Property Development: Planning for the Unexpected



21 April 2020

Property development is an ever moving landscape with a number of routes a deal can take.

Seeking and obtaining planning is often the most crucial stage, with the risk of planning refusal a key consideration in assessing a project’s feasibility.

The cost of obtaining planning varies for many reasons, such as the scale of your project and the likely impact on the surrounding area. There is a measurable financial risk for both developer and funder when planning is refused with lost opportunity income together with abortive planning application costs.

New Bespoke Insurance product

In response, Howden Real Estate is able to offer a new, bespoke “Abortive Planning Costs” insurance product that is backed by 'AA-' (S&P) rated insurer*. This covers preliminary site investigations and costs associated with a proposed development project.

The insurance cover has been designed to meet the needs of all professionals involved, and creates an opportunity for site finders, developers, builders and financial institutions, where they may have previously not been considered.

The policy can extend to provide pre-planning and post-planning cover for any development across the United Kingdom, with typical costs covered as follows:

  • Preliminary site investigations
  • Planning fees
  • Project management costs associated with the proposal including planning consultants, architects, highways consultants, ecological consultants, surveyors, flood risk engineers, landscape architects, acoustic consultants, land contamination consultants, and accountants fees
  • Legal fees
  • Local Planning Authority pre-application fees
  • Costs associated with market research

Specific additional costs that may be rendered abortive as a result of a refusal can also be considered.

The policy is flexible and can extend to cover funders and may be assigned to other parties with the insurer’s consent.

Limits of indemnity are set to represent the client’s expected abortive costs exposure should the planning application be refused. Limits are available up to a maximum of £1.5 million.

The policy provides an indispensable tool for developers looking to manage the uncertainties involved in the planning process.

Coverage under the policy can also be combined with the following products to offset the risks associated with a development:

  • Judicial reviews
  • Restrictive covenants
  • Defective title (adverse possession)
  • Land subject to rights of way/reservation of rights
  • Land registered with possessory title /good leasehold title
  • Lack of access or easement for services
  • Rights of light
  • Mines and mineral rights
  • Unexpected archaeology and environmental impairment/contaminated land.

Through our dedicated legal indemnity specialists, Howden Real Estate has the experience and expertise to help you mitigate legal risks arising from a development opportunity.

*Correct as at the date of issuance of this article.

For further information please contact:

Ben Thompson

Divisional Director, Howden Real Estate Practice

E: [email protected]

T: +44 (0) 7761 516 524