined as residential buildings of seven or more storeys or eighteen metres in height. These buildings now require a building control authority approval rather than a simple initial notice, and the building control process is more rigorous and time-consuming. For developers of taller residential schemes, the additional regulatory requirements can add three to six months to the pre-construction timeline and increase professional fees by £50,000 to £100,000 depending on the complexity of the scheme.

For development finance applications, these regulatory changes mean that lenders are paying closer attention to building regulations compliance and are more likely to require detailed evidence of compliance at each stage. Build costs submitted in development appraisals must reflect the current regulatory requirements, not historic benchmarks. A development appraisal that uses build cost data from before the latest Part L or Part O amendments will underestimate the true cost of compliance and may result in the lender reducing the facility amount or declining the application. We always advise developers to obtain current build cost estimates from their quantity surveyor or contractor and to ensure that all regulatory requirements are factored into the development appraisal from the outset.