It goes without saying that the Whitsundays has been somewhat of a mecca for many years for new developments. In this podcast, we’re going to talk about property development from a legal prespective with Stuart Bell, Lawyer and Director of PD Law.
Dan: Thanks for joining us for this edition of the PD Law podcast and today we’re talking property development. Now, it goes without saying that the Whitsundays has been somewhat of a Mecca for many years for new developments.
So in this podcast, we’re going to talk property development from a legal perspective with Stuart Bell, who is a lawyer and director of PD Law and has been behind numerous property developments spanning more than 30 years. Stuart, you’ve been acting for developers for decades. What kind of developments have you been involved in and what does your role typically entail as a property development lawyer?
Stuart: Hi, Dan, yeah thanks. I’ve been acting for developers for probably close to 30 years now, from pretty much when I started out in my own practice. I decided reasonably early that I wanted to do property development related law and work with developers where I could. I’d already had a bit of a taste for it outside of law as my father, who was also a lawyer, by the way, had already done some property development, so I guess I was at least a little bit familiar with what it entailed and the basic concepts, so I can see now why I gravitated towards it.
In terms of where this trajectory has taken my career, it’s ranged from the very simple mum and dad subdivisions right through to staged and layered mixed use developments, different types of property, freehold and leasehold, all sorts of things and in terms of the role that we play in our firm, we’re involved from both quite simply just engaging or being engaged to prepare off the plan contracts, which requires compliance with some state legislation and also some federal legislation sometimes.
But it necessarily expands from there and I found that during the lifetime of any development, the need for legal help starts pretty much on day one, whether it be the simple stuff like just reserving a development name, right through to the legal compliance, potential dispute with contracting parties like civil contractors, or even planning issues with council and planning court.
Legal help on some level is necessary almost from the get go. Of course, as my experience has grown over the years, I’ve been able to sharpen our focus a little bit on where our time is better spent, so the aim is to provide traction for developers from the start.
Dan: In your experience, what separates successful development projects from those that might be unsuccessful?
Stuart: I think a successful development just won’t happen unless that developers put together and relied on a really cohesive project development team right from the start. That team consists of different consultants, depending on the type of development, but typically comprises the developer, the town planner, their architect, their designers, their surveyors, their engineering team.
I think it’s worth having their civil contractors in that group, also their lenders and investors, their accountants, and of course, their real estate agents for the purposes of marketing, so there’s this whole group of people who really should be involved from the start and I say that because it’s just amazing how the decision of one consultant might impact on the other consultants at a later date, and if this can be avoided early, massive cost and time loss and aggravation can be minimised when everybody’s aware of what everybody else is planning to do, and as you know, to the uninitiated, property development looks like a pretty simple way to make a dollar, but this just isn’t the case.
So the successful developers also tend to differentiate themselves based on their early and comprehensive due diligence. Those who’ve put a lot of time and effort into preparing and then pressure testing their feasibility in a variety of scenarios.
A good developer plans based on worst case scenario and then builds in a decent contingency just to see whether the development is viable in the first place. They’ll take into account things like the state of the economy, the state of the market at their particular location, their product, their competitors, the government of the day, the likely development approvals they might get, the appetite of their lenders for extensions, and the cost of those extensions, and on the subject of extensions, that’s a real killer.
Many developers simply don’t have the capital, sadly, to hold the line when the development drags out for months and then years, and having to battle with lenders in one corner, prospective buyers in another corner who might want to get out of their contract and that in turn spooks the lenders some more, battling with government agencies, angry objectors wanting to appeal approvals.
It all adds to the aggravation and has an impact on whether a development is going to be successful or not. Now, of course, it’s impossible to plan for every single contingency. But those developers I’ve found who factor in these kinds of things, or at least think of them early, are generally the ones who make it through those inevitable troughs during that development phase and come out the other end with a smile on their face, hopefully.
Dan: Can you give us two or three key takeaways for developers or prospective developers to consider from a legal or regulatory context?
Stuart: Key takeaways I’d say, firstly, in a hot market, secure your development parcel without any risk. Get a low cost option or a conditional contract that enables you the time to do your homework and do your due diligence, but also gives you an exit if things don’t stack up.
Secondly, I’d say do your feasibility very comprehensively. Make sure you’ve got your time frames, your costings and your worst case scenarios bedded down before going in too deep, and I’d think thirdly, and this is in no particular, in fact, this is probably the most important, assemble your A team early and make sure that everybody knows what everyone’s doing and what their role is.
Don’t be afraid to ask them for feedback and what you’re proposing to do based on the other consultant’s recommendations. It’s actually amazing how much knowledge is in a room full of good consultants with loads of experience, so you really want to leverage off that experience where you can.
Dan: Now, if anyone listening to this podcast, Stuart, has got questions, they can reach out to you and the team at PD Law.
Stuart: Absolutely, Dan and in fact, I’d encourage people to call before they take any steps. If this is the first time that they’ve gotten into property development, it is without doubt something you need to go in with eyes wide open and if they need, if they have more questions based on what they’ve heard today, by all means, give us a call.
Dan: That’s Stuart Bell, Director at PD Law. Now, you can reach Stuart and the team at pdlaw.com.au or by simply calling 1800 875 460 that’s 1800 875 460.
Disclaimer: This podcast has been transcribed using AI. There may be errors that were lost in the translation.