Providing bespoke specialist services and working solely for local authorities, Bellavail IMS has over 10 years’ experience in resolving historic Section 38/278 Highways Act (1980) Agreements and holding defaulted Developers accountable.
Marie Hill, Company Solicitor at Bellavail IMS, explains why time is of the essence and why a proactive approach is a necessity in order for local authorities to protect themselves.
Q. Is this a national issue across Local Authorities?
A. Yes. The continued increasing rate of new developments in the last 20 – 30 years means that there is a large backlog of default Section 38 & 278 Agreements with Bonds where the works still remain outstanding in all areas of the UK.
The size of the problem varies from authority to authority, but we do not believe there is a single local authority in the UK that doesn’t have a Bonded Highway Agreement whereby the Developer has failed to fulfil their obligations within the original time promised.
Q. Why is it important to act now?
A. It is vital that authorities act now, as Housing Bondsman are increasingly shifting accountability to the local authorities to act within a reasonable period of time or their ability to make a valid claim on a bond is significantly compromised or can even be lost completely. It is very much becoming a use it or lose it scenario, and in cases where action has not been taken, residents or users of a substandard highway can hold the authority financially accountable of maladministration.
Q. What steps can Local Authorities take to protect themselves now?
A. We always recommend the best place for authorities to start is by engaging us to undertake an analysis on their list of unadopted highways and incomplete highway projects, covered by Section 38 or 278 Agreements. This allows us to help them understand the size of the problem, at which point we can look to prioritise cases and look to take proactive actions to protect the authorities position.
Q. What steps can Local Authorities take to protect themselves in the future?
A. The increasing onus being placed on authorities to be able to demonstrate that they have been proactive in holding developers accountable means that we recommend they undertake a review of the status of unadopted Highway Agreements on a quarterly basis, and that notifications of default are issued in a timely manner.
Q. Why is it a problem if the Developer is still trading? Isn’t the Developer responsible?
A. That’s a great question, and although we were actually originally formed over 10 years ago solely to address cases where the Developer was no longer trading, we soon discovered that to protect authorities, action needed to be taken prior to developers ceasing trading which in some cases can be too late!
In order to make a successful claim on a bond when a developer has ceased trading, it is increasingly becoming a requirement that the authority is able to demonstrate that proactive actions were taken when the developer first defaulted on the agreement, which is typically well before they ceased trading. If this cannot be evidenced, the ability to successfully recover monies from the bondsman to undertake corrective or incomplete works is significantly compromised.
Q. With the number of new builds and government targets, should this be the focus for Local Authorities?
A. Developers are increasingly referencing their inability to secure bonds for new schemes as a factor that is hindering their ability to commence with new sites. We help authorities with a way to provide developers with a pathway to adoption of their old legacy unadopted sites, which allows them to focus resource on new schemes and helps them get old Bonds cancelled, so Bonds can be put in place on new schemes. As a result of this, we often find that developers very much welcome our approach and as such often volunteer further schemes for inclusion on our program to help facilitate adoption.