Planning Costs Insurance

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.

Example 1
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.

Example 2
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: 

  1. Preliminary Site Investigations;
  2. Planning Fees;
  3. Planning Consultants;
  4. Architects;
  5. Highways Consultants;
  6. Surveyors;
  7. Flood Risk Engineers;
  8. Landscape Architects;
  9. Acoustic Consultants;
  10. Land Contamination Consultants;
  11. Land Surveyors;
  12. Ecological Surveyors;
  13. Environment Surveyors;
  14. Traffic Survey;
  15. Accountant’s Costs;
  16. Utility Services etc….

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:

  • One Appeal;
  • One Re-Submission;
  • Application of English Law.

Additional cover can be sought for:

  • Judicial Reviews;
  • Legal Expenses and legal contingencies including, restrictive covenants, missing beneficiaries, boundary and planning disputes, defective title, unexpected archaeology,
  • and environmental impairment/contaminated land are available as either standalone or combined cover.

Scope of Cover

  • The policy will provide up to 100% of the costs incurred;
  • The Insurer will carry out a risk assessment before taking on the case, and a further assessment if the case goes to Appeal;
  • The premiums are dependent on the risk assessment and are evaluated on a case-by-case basis;
  • The cover offered ranges between £50,000 to £1.5m (higher limits available on referral) .

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:

  • Attract early-stage investment
  • Retain more equity
  • Start construction sooner

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.

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