Claw-back clauses?? buying land...HELP

squirrelchops

I have the opportunity to purchase 1.79 acres within a development area for £20k. The reason is due to a faily member dying and is very complex.

Anyway this price is based on purely agricultural valuation but within the report it is noted that this is within the development boundary and hence planning could be sought.

My problem is thus:
By purchasing at special price of £20k I would have to sign a cluase which would mean if the land was sold with the benefit of planning in the future the enhanced uplift value would be shared with the estate ( this is as i spart of a farm being split).

Anyway...anyone have any experience of claw-back clauses and should I just go for it at this price as should make money even if I have to return 50%??!! HELP

Debt_Free_Chick

squirrelchops wrote: »

Anyway...anyone have any experience of claw-back clauses and should I just go for it at this price as should make money even if I have to return 50%??!! HELP

These are common with plots of land within the development boundary. Essentially, the seller is saying "look, we know that planning permission is likely. We can't be bothered with all that, but we know that if we did, then the land will be worth more. Tell you what .... we'll knock something off the price of the land, you deal with the PP hassle, but you give us some of the increase in the value of the land, which you will get, once you get PP"

The seller is suggesting that they've adjusted the price of the land down, as there is no PP. But - if the land did have the PP it would be worth more. They want their share of the higher value.

Bear in mind that it's only the extra value that you have to share - you deduct the price you're paying for the land. Or you deduct the value of the land, without PP, in the future. Whichever applies depend on the deal you strike - but it's usually just a share in the increase.

If you bought, what would you do? Apply for PP? Apply for outline PP? Just sit on the land and hope the value increases?

squirrelchops

Not 100% sure yet.

Thank you for your no nonsense answer. Has helped me get a grip!!!

poppysarah

Can you drive a combine harvester?

Buy it and turn it into allotments and rent them?

I wouldn't ever bother buying land in the hope of ever getting PP especially when someone wants a dibs on the profit.

Doozergirl

poppysarah wrote: »

Can you drive a combine harvester?

Buy it and turn it into allotments and rent them?

I wouldn't ever bother buying land in the hope of ever getting PP especially when someone wants a dibs on the profit.

1.79 acres of develpment land valued at at least £600,000 per acre, even in a crap market for £20,000? It's not even a gamble - you'd get the £20,000 back even if you failed to get PP and sold it to someone else who wanted to sit on it. I've seen greenbelt go for more than that where it's on the outskirts of a village - a few times.

I'd share the profit, no problem. Money for nothing if it pulls off.