Services
Pre-acquisition technical due diligence for residential schemes
Written by Jack Swingler MRICS, Founder and Director
Before you commit capital to a residential scheme, you need to know whether it can be delivered as planned. Momentm's technical due diligence is a fixed-scope review of viability, planning risk, contracts, contractor capability and deliverability, led by a senior development manager and reported in four to six weeks, with every finding tied to the risk it poses to the deal.
Where due diligence usually falls short
Most technical due diligence lists the risks and stops there. The question a fund needs answering is different: who carries each risk under the contract or funding agreement, and what happens if it lands?
So we tie every finding to the clause that allocates it, then negotiate the technical clauses alongside your solicitors rather than accepting the status quo. By the time the report is final, you know exactly where you stand in your contract before you commit.
Some of what we've found on recent schemes:
- A vendor and contractor in the same group, with no competitive tender behind the price.
- A value-for-money statement that didn't reconcile to the contract sum analysis, with the frame and the tanking apparently counted twice.
- A large grant assumed in the appraisal, with nobody carrying the risk if it didn't arrive.
- Retention, bonds, guarantees and step-in rights that needed restructuring before the fund could rely on them.
Who appoints us
- Funds and funders acquiring or forward funding residential schemes.
- Developers and investors buying sites or part-built schemes.
- Buyers taking over a scheme after a developer's insolvency.
What we review
- Planning: the consent, its conditions and their discharge, and the section 106 obligations.
- Contracts: the development or building contract, and how risk is allocated between the parties.
- Design and specification: the employer's requirements against what is being built.
- Contractor and developer: track record, resources and capacity to deliver.
- Programme and cost: whether the programme and budget are realistic.
- Warranties, building regulations and the handover documents a fund will need.
- Deliverability: anything that could stop the scheme completing as planned.
What you receive
- A written report with every finding rated red, amber or green.
- Each finding linked to the risk it creates under the funding or acquisition agreement, separating programme risk (timing) from financial risk (capital).
- Enquiries to put to the seller, and points for your solicitors.
- A schedule of the documents and deliverables to require at handover.
Recent work
Etherow Grange, Peak District
156 open-market family homes, £45m GDV, for Gresham House. The client inherited a partly built scheme after the developer's insolvency, with outstanding planning conditions, fragmented approvals, missing warranties and gaps in quality assurance. Our due diligence led to a development management mandate. Led by Jack Swingler.
Read the case studyCommon questions
What is technical due diligence on a residential scheme?
An independent review of whether a scheme can be delivered as planned: its planning position, contracts, design, programme, cost and the parties building it. It tells a buyer or funder the risks before they commit capital.
How long does it take?
Usually four to six weeks for a fixed-scope review, depending on the scheme and how quickly the information is available.
What happens if you find problems?
Every issue comes with the clause it sits under and what to ask for: an enquiry to the seller, a point for your solicitors, a change to the agreement or a cap on drawdown until a condition is met. If a scheme needs more than a review, as at Etherow Grange, we can stay on to deliver it.
Related services
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