Planning refusal is a risk common to all developers and forms a core consideration in assessing a project’s feasibility.
Planning Costs Insurance or ‘Abortive Planning Costs Insurance’ is a new form of insurance to recover the costs involved when a planning application is declined. It is specifically designed for site owners, developers, constructors, funders, and property owners.
There have been a number of high-profile cases where planning permission for large developments has failed to be approved, landing developers and their funders with a significant cost of lost planning application fees.
One of the UK’s largest house builders applied for planning for 200 properties back in 2016, which was subsequently refused in 2020. The refusal follows 4 years of redesign, planning consultant fees and architect fees – not including a loss in the value of the land of £1.1m. Planning was ultimately refused, and it may be the case that, given the amount spent on planning and the reduction in the land value, the developer may not appeal the planning decision.
A development in Bradford saw its application refused for plans for 44 new homes. Planning officers recommended that the plans should be approved but a government planning inspector refused planning on the basis that it would result in an intensification of the use of a substandard access road, which is deficient in terms of width, geometry and forward visibility that would be prejudicial to highway safety. The developer decided to appeal this decision which was ultimately unsuccessful despite Bradford Council having a long-term housing supply shortage. The costs associated with this are all shouldered by developers and their lenders so this would have been a huge blow to the developer.
When looking at the viability of a site for development, a number of things are taken into consideration, but planning is one of the first and one of the largest to overcome. Fees for site investigations, planning fees and all professional service fees are non-refundable. Once you factor in legal fees, pre-app fees, market research and appeal fees, if needed, the costs can mount up.
Planning is still one of the major risks affecting developments – it is hoped that insurance can be a way to mitigate the costs of a planning system that has not been reformed in decades, whilst giving comfort to developers with the knowledge that abortive costs can be covered.
Bluebox Finance can help arrange insurance cover on all the costs associated with planning for property development.
The insurance provides a pre-planning and post-planning stand-alone cover up to a determination for any development in the UK, offering a wide range of cover for the most complex development through to a minor planning application.
Each planning application involves several project management costs. These include:
Legal fees associated with a project are also covered, as well as payments for exclusive negotiating rights, costs associated with market research and death of vendor/delay in completion of the project.
The Policy Includes:
Additional cover can be sought for:
Scope of Cover
Other Key Benefits
By purchasing APC insurance, developers can gain a competitive advantage by utilising its benefits to improve their funding arrangements or even their cash flow via the ability to defer professional fees.
The insurance can act as a funding enabler by increasing the bankability of the project - ie improving the willingness of financial institutions to fund the project.
It may also help developers to:
Every case is individually underwritten to take into account the unique circumstances of each development
How To Apply
To discuss a case that you might wish to submit, please call or email us.