In some ways, the core model of title insurance remains unaltered – all standard title risks are covered such as breach of restrictive covenants, lack of title, lack of easements and adverse entries in all required conveyancing searches.
Where the model differs is that it prices in a higher risk profile associated with change of use, often a feature of smaller developments, while offsetting this against the relatively lower risk profile of small and medium-scaled developments. This is in contrast to larger more contentious developments.
For instance, the policy will allow for the connection of services for the development to already installed services and use of existing access roads to serve the development. In so doing, it underwrites uncertainties around intensification of burden on existing easements or a challenge based on lost prescriptive rights. These are typically the categories of risk which are unlikely to yield an obvious resolution but which, if approaches are made to third parties, are likely to prompt claims.
This developer policy complements the government’s reforms which are aimed at increasing the country’s housing supply. These have included measures to help communities to get empty and surplus land back into productive use, reforming permitted development rights to cut through complexity and encourage the conversion of existing buildings. More recently, in his Autumn Statement, Chancellor George Osborne reaffirmed the government’s pledge to build 400,000 new homes including 200,000 starter homes, 135,000 Help to Buy shared ownership homes and 10,000 rent-to-buy homes.
With the new concept of build-to-let becoming increasingly popular with investors, the appetite for small and medium-sized developments is only likely to increase. In mid-January, Legal & General announced the launch of a £600m fund to build rented accommodation, underlining the growing trend among institutions to make privately rented developments an asset class in its own right.
This all spells good news for short-term lenders – but build-to-let comes with its own title risks as the sites in question will often involve a change of use as opposed to the preservation of the status quo. Moreover, as build-to-let developers are likely to be accountable to shareholders and investors, the adverse impact of title defects on margins becomes a real issue.
Title insurers must innovate to meet their clients’ product profiles. Titlesolv is leading the way in this sector with its unique developer policy which aims to mirror and complement the USPs of its traditional title insurance product offering.
Attributed to Chris Taylor, Chief Executive Officer, Titlesolv
Titlesolv is the trading name of London & European Title Insurance Services Ltd authorised and regulated by the Financial Conduct Authority
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