Land for sale

Sidnoi

Good day to you people of MSE forum. I am looking for some advice. I could not see a land section or forum. Only homes and mortgages, so I thought here is my best option.






I have saw a piece of land close to where I live and was interested to see if it was for sale and at what cost.


I bought the title deed from land registry and found some solicitors have an interest in the land. The tenure from the document says caution.


I called the solicitors and asked what their interests are in the land were. One solicitor told me that it belonged to someone, and they were executors to this person. I asked him if the seller was interested in selling the land and he came back to me with a lot of gobbledegook and this word “overage”. I googled the word and found its explanation and meaning. I looked over official documents from Gov.uk and now I undertand he word oveage.


I got back on to the solicitor and asked if the seller had a price in mind for un-residential state (as it is now, a field). He replied that it was not as simple as price and tells me about uplift fees, etc. I understand some of the legal and technical terms now.


Here is my problem. The solicitor tells me that I need to get 2 or 3 quotes to value the land as it is now. Overage and uplift agreed at a later date.


So. I pay for the land to be valued out of my own money. The valuer says for example 10K as it is now. If I apply to get planning and it is granted the seller can then ask what he wants for the uplift fee as now it has started costing me money and now I am at the sellers ransom. The seller can the price me out of the sale of the land. The problem is: I have paid for the land to be valued, and got planning permission, and it has cost the seller nothing. The seller can then sell the land on at a higher cost (with OPP) and I have done all the legwork.


Any ideas how I can proceed with this whilst protecting my interests and not lining the already rich land owners pockets.


Thanks for reading.

AnotherJoe

On the basis that everything is negotiable, I don't see why you can't come to an agreement prior to applying for planning, that you will pay (as an example) the agreed upon price it's worth now plus an overage of (say) 50% of the enhanced value after PP. and that is signed prior to you getting valuation.

You could build in provisos, eg won't pay more than £10,000 for the land as is, and won't pay more than £37000 as the increased value and if PP is not granted or the overage is more than £X the transaction is cancelled. Or any other sums and terms you agree.

Or you could just walk away now.

Stevie_Palimo

Does not seem to be a lot you can do as they may have looked at getting planning permission for it prior to selling as it would always add to the potential sales value.

Basically what you require is the land at £10.000 as an outright sale then have the planning permission approved so that you can make a huge profit, Not a bad idea but to say that you do not want to line some rich land owners pockets when you are seeking the same thing sort of contradicts itself.

You also have no clue as to what the land owner has in the bank so two choices here carry on as they wish or pull the plug and accept a loss.

jbainbridge

There's not much you can do about the vendor's terms. Only you can decide if they are being greedy.

davidmcn

No, I think you've misunderstood. Overage is the uplift which is paid after you complete the purchase and later get planning permission. Alternatively, you could enter into a contract now which is conditional on you getting planning permission - as you are obviously aware, you don't want to apply for planning and then see the seller walk away with the benefit of the planning consent.

AdrianC

You want to buy a field.
The field is worth £x as a field.

You want to then apply for planning permission to build on it.
The field would be worth £y as a building plot (where y is a multiple of x)

The overage means that the seller wants a slice of the difference between x and y.

That percentage is something you would negotiate as part of the sale contract, along with any time limit on it being payable. I believe 1/3rd is a fairly typical percentage.

So...
If the field is worth £10k as a field, and £70k as a building plot, that's a £60k increase in value, so the vendor would be due £20k. Your £10k investment would be worth £50k.

If you don't like that deal, then you don't buy the field. It's that simple.

Remember - you've gone to them to ask about buying the field, and they've said "Well, yes, it could be for sale."

eddddy

I think the solicitors are essentially saying...

Make an offer for the land. The offer must comprise of:
- The price you will pay now
- The uplift formula you are proposing when/if planning consent is granted

And support your offer with valuations from RICS land valuers (and probably with details of your development plans).


However, I guess that
- they would use your offer as a baseline for seeking more offers
- they would prefer to sell to a 'professional' developer, who could use their experience to derive more planning uplift.


I suspect that you're going to need advice from land valuers and solicitors.

Sidnoi

Thanks Another Joe. There is an option I could look into.

Thanks Stevie Palimo. I do actually know a Baron owns the land for sure. Solicitors told me. I didn't want to sell the land on at a profit. Sorry for confusing you. My intention was to build on it and stay there.

Thanks Davidmcn. I do understand the uplift. Even to the point I know what triggers to keep clear of, or negotiate the triggers.

Thanks AdrianC. Thats the top and bottom of it.

Thanks eddddy. "And support your offer with valuations from RICS land valuers (and probably with details of your development plans)." This where I would like to know if the seller is willing to sell , or, just finding out if the land will get PP, at my cost. This is where it could cost me a fortune only for the seller to do what you said in your last statement. Land valuers and other prfoessional people don't come cheap.

Jhoney_2

Maybe the owner is a Mr/Mrs/other A.Baron

booksurr

given you say it is part of an estate then the Baron is unlikely to be in a position to get pp himself! So I think the executor is doing what he is supposed to do - ensure that the value of the estate is maximised without incurring speculative investment costs which would have to be paid from the estate. As such selling with overage is the right and proper thing for the executor to do

so the only way to limit your financial exposure is to research the prospects of obtaining pp and accept that if you do, the overage will have to be paid

so what do you know about planning restrictions for that precise area? What has the council zoned as it in the local area plan?

That should be researchable online and should give you an indication of a total no outcome, or whether there is at least some scope. Obviously you can ask the council, but are unlikely to get an easy answer otherwise everyone would be making a fortune as a land developer!

if you want it for self build purposes then presumably the land is useless to you without pp, so it really does look like you will have to risk some money in starting the process

eddddy

Sidnoi wrote: »

Thanks eddddy. "And support your offer with valuations from RICS land valuers (and probably with details of your development plans)." This where I would like to know if the seller is willing to sell , or, just finding out if the land will get PP, at my cost. This is where it could cost me a fortune only for the seller to do what you said in your last statement. Land valuers and other prfoessional people don't come cheap.

I think the problem is that you'll be competing with professional developers.

Because of their experience - those developers will look at the site and assess the opportunity, and they will propose their standard uplift contract terms.

But because you don't have the experience, you have to pay others for the benefit of their experience.

In this instance, I guess you have to judge whether you want to pay to try to keep up with the professionals.

(Unless the solicitors are completely deluded, and the site is too insignificant to be interesting to professional developers.)