Despite a slowdown in insolvencies, construction remains the most impacted industry in the UK – due to the combined effect of ongoing project and planning delays, as well as challenging economic conditions, including high material costs and labour shortages. When the worst happens, and a contractor or other party goes into insolvency or liquidation, developers and housing associations are often left dealing with part-complete distressed projects.
Navigating this brings complex challenges that require immediate and effective solutions to ensure project continuity and protect investments. By providing tailored insurance solutions, financial flexibility, and expert support, London Belgravia Group (LBB) helps ensure that these challenging projects can be completed successfully, protecting the interests of all stakeholders involved.
LBB steps in to safeguard social housing developments and ensure project continuity
A specialist property services company approached LBB when grappling with the aftermath of contractor insolvency involving three significant social housing developments. The sites, each in varying stages of completion, were suddenly confronted with the daunting uncertainty of no structural warranty coverage.
- In Surbiton, a social housing development comprising 49 apartments, with a mixture of shared ownership and affordable rental units had 75% of its construction work completed. The abrupt insolvency of the contractor posed a severe threat to the project’s completion and financial integrity.
- Over in Twickenham. a proposed 24 apartment complex was facing a similar situation. Catering to social housing and affordable rental, there had been a build cost of £6.5 million, yet only 60% was complete when the contractor went under.
- A 28-apartment complex in Croydon was designed with the intention of providing affordable housing. With a build cost also at £6.5 million, this project was 70% complete when it too had to deal with contractor insolvency.
“This situation presented significant challenges as the existing warranty provider would not honour the terms of the contract with the liquidation of the contractor. Without prompt and effective intervention, such situations can lead to significant delays, financial losses, and even project failure. It was crucial to find a warranty provider that could step in to safeguard the project’s future and support the completion of the development.” Alex Limpenny, Sales Director at LBB, shares.
“Our top priority was to ensure the clients could continue their work on these vital social housing units and maintain their project timeline, without compromising on protection or quality, with the confidence that they were fully covered.”
LBB’s expertise in navigating risk and securing comprehensive warranty solutions
Our consultants spent time getting a detailed understanding of the voided warranties’ implications, gauging the extent of protection lost and the potential risks faced at each site.
Our established relationships and strong negotiating power were fundamental when conducting a market comparison to identify potential providers who could step in mid-construction. Finding replacement coverage was naturally important but the team worked to ensure new providers would offer comprehensive coverage addressing the bespoke demands of each project.
LBB’s successful procurement of new warranties significantly boosted the confidence of investors and stakeholders, who were reassured by the stability and comprehensive coverage these warranties provided.
More than just securing warranties, LBB delivered bespoke solutions to meet the unique demands of each project. Their expert steering of complex scenarios and strategic interventions underscored their deep understanding of the construction industry and commitment to project success.
“Some warranty providers simply don’t want a situation where there has been a material change on site. In this case, the original warranty provider was unable to issue cover due to the contractor entering insolvency part way through construction. With these three developments, we were able to source and implement replacement cover, ensuring that the sites were sufficiently insured, and the units could be sold once completed.” Alex Limpenny comments.
“Sourcing replacement cover in a situation like this can be difficult to navigate, with some warranty providers not having the appetite for such risks and complications surrounding the contractor/developer defect liability period. As specialists in this market, we were able to utilise our expertise and act quickly, ensuring that additional delays and costs were kept to a minimum whilst providing best in market advice.”
Why specialist insurance support is key to protecting your development
Commercial factors outside of your control can profoundly impact development, and in a challenging economic landscape defined by uncertainty and tight margins, protecting your project has never been more important.
Our team at LBB has deep expertise in the construction and insurance industries. LBB’s proactive and expert approach makes us an invaluable partner for developers and housing associations dealing with part-complete projects.
This experience enables us to act as trusted advisors, evaluating the project’s individual needs and helping clients navigate complex project situations. By leveraging our industry relationships to quickly source alternative warranties we can ensure continuity and provide financial flexibility.
It not only helps protect investments but also ensures that challenging projects can be completed successfully. In a construction industry facing unprecedented challenges, LBB is your trusted partner, safeguarding the interests of all stakeholders involved.
Interested in learning more – read our recent article: How housing associations benefit from specialist insurance brokerage
