With one in five property transactions revealing a defect in title and/or other land law related issue and with more concentrated uses of land in towns and cities, conveyancing risks which could prevent developments from going ahead have increased.
A firm of underwriters set up to mitigate those risks, is seeing unprecedented growth in enquiries about its services. Conveyancing Risk Solutions (CRS) considers matters which traditionally are largely only known about and dealt with through solicitors. CRS are working closely with developers, lenders and lessees alike, to provide an education in respect of such to risks to ensure that they are addressed and insurance solutions are found early enough to avoid large legal fees and/or hefty premiums.
Senior underwriter Clair Rickaby said the firm’s aim is to help developers make their schemes happen. She said: “They might know about these risks but may not necessarily realise that they are solvable.” With increasing numbers of developments across the country, issues such as building on contaminated land, the threat of judicial review and disputes over rights of light (particularly given the increasing number of tower builds) are all risks which can be costly to developers, often when they thought their scheme safe to proceed with.
Miss Rickaby said: “Rights of light is currently a really big topic. There is a lot going on. More and more towers are going up and this risk (amongst others) will be more and more of a problem.” In one famous case in Leeds a developer had to remove two floors it had added to a building when neighbour Marcus Heaney objected. Instances of case law such as that, she said, are central to the expertise at CRS.
She added: “There are so many towers going up as people try to cram more onto small spaces, we are offering a solution which can provide a developer with peace of mind against the worst case scenario enabling them to limit their required contingency budget (particularly as the majority of the profits in a tower build are in the top floors)
Contaminated land issues can sometimes be resolved by reconfiguring a scheme, so that typically, a car park rather than a residential block might occupy a certain area. But Miss Rickaby said the disruption to the ground is what triggers concerns on contaminated land, rather than what the development is meaning that if the council identifies a risk they will be required to deal with this regardless of the end use of the development. She added: “If you are trying to get a mortgage, lenders don’t like contaminated land risks. We are therefore providing solutions not only to save developers from considerable losses, but also to aid them in making the proposition attractive to funders and lenders.”
The risks of judicial review rise in areas of greater development where residents are becoming frustrated with the amount of disruption in the area.. Nowadays residents’ groups are seeking to use the process to fight schemes in their neighbourhoods and potentially frustrate development wherever possible. A judicial review can effectively quash planning permission if the applicant can show the local authority failed to do its job properly in assessing the viability of the development. Miss Rickaby said: “Residents opposing a development are difficult people to fight if they’ve got everybody supporting them because they will probably have a few friendly lawyers backing them and if you are not local to an area, and you are looking at it externally, you can’t really know it so well.”
CRS works throughout the UK and has done work in Ireland. The south east of England is where new risks and new solutions tend to emerge from and in the Thames Valley developers have caught on earlier than most to the innovative solutions CRS offers. Miss Rickaby said: “The Thames Valley is one of those areas where we think people are a bit more aware of what we can do. It’s got the potential to be quite a major market because of the amount that’s going on.”
CRS has seen growth since it launched five years ago but that accelerated last year as optimism increased. “We’ve seen a huge increase in business since August last year. Things have really taken off. In five years we have never seen the number of enquiries we are now seeing.” It’s team of seven includes six underwriters so callers are never far from an expert. “Everybody gets involved in cases. Anybody you call should be able to help and we are more than happy just to talk a proposal through with you to establish whether the risk is insurable with no obligation.”
She calls CRS’s role as being a facilitator to development, educating those involved to keep a developer’s risk exposureto a minimum. She added: “All you can do is try to help people understand so that they can avoid a situation three months on from purchasing a site, when something crops up that could make the site unviable by which time considerable costs could already have been lost..”