How Fenrir thinks about risk, planning and compliance
A practical framework for managing the full development lifecycle in UK mid-market property
Executive summary
UK development risk used to be straightforward: can we get planning, can we build it, will it let? In 2025, that's no longer enough.
Between the revised National Planning Policy Framework (December 2024), the Building Safety Act's higher-risk building regime, maturing ESG disclosure requirements and persistent construction volatility, development risk is now more interconnected, more regulated and more visible to lenders, investors and regulators.
Fenrir's response is to treat risk, planning and compliance as a single integrated framework that runs from site selection through to occupation and operations. We structure this around six linked layers: market & site selection, planning & political, technical & design, construction & delivery, funding & counterparty, and operational ESG & compliance.
At each layer we ask: what can go wrong, how likely and severe is it, what can we do about it, and who owns the decision? The aim isn't to eliminate risk—that would kill returns. The aim is to choose risk deliberately, price it correctly and govern it transparently.
Why development risk has changed
A typical UK development scheme in 2025 is shaped by forces that barely existed five years ago. The regulatory and commercial environment has fundamentally shifted:
- Planning: The revised NPPF (December 2024, with further tweaks in February 2025) pushes harder on design quality, plan-led growth, housing delivery and environmental considerations. Local authorities are expected to demonstrate how they're meeting ambitious housing targets while protecting nature and green spaces.
- Building safety: The Building Safety Act 2022 introduced a new higher-risk building regime for taller residential buildings (18m+ or 7+ storeys), with the Building Safety Regulator acting as building control. This means gateway approvals, safety case information and lifetime accountability for principal designers and principal contractors.
- ESG and disclosure: The FCA's Sustainability Disclosure Requirements (SDR) and anti-greenwashing rule require that sustainability claims be fair, clear and not misleading. Investors increasingly expect robust ESG data and transparent reporting.
- Construction volatility: Cost inflation, supply chain fragility and skills shortages are now explicit risks in UK industry guidance, not edge cases. Fixed-price contracts are harder to secure, and programmes are longer and less predictable.
- Professional standards: RICS guidance on risk management, liability, insurance and real estate management has become more demanding, reflecting lessons from past failures and the need for better governance.
The common theme: risk is more interconnected, more visible and carries greater consequences. Getting it wrong can mean stalled projects, regulatory enforcement, reputational damage and stranded capital.
Fenrir's six-layer framework
We organise our risk thinking around six interconnected layers. At each stage, we ask four questions:
- What can realistically go wrong?
- How likely is it, and how severe would the impact be?
- What can we do to avoid, reduce, transfer or accept it (following RICS risk management principles)?
- Who owns the decision, and how is it documented?
The six layers are:
1. Market & site selection
Macro demand, micro-location, use-class flexibility, regulatory overlays
2. Planning & political
Policy alignment, stakeholder mapping, consultation strategy, appeals risk
3. Technical & design
Fire safety, building regs, buildability, coordination, higher-risk building requirements
4. Construction & delivery
Cost, programme, quality, contractor capability, supply chain resilience
5. Funding & counterparty
Lender requirements, covenant strength, incentive alignment, step-in rights
6. Operational ESG & compliance
Energy performance, resident safety, ongoing maintenance, disclosure obligations
These layers overlap and interact. A decision at site selection (layer 1) shapes planning risk (layer 2), which drives design complexity (layer 3), which affects construction delivery (layer 4), and so on. The framework forces us to think systematically about how risks connect.
Layer 1: Market & site selection
This is where most value is created or destroyed, long before any planning application is submitted. We screen sites against:
- Demand drivers: Employment base, demographics, transport links, competing stock and the local development pipeline under the revised NPPF.
- Use-class flexibility: Can the site support alternative uses if the primary strategy falters? Where is planning policy supportive of intensification, mixed-use or repurposing?
- Regulatory overlays: Heritage constraints, flood risk, environmental designations, potential exposure to new nature and biodiversity rules.
How we mitigate
- Maintain clear "no-go" thresholds on micro-locations, lot sizes, sector exposure and regulatory complexity.
