I’m Starting a Property Development Company; What Legislation Do I Need To Know About?

Breaking into the property development industry can be a rewarding enterprise, but you’ll likely face a number of challenges on the way. Aside from being great at selling, developers must excel at marketing, project management, property market analysis, and most importantly, understanding what buyers want and need.

Applied in the right way, these skills can all contribute to the success of a property development company. But before you get started, there are a number of legislative and regulatory requirements any successful developer should be aware of. Here, we’ll get you up to speed on some of the most important things to know.

Key Takeaways

• Secure planning permission through your Local Planning Authority before starting any major works. While some minor projects fall under Permitted Development Rights, most significant structural changes or new builds require formal legal consent.
• Comply with building regulations to ensure health, safety, and energy efficiency. These standards cover essential areas such as disabled access and resource conservation, and they vary slightly between England, Wales, Scotland, and Northern Ireland.
• Manage site safety in accordance with Construction Design and Management (CDM) Regulations. Developers are legally responsible for the safety of on-site workers, which involves creating a safety plan and ensuring contractors fulfill their duties.
• Verify the safety of all electrical site equipment. While portable appliance testing (PAT) is not strictly a legal requirement, it serves as vital evidence that you have met your duty of care under the Health and Safety at Work Act.
• Protect your business with comprehensive liability and indemnity insurance. Essential cover includes public liability for third-party injuries, employer's liability for staff, and specific policies like Right of Light indemnity to guard against neighbour claims.
• Obtain the necessary licensing if you intend to lease your properties. Nationally, mandatory HMO licensing applies to properties occupied by five or more persons from two or more separate households, though many local councils operate additional licensing schemes that extend this requirement to smaller properties with three or four occupants. You should check with your local authority to confirm which rules apply in your area, as operating an unlicensed HMO is a criminal offence carrying an unlimited fine.

Planning and Regulations

Planning permission

Before you begin any development project, the first thing you’ll need to consider is planning permission, as you can’t legally make big changes to a property without it. In order to gain permission to change a property, you’ll need to make an application to the Local Planning Authority (LPA) in the area that your property falls.

Some types of work can be undertaken without planning permission, as per your Permitted Development Rights. While these options tend to be relatively minor in scope, they may present an attractive option for developers looking to cut down on red tape and lead times.

Building Regulations

On top of this, you’ll also need to make sure that your plan falls in line with UK building regulations. Essentially, they are a set of legal requirements governing the design and construction of a building which is outlined in The Approved Documents, available to download here. The Regulations cover three key areas:

• Health and safety
• Resource conservation (of energy and other resources)
• Disabled access

If you’re a property developer in England or Wales, you’ll need to follow The Building Regulations to the letter — whether you’re developing an existing property or constructing a new one. Scotland enforces its own separate set of standards, as does Northern Ireland.

Health and Safety

Safety Regulations

While legal regulations are important, you will also need to consider your employees. As a developer overseeing projects on building sites, you’ll need to take care that you follow the relevant health and safety regulations. As per the Construction Design and Management (CDM) Regulations (2015), developers are responsible for the safety of on-site workers. This includes:

• Drawing up a safety plan with the contractor before work begins
• Having a designer prepare a health and safety file
• Arranging how time and resources will be allocated
• Maintaining and reviewing safety standards throughout the duration of the project
• Ensuring the principal designer and contractor comply with their duties.

You can read more about the CDM Regulations here.

Portable Appliance Testing

At the construction stage, your workers will be handling a range of potentially hazardous electrical equipment. As a developer, it’s your legal responsibility to ensure that all electrical appliances used by your business are safe, as per The Health and Safety at Work Act of 1974, and The Electricity at Work Regulations of 1989. The simplest solution is to have a licensed contractor or company regularly carry out a Portable Appliance Test on your site equipment, to ensure they are up to standard. While PAT testing is not a legal requirement in itself, it will provide evidence that you’ve lived up to your duty of care, in case something does go wrong.

