Development clause on land - help!

Honeyhoney

Hello all, mse newbie here!

Looking for some advice please.

My mother and I are looking at fulfilling a dream and buying some land to build our homes on. We've looked at a fair few plots of land but they all seem to come with a development clause.

This particular piece of land we're interested in has the following clause

the paddocks will be sold with a development uplift provision whereby the vendors and their successor(s) in title will be entitled to 50% of any increase in the market value attributable to the grant of planning permission for any change of use except for agricultural or personal equestrian use for a period of 20 years from the completion date.


Does this mean that if we were to build on the land immediately (as intended) then we would be liable to give the current vendors half of what we'd make? If so, when?

We'd be looking at spending pretty much the rest of our lives there if all worked out well, so what would we need to do about the clause?

I'm not able to speak to the vendor until Monday when he is back from holiday and I'm impatient to know!

If anyone could help I'd be extremely grateful

Ulfar

To me it means if you get planning permission within the next 20 years, then you owe the vendor 50% of the increase of the lands value due to this.

Davesnave

Surely you would have to be sure of obtaining planning permission (for two houses?) before buying the land?

Once planning permission is granted, the land's value would increase four or five fold, so it's common for such overage or uplift clauses to be inserted. The amount specified would be payable on receiving PP (after a survey and valuation.)

The existence of an uplift clause is no indication that planning permission is likely to be granted, however.

I'm not clear how you would 'make' money on the land, unless you sold whatever you'd built.

Doozergirl

Are you confident you're going to get PP?

In some ways, 50% of the uplift in land value is better than paying full whack for land that already has PP.

On the other hand, from personal experience, getting that PP yourself can be a great strain.

Honeyhoney

Very confident of getting PP, we have horses so absolute worst case scenario if we bought the land and couldn't get planning and couldn't sell it then we'd have a nice grazing paddock!

So when would it need to be paid? And how would the value be worked out? We'd plan on putting two 3 bed detached chalets on there along with extending the current stable block.

Thanks for your replies everyone

Davesnave

If you are confident, this must mean that you have checked that the land, or the part of it where you intend to put the chalets, is within the local development boundary. Have you?

I have two very nice fields behind my house, but the nearest local development boundary is a mile away, so my chances of obtaining PP in either is virtually zero.

The money would need to be paid on receipt of outline planning permission, probably after re-valuation by an independent qualified person agreed by both parties.

JQ.

Why are you so confident you'll get pp?

Generally such clauses are placed on sites where the current owner feels pp is not so likely. If it was a certainty they'd have got pp themselves and gained 100% of the uplift in value.

You would probably become liable for the payment once pp is granted, the clause should specify. It's also likely the value would be calculated by the parties jointly employing a Chartered Surveyor.

Be warned, pp can turn paddock land worth £10,000/acre into land worth £1m/acre depending on the location.

Honeyhoney

I've rented the land for equestrian use for the past few years, in the last year both adjoining fields have been built on. The agent, vendor and council have all implied that PP may well be obtained. We would be looking to build near one of the field boundaries, in effect to extend the road where the houses were built at the start of the year.

The vendors are in their 80s and are of ill health, which is why the land is for sale in the first place and why I'm guessing there's been no intention of them applying for PP.

Thanks again for your replies

pinkshoes

We're looking at something similar with the same clause. It's usually used when the odds of getting PP are slim! We're wanting a big garden rather than houses for profit, so not relevant to us.

If it wad that easy to get pp, then they would do it themselves. Clearly they're not willing to take the risk!

Thrugelmir

Honeyhoney wrote: »

We'd be looking at spending pretty much the rest of our lives there if all worked out well, so what would we need to do about the clause?

Obtain a valuation for the land with PP and crunch the numbers.

ging84

uplift clauses are a dodgy business
i would make it clear from the outset you intend to build on the land, and therefore would not be agreeing to any uplift clause