- Use independent valuation and market data, aligned with RICS standards, to avoid optimism bias in internal business cases.
- Run early downside scenarios—yield softening, slower absorption, capex creep—before committing to options or contracts.
This is the stage where we decide whether the risk-reward envelope is even worth pursuing. If the answer is "maybe," that usually means no.
Layer 2: Planning & political
Planning is the most visible development risk, and often the most misunderstood. The revised NPPF emphasises plan-led decision-making, design quality, delivery against housing and employment needs, and environmental protection. That means:
- Schemes need to demonstrably align with adopted (or emerging) local plans.
- Design quality and placemaking are no longer optional add-ons.
- Environmental and nature considerations carry real weight in committee decisions.
Our approach
Policy and precedent mapping
We review the NPPF, Planning Practice Guidance, adopted and emerging local plans, and recent committee decisions and appeals. This tells us where the local "red lines" really are—not where the policy document says they should be.
Stakeholder and political analysis
Map key councillors, planning officers and statutory consultees. Identify potential objectors, including environmental and local amenity groups who may have legitimate concerns or organisational capacity to delay schemes.
Planning strategy
Decide early whether to pursue a policy-conforming scheme or a more ambitious proposal with higher planning risk but higher returns. Structure a pre-application and consultation plan that tests the key issues before formal submission.
Mitigation tools
- Clear "go/no-go" gates at key decision points: post-pre-app feedback, pre-submission, and post-committee.
- Flexibility in massing, mix and phasing so fallback positions exist if the preferred scheme proves politically unpalatable.
- Early advice from specialist planning counsel on contentious applications.
We treat planning risk as priceable and manageable, but only if it's confronted explicitly—not as a hope that "it will be fine on the night."
Layer 3: Technical & design
Technical and design risk is where early decisions can lock in later problems. This is especially true for fire safety and building regulations compliance, where the stakes—commercially and reputationally—are very high.
Key dimensions
- Structure, fire and life safety: Especially critical for any scheme that falls within the higher-risk building regime (18m+ or 7+ storeys with residential). This means gateway approvals, safety case information and lifetime accountability under the Building Safety Act.
- Compliance with evolving regulations: Part L (energy), Part O (overheating), accessibility, fabric standards. These change frequently and must be tracked.
- Buildability and coordination: The risk that what's drawn on paper cannot be efficiently delivered on site, leading to design changes, programme delays and cost creep.
How we mitigate
- Appoint design teams with clear competence and professional indemnity cover, aligning with RICS guidance on risk, liability and insurance.
- Run formal design-risk reviews at RIBA stages, with specific focus on fire safety, means of escape, structural robustness and building services resilience.
- For potential higher-risk buildings, plan early for gateway requirements and safety case information—don't treat these as administrative afterthoughts.
- Value-engineer with guardrails: cost optimisation cannot compromise safety, code compliance or long-term maintenance.
We see design risk as an area where cutting corners can destroy value—commercially and reputationally—very quickly.
Layer 4: Construction & delivery
Construction risk has been front-page news for several years. Cost inflation, supply chain disruption and programme slippage are now normal rather than exceptional. UK industry guidance emphasises cost overruns, delays, quality failures and safety as dominant risk drivers.
Our focus areas
Cost risk
- • Use independent cost data (e.g. BCIS) to stress-test budgets
- • Consider inflation mechanisms and risk-sharing in contracts, rather than assuming fixed-price solutions are always deliverable
- • Build realistic contingencies and don't release them for scope creep
Programme and interface risk
- • Single responsible entity for coordinating design and construction (avoiding fragmented accountability)
- • Realistic programmes that reflect approvals, utilities diversions, procurement lead times and long-lead items
Quality, safety and compliance
- • Clear Employer's Requirements and testing/inspection regimes
- • Independent clerk of works or technical monitoring on higher-risk elements
- • Robust snagging and handover processes before practical completion
Contracting strategy
- • Align form of contract, risk allocation and contingencies with the specific project—not a one-size-fits-all template
- • Balance between cost certainty (design-and-build) and flexibility (construction-management or two-stage)
Fenrir's principle: if the construction risk profile is unclear, the project is not ready for a shovel—or for capital.