Insurance

Property development companies require several types of insurance to protect against a number of risks that go hand-in-hand with their line of work. As a developer, you’ll require liability insurance to cover against the day-to-day damage that could occur on a working building site. This includes: public liability, which covers against claims by individuals who have been injured or have had their property damaged from your work; employer’s liability, which protects against claims by employees injured in the course of their work for you; and directors and officers liability, which covers against claims made directly against company directors and management.

On top of this, you’ll also need to consider cover as you come to the final stages of the build. Right of Light Indemnity insurance will protect you against claims made by neighbours who argue they have had their amount of light reduced due to your development work. And once you’ve completed the build, building warranty insurance will protect you against claims in defective in workmanship and professional indemnity will cover you in case clients claim inadequate advice, services or designs.

Licensing

Once you’ve successfully completed the development stage, you’ll need to think about the end-goal for your properties. If you plan on leasing out your developments, you will be required to meet all the regulatory requirements that come with being a landlord. For example, if you lease a residential property to three or more independent people (i.e. not a family), you’ll need to obtain a House in Multiple Occupation (HMO) Licence. Each property meeting HMO criteria requires its own licence, and each licence must be renewed every five years. You can apply for an HMO licence via Gov.uk.

Other requirements you’ll need to meet include: providing an Energy Performance Certificate, fitting and testing smoke and carbon monoxide alarms, and undertaking property repairs whenever necessary. You can find further information on leasing here.

What next?

However, before you can start building your property development enterprise, you’ll need to consider company formation. For property developers, that typically involves registering as a limited company, taking out the necessary insurances and finding a registered office (if you’re starting small, that might mean registering your own home).

If you’re wanting to just focus on your business, then formation can seem an overwhelming task — so we’re here to help. Whether you’re looking to register as a limited company or sort out administration, our formation packages can take the stress away from the formal parts of creating your company. 

Register a limited company now

FAQs

What is the difference between planning permission and building regulations?

Planning permission deals with the appearance of a development and its impact on the surrounding area or neighbours. Building regulations, however, focus on the technical and structural aspects of construction to ensure the building is safe, accessible, and energy efficient. Most property development projects require separate applications and approvals for both sets of rules.

Do I need a specific licence to become a property developer in the UK?

There is no general developer licence required to start a property development business. However, specific licences may be required depending on how you use the completed property — nationally, mandatory HMO licensing applies where five or more persons from two or more households share a property, though local councils may extend this to smaller properties with three or four occupants. You must also ensure your company is properly registered with Companies House before you begin trading.

What are my health and safety responsibilities on a construction site?

As a developer, you are legally responsible for the health and safety of everyone on your site under the Construction Design and Management Regulations. This involves appointing competent professionals, ensuring a construction phase plan is in place, and providing adequate welfare facilities for workers. You must also ensure that all electrical equipment used on-site is safe and regularly maintained.

What happens if I carry out building work without the proper approvals?

Failing to obtain building regulations approval or planning permission can lead to significant legal and financial consequences. Your local authority has the power to issue enforcement notices requiring you to undo the work or even demolish the structure at your own expense. Additionally, a lack of completion certificates will make it extremely difficult to sell the property or secure a mortgage in the future.

What insurance policies are mandatory for property development companies?

If you employ staff on an employed basis, you are legally required to hold employer's liability insurance — note that this does not apply to genuinely self-employed subcontractors, which is a common arrangement in property development. While other policies such as public liability, professional indemnity, and buildings insurance are not always mandatory by law, they are almost always required by mortgage lenders and investment partners. These policies protect your business from the high costs of accidents, structural defects, or third-party claims.

When do I need to apply for an HMO licence?

Nationally, mandatory HMO licensing applies where five or more persons from two or more separate households share a property with common facilities such as a kitchen or bathroom. Many local councils also operate additional licensing schemes that extend this requirement to smaller properties occupied by three or four tenants, so you should always check with your local authority. Operating a licensable HMO without the correct licence is a criminal offence and can result in an unlimited fine.