Purchase of option to buy house and land - need help!

fatbob10

Hi all. A member of my family has recently been approached by a neighbour (industrial unit) who may wish to purchase an option to buy the property and land that it sits on (approx 100ft square), pending planning permission. Apparently they are looking to develop the current unit into office space, units etc. They are suggesting putting an option to purchase in place? and they suggested this might mean payment of a fee whether or not the offer to purchase is actually taken up or not. Anyone know anything about this kind of thing? The area in general is very built up and with no spare land that I am aware of. It resides close to a very popular and fairly affluent highstreet. The property and grounds itself are in need of serious work and is fairly heavily overgrown though I guess this is just cosmetic really. any help and advice would be very well received. many thanks.

G_M

Why have they approached your family member? Who owns the land? Why not just buy the land? Presumably they will pay the owner (whoever that is) the fee to fix the price at which they could subsequently buy the land if planning permission is granted?

So if PP granted, neighbour gets the land at price agreed prior to PP.
If PP rejected, land owner gets to keep the land...and the fee?

Still don't see where your family fits in!

fatbob10

My family fits in in that we own the land and the house on it that the developer wants to purchase .

paddedjohn

whats your question please? if they want to sell then sell.

fatbob10

I guess Id really like to hear from anyone who has experience with options to purchase a property. Whether there are pitfalls as well as any positives. How long should one last for? What kind of payment should be sought to purchase such an option regardless of whether a sale actually takes place or not. It seems clear our peice of land is needed in order to fulfill what the developer wants to do so should we be looking for more than the typical value of the home and land would it have been sold to a private home buyer?

any thoughts would be appreciated.

DVardysShadow

An option to purchase is effectively a contract to buy at a given price, probably before a given future date, without an obligation to actually do so.

If PP is granted, the value of the property will change, most probably upwards. They can apply for PP without owning the land and without the endorsement of the owner, I believe. The option to buy might bind the family to silence on the Planning Application.

I would be looking for an option price which reflects the value of the land with PP. And I would be looking for a good option fee annually, with a get out clause. Bear in mind that if you do give an option, effectively the property may not be saleable on the general market and it will move to an investment market.

Bear in mind, that I am only speculating as to how this could play out. It is enough to convince me that you need professional advice.

fatbob10

Many thanks for that response. Who would I b likely to get professional advice from for a situation like this one?

MegaMiniMouse

fatb!!!0 wrote: »

Many thanks for that response. Who would I b likely to get professional advice from for a situation like this one?

DVS's advice is good - a solicitor will give professional advice, but talk to several before you hire one - make sure they have experience in this area. But the advice will not be cheap - the commercial/industrial 'market' is in a different league from the residential market

But with the correct advice, you may stand to make a considerable amount of money from any deal - intially, the prospective purchasers will be calculating that you will be a bit of a 'pushover' - prove them wrong...

MMM

JQ.

You need the advice of a Chartered Surveyor before you even start speaking to a solicitor. They are the ones who will understand the values involved and can advise on what you need to agree. They will usually negotiate the deal on you behalf. A solicitor can only advise on the technicalities of the contract, not what you will actually be agreeing to.

Ultimately, if the other party won't agree to the values suggested to you by the Surveyor you will have wasted your money on the solicitor, as the deal won't be happening.