Planning Director, David Brown, explains why, in today’s development market, a distressed site doesn’t necessarily mean a distressed asset – and how the right planning strategy can unlock value that others assume has been lost.
Not every distressed site is a distressed asset. That is becoming one of the defining realities of today’s development market.
Across the UK, more property and land assets are entering receivership, refinancing or restructuring. In many cases, this is not because they are in the wrong location or lack planning potential. It is because rising finance costs, regulatory change, slower sales and viability pressures have overtaken the original business case.
Commercial platforms reportedly track around 28,000 distressed UK property and land assets with outstanding charges, including more than 17,000 identified in the last 12 months. Construction insolvencies also remain above pre-pandemic levels. BCIS reported 3,805 construction insolvencies in the 12 months to June 2026, 18% higher than in 2019.
Receivership activity tells a similar story. According to NARA, fixed charge receivership appointments in the real estate market rose by 38% during 2023, followed by a further increase in the first half of 2024. By the first half of 2025, appointments were reportedly 67% higher than in the equivalent period of 2024. Land and incomplete or part-developed sites represented 14% of appointments.
For lenders, receivers, administrators and developers, this is no longer simply a story about distressed debt.
Increasingly, it is a story about stalled planning value.
When the strategy fails, not the site
Many distressed development sites are not fundamentally poor assets. They are often well-located schemes where the original business plan has been overtaken by higher borrowing costs, slower sales rates, build cost inflation, planning delays, affordable housing obligations or regulatory change.
The question is no longer simply:
“Is this a good site?”
It is:
“What needs to change to make this site deliverable again?”
That is an important distinction. It can influence recovery valuations, lender decisions, disposal strategies and negotiations with borrowers, local planning authorities and prospective purchasers.
It is also where planning moves beyond a statutory process and becomes a commercial tool for protecting and recovering value.
The most exposed sites tend to include urban brownfield developments, flatted schemes, part-built projects, SME-led developments and assets acquired during the stronger 2021–22 land market.
At Newsteer, we have been asked to appraise schemes totalling approximately 600 apartments and 800 houses during the last 12 months alone. Many involve SME developers and, importantly, the vast majority occupy sustainable locations where the underlying property fundamentals remain strong.
The common problem is rarely a complete absence of planning potential.
It is that circumstances have changed.
Finance has become more expensive. Policy has evolved. Regulation has tightened. Sales rates have slowed. Viability assumptions no longer stack up.
A permission that appeared deliverable two or three years ago can become constrained by market realities, even where the planning principles remain sound.
Planning should shape recovery
Too often, planning expertise enters the conversation only after the problem has crystallised: after enforcement action, after a receiver has been appointed or once a sales process has started and stalled.
By that point, options may have narrowed and value may already have been lost.
Earlier planning involvement can help distinguish between a genuinely impaired asset and an asset with an impaired delivery strategy.
That distinction matters. A site may need a revised permission, a reassessment of viability or a different development mix. Meanwhile uses may help protect income and value while the market recovers. Outstanding conditions may need to be resolved. Community Infrastructure Levy exposure may require closer examination. Section 106 obligations may need to be revisited.
There is rarely one universal answer. The value lies in understanding the full planning and commercial position before committing to a recovery or disposal strategy.
For lenders and receivers, this can provide a more informed view of the asset and its potential. It can support more robust recovery valuations, identify hidden liabilities and reveal options that might not be apparent from the existing consent alone.
Planning should not simply support recovery.
It should help shape it.
A discounted price does not guarantee value
Distressed sites may present significant opportunities for developers and investors, but only where planning risk is understood as thoroughly as financial risk.
A low purchase price is not enough.
An undeliverable permission, unrealistic affordable housing assumptions, unresolved CIL liabilities or outstanding pre-commencement conditions can quickly erode an apparent discount.
The strongest acquisitions are not necessarily those bought at the lowest price. They are the ones where the purchaser understands what is constraining delivery and has a credible strategy for removing or managing those constraints.
This is particularly relevant in London and on urban brownfield sites, where building regulation changes, affordable housing policy and weaker sales conditions have added to viability pressures.
The emerging London Plan recognises many of these challenges, but adoption is unlikely before 2027. In the meantime, a disconnect remains between planning policy aspirations and commercial reality. Viability is still too often treated as an excuse to avoid policy obligations, rather than as a genuine delivery challenge that must be understood and addressed.
A more pragmatic approach does not mean abandoning planning or affordable housing objectives. It means recognising that an undeliverable permission creates no homes, no affordable housing and no wider public benefit.
Unlocking value that has become trapped
The direction of travel suggests that distressed development opportunities will remain a significant feature of the market over the coming years. Higher debt costs, slower sales, regulatory complexity and planning delays are unlikely to disappear quickly.
That creates risk, but it also creates opportunity.
The opportunity is not simply to acquire distressed assets cheaply. It is to identify assets where value has become trapped rather than permanently lost.
Over the past year, Newsteer has helped lenders, receivers and developers reposition distressed sites across the country. This has included securing meanwhile uses where development has stalled, regularising permissions where schemes have gone off track, revisiting viability and reshaping financial obligations through the Section 106A mechanism.
In other cases, the right response may involve revisiting the permission itself or identifying an alternative development strategy. By bringing planning and development consultancy expertise together, it becomes possible to test not only what is permitted, but what is commercially realistic and capable of delivery.
There remains an important debate about whether mechanisms such as Section 106BA should return. Greater flexibility may be needed where viability genuinely threatens delivery. Until then, progress will often depend on pragmatic local authorities recognising the commercial realities facing development and the importance of bringing sustainable schemes forward during a national housing crisis.
The sites that create the greatest value over the next few years will not necessarily be those with the strongest planning permissions on paper.
They will be the sites where lenders, receivers, developers and experienced advisers can identify opportunities that others overlook.
Because the best planning strategies do not simply respond to problems.
They unlock value that others assume has already been lost.
David Brown, Planning Director at Newsteer, specialises in distressed asset strategy, advising lenders, receivers and developers on how planning and development strategy can protect, recover and unlock value.
