The UK government’s National Planning Policy Framework (NPPF) reform seeks to unlock ‘grey belt’ land for development. The new NPPF represents a transformative opportunity to address the housing shortage in England. However, the inherent complexities of building on land with existing legal encumbrances or uncertain ownership presents significant risks to developers. Legal Indemnity Insurance can be crucial for navigating these challenges and ensuring project viability.
What is the grey belt?
The term ‘grey belt’ refers to land within green belt areas that contributes minimally to the three of the five core purposes of green belt designation, such as preventing urban sprawl, prevent towns merging into one another and safeguarding the countryside. Disused car parks, previously developed land, and low-biodiversity wastelands are all examples of grey belt land. This new grouping of land excludes environmentally or culturally sensitive sites, such as Areas of Outstanding Natural Beauty and flood-prone areas.
While this renewed categorisation seeks to clarify development potential, challenges remain. Notably, the ambiguity surrounding what constitutes a ‘not strongly contribute’ to Green Belt purposes invites the potential for judicial review. Developers must navigate these complexities with robust strategies to mitigate risk effectively.
Title and legal indemnity issues for grey belt land
Disused industrial areas, wastelands, and other forms of grey belt land are often encumbered by a range of legal and title issues. These include:
Restrictive covenants – historical restrictions on land use are among the most common impediments. Covenants may limit development types or require prior consent from adjacent property owners. Breaking or negotiating these restrictions can be time-consuming and costly, particularly if beneficiaries of the covenants are difficult to identify.
Adverse possession claims – many underutilised grey belt parcels may have informally extended over the boundary over time, leading to potential adverse possession claims if a developer were to build outside the red line title of the land. These disputes can delay planning approval and increase project uncertainty.
Access and easement issues – developers often discover that their intended sites lack adequate legal access or utility easements, necessitating negotiations or legal actions to resolve.
Rights of light – existing buildings near grey-belt developments may claim rights to light or air that impede new construction plans. Without resolution, these rights can halt projects or lead to costly compensatory agreements.
Mine and Minerals – a title to a property may contain reference to mines and minerals being expected and or/reserved to another party. This will permit the third party to extract minerals that lay beneath the sub-soil or charge a fee to permit foundations to disturb the minerals. The beneficiary of the rights can demand compensation or seek injunctive relief to prevent trespass into their minerals.
Planning permission risks – securing planning consent on grey belt land involves navigating ambiguity in the new NPPF, community objections, and potential judicial reviews.
For developers, any of the above can pose a significant risk to an investment and outstanding title issues in most circumstances are unacceptable to funders. In order to unlock these grey belt opportunities, developers will need to work with a specialist broker to cover off these risks by way of legal indemnity insurance policies.
The benefits of legal indemnity insurance
Legal Indemnity Insurance can offer a solution for developers looking to mitigate the risk of building on grey belt land. It provides protection where there is a defect or issue which cannot be resolved, or represents an ongoing risk that would result in financial loss.
Features of legal indemnity insurance can include:
Restrictive Covenant Insurance – covering potential costs from breaching historical restrictions. If legal action is initiated by a beneficiary of the covenant, the insurance policy pays for defence and any resulting settlement or damages.
Adverse Possession coverage – for sites with informal users or unclear ownership, this protects against financial losses if an adverse possession claim disrupts the project.
Easement and access indemnities – covers the risks associated with inadequate access or utility connections. These protect developers from financial losses if they are sued for trespass or face infrastructure-related delays.
Rights of Light Insurance – ensures that projects can proceed even when neighbouring properties assert rights to light, and covers both the cost of compensatory agreements and legal challenges. It is particularly valuable for urban and semi-urban developments.
Mines and Minerals Insurance – permits the developer to proceed with works without an agreement with the registered party.
Planning and Judicial Review Insurance – addresses risks arising from planning permission refusals or legal challenges. It can include financial protection for redesigns, appeal processes, and delays stemming from community or stakeholder objections.
Cover for unknown title defects – grey belt land, especially where plots have changed hands multiple times or been subject to fragmented ownership, often have unknown title defects. Legal indemnity policies can cover these risks, ensuring clear and marketable title for developers and future buyers.
No two grey belt parcels are alike. Some may face multiple overlapping legal issues, while others might involve unique challenges related to historical uses or geographic location.
Working with Lockton
The development of Grey Belt land demands a comprehensive approach to risk management. At Lockton, our experts work with your legal teams and surveyors to identify potential issues early in the acquisition and planning process.
We tailor coverage to address the specific risks associated with a project, ensuring maximum protection without unnecessary costs. With a deep understanding of our insurers within the market, we can ensure that we choose the correct providers for your risks. By securing the right insurance solutions, developers can turn the challenges of the grey belt into opportunities, delivering projects that meet both community needs and financial goals.
Visit our Construction (opens a new window) page for more information, or reach out to a member of our team.