Layer 5: Funding & counterparty
Risk management is as much about who we partner with as what we build. Counterparty risk includes lenders, investors, contractors, operators and tenants.
What we assess
- Lender and investor requirements: Covenants, reporting, ESG and disclosure expectations (increasingly shaped by SDR and anti-greenwashing rules for institutional capital).
- Covenant strength: Track record and financial stability of contractors, operators and key tenants.
- Incentive alignment: How development management fees, profit-share and promote structures create (or misalign) incentives.
Typical mitigations
- Conservative gearing and covenant packages for schemes with complex planning or construction profiles.
- Robust step-in rights and security packages to manage contractor or operator failure without project collapse.
- Transparent information packs for investors, aligned with FCA expectations on clear, fair and not misleading communications.
We aim to structure deals so that risk sits with the party best able to manage it, and so that all parties understand what they're signing up for.
Layer 6: Operational ESG & compliance
The final layer is often overlooked until it's too late: how the asset performs once occupied, and how it meets ongoing regulatory and ESG obligations.
Key considerations
Energy and MEES compliance
Minimum Energy Efficiency Standards are tightening, with EPC B likely required around 2030 for commercial lettings. Schemes designed today must anticipate these standards or face future capex and re-letting risk.
Building safety and ongoing obligations
For higher-risk buildings, the Building Safety Act introduces lifetime accountability, including mandatory occurrence reporting, safety case reviews and resident engagement.
ESG disclosure and reporting
Investors increasingly expect robust ESG data: energy use, carbon emissions, water consumption, waste management, tenant satisfaction. The FCA's anti-greenwashing rule means claims must be substantiated and verifiable.
Maintenance and defects
Clear handover documentation, asset management plans and defects liability processes to avoid disputes and ensure buildings perform as designed.
How we mitigate
- Build to higher standards than minimum regulatory requirements where the payback in lettability, value and liquidity is clear.
- Ensure asset management capability and systems are in place before occupation, not retrofitted afterwards.
- Maintain clear documentation trails—building manuals, O&M manuals, fire safety information, ESG data—so compliance and reporting are routine, not crisis management.
This layer is where short-term savings in design or construction can create long-term operational liabilities. We design with the end in mind.
Putting it all together
The six-layer framework isn't a bureaucratic checklist. It's a thinking tool that forces disciplined conversations about risk at every stage of a project.
In practice, this means:
- Early and often: Risk review happens at key milestones—site acquisition, planning submission, design freeze, construction start, practical completion—not just at investment committee.
- Cross-functional: Risk is not just for the development director. Commercial, legal, technical, ESG and finance teams all contribute.
- Documented and tracked: Decisions, assumptions and mitigations are written down in risk registers and project papers, so institutional knowledge doesn't walk out the door when people move on.
- Learning loops: Post-project reviews feed lessons back into the framework, so it gets smarter over time.
The result is a platform that can handle complexity, manage volatility and deliver predictable outcomes even when external conditions are uncertain.
This is how Fenrir is internally organised under what we call "Fenrir Strategies"—our framework for sourcing, underwriting and managing value-add opportunities in the UK market. It's not marketing; it's how we actually work.
Implications for investors and partners
For capital partners, this framework offers several advantages:
- Transparency: Risks are identified, assessed and mitigated systematically, not discovered mid-project.
- Consistency: The same approach applies across all projects, making portfolio risk management simpler and more reliable.
- Alignment: Clear documentation of risk ownership and decision-making reduces the potential for disputes and misalignment.
- Compliance: Built-in ESG, safety and disclosure practices meet institutional and regulatory expectations from day one.
For JV and development management partners, the framework provides a common language for discussing risk and a clear basis for structuring agreements around who bears which risks and how they're compensated.
Ultimately, good risk management isn't about avoiding all risk—it's about taking the right risks, at the right price, with the right mitigations in place. That's what this framework is designed to deliver.