Welcome to the first of our regular real estate round-ups, where we discuss hot topics affecting the sector.
Real Estate Insurance

This month, topics include the risk management of vacant high street shops, how to use W&I in a bidding war, disaster recovery planning advice following the Stratford shopping centre flooding and the unconditional sale of development sites without planning permission.

Retail demise – how to protect your vacant property

The state of the UK retail industry has made for grim reading in recent months and the press regularly features news of long standing, large brands having to close high street or industrial premises in order to improve their profit margins1. This has left many buildings standing unoccupied on the UK’s high streets. Yet vacant properties can be vulnerable to a range of risks, from vandalism to arson and theft. With this in mind, insurance becomes even more important to protect you during the period of unoccupancy to help mitigate these risks.

It is then vitally important to maintain your unoccupied properties in order to deter potential losses.

For more information, read our top tips on unoccupied property risk management.

The government are selling prime Real Estate

The slow market has led to a shortage of attractive assets, meaning that when investments opportunities arise, a competitive auction scenario is likely. For example, the government announced in July 20182 that they intend to sell off over half of their Whitehall buildings – considered to be prime UK Real Estate. The Cabinet Office wants to reduce their properties from 800 to below 200, which will result in a saving of £3.6 billion over a 20 year period. This offers great development opportunities in London and therefore will likely spark a competitive bidding war.

In order to improve your chances of providing a competitive bid, we recommend including insurance cover for Warranties & Indemnities (W&I) alongside the bid. This allows the seller to limit their liability to as little as £1 whilst providing comfort that any breach of warranty will be covered. Just as in the case for private M&A transactions, this solution would allow the seller, in this case, the government, to make a clean exit from the deal, which might be more attractive to them than the other bids that have been presented.

Stratford Flood – How can you plan for this?

In summer 2018, Stratford Shopping Centre in east London was forced to close its doors for several days as a result of flooding3. It is reported that the flood resulted from a burst water main, leading to the closure of 50 stores.

Read on for advice on how to implement a disaster recovery plan, and other tangible steps you can take in a similar situation.

Growing trend in London to opt for an unconditional sale of development sites without planning permission

Developers are continuously adapting to survive in today’s volatile environment which is subject to a variety of factors, from tax reform to funding limitations - not to mention the potential fallout from Brexit.

Whilst the aim for developers is to remain profitable, some have moved into different use classes such as retirement homes, multifamily housing, or are focusing their portfolios on new locations. A key trend in London has been the increase in demand for the unconditional sale of development sites without planning, mentioned by PropertyWeek4 this month.

Unconditional deals have always been popular due to the simplicity of the structure and the availability for the vendor to release capital quickly which gives landowners the opportunity for developers to purchase at a lower price.

Developers prefer to design and build to their own guidelines and unit type so that they can achieve maximum profit. When inheriting planning permission, developers often have to compromise on the design and occasionally go back to planning so that they can tweak layouts and sometimes resubmit plans. When buying a piece of land without planning permission it is important to check if previous permission has been applied for and not granted (and the reasons behind this) and if there are any restrictions on the use of the land or third party access ways, as this can put a hold on development.

Bespoke insurance policies which can cover future breaches of these covenants are available, and can be sought before planning is even granted. Subsequently, insurance can assist during the judicial review period, where a third party challenges the grant of planning.

Read more information on Legal Indemnities insurance.


  1. https://www.propertyweek.com/news-analysis/why-are-more-than-half-of-bhs-stores-still-lying-empty/5098449.article
  2. https://www.standard.co.uk/business/government-property-selloff-tipped-to-start-bid-war-from-investors-a3885621.html
  3. https://www.express.co.uk/news/uk/995842/stratford-centre-flooded-closed-shops-london-news
  4. https://www.propertyweek.com/comment/getting-planning-permission-right-is-now-make-or-break/5097990.article