"Claw back provision" applied to large garden/land - what does this mean for buyers?

PrincessJR

Hi,

We are in the process of purchasing a house in a rural area with a large garden. The estate agents have informed us of the following:

"The garden could, subject to planning consent, accommodate an additional dwelling. However there is to be a covenant prohibiting the development of a dwelling house on the garden land subject to a claw back provision".

We have no intention of EVER wanting another dwelling built on the land however we do intend to make it more private by erecting higher fencing (the garden runs parallel to the road and we have small children)

How might this claw back provision affect us? Or won't it?

Any help appreciated please!

Rain_Shadow

PrincessJR wrote: »

"The garden could, subject to planning consent, accommodate an additional dwelling. However there is to be a covenant prohibiting the development of a dwelling house on the garden land subject to a claw back provision".

We have no intention of EVER wanting another dwelling built on the land however we do intend to make it more private by erecting higher fencing (the garden runs parallel to the road and we have small children)

How might this claw back provision affect us? Or won't it?

Any help appreciated please!

It won't affect you. It's to give the vendors a slice of any money made from developing a second property on the land.

stator

Just have your solicitor check the clause, but as above it shouldn't affect you if you don't build.

Mgman1965

Theses seem to be getting very common now on any house sold with a garden bigger than a postage stamp.

Personally I think they're a downright cheek and would want a similar percentage discount on the price because of it.

To me, if you sell a piece of land/house with garden that's it, you've sold any interest in it now, not 10/15/20/25yrs down the line (I saw a house with a 30yr clawback of 40% on its large garden).

As I say, I think they're cheeky and greedy of sellers and although as the OP said even if I'd have no intention of developing I'd want a good discount or I'd back out.

davidmcn

One thing to watch for is whether there is a charge over the property in security of the clawback obligation - that can complicate your own funding of the property (as lenders prefer to have the one and only charge over the property).

PrincessJR

Mgman1965 wrote: »

Theses seem to be getting very common now on any house sold with a garden bigger than a postage stamp.

Personally I think they're a downright cheek and would want a similar percentage discount on the price because of it.

To me, if you sell a piece of land/house with garden that's it, you've sold any interest in it now, not 10/15/20/25yrs down the line (I saw a house with a 30yr clawback of 40% on its large garden).

As I say, I think they're cheeky and greedy of sellers and although as the OP said even if I'd have no intention of developing I'd want a good discount or I'd back out.

Thank you all. Regarding a discount on the property, we have had an offer of £280k accepted when the property was for sale at £295k but this discount is based on the level of interior work needed nothing to do with the garden. We understand that the vendors will not drop a penny below £280k (we tried!)

I suppose that as we have no intention of building on the garden, it has no effect however I wonder if it would affect the resale if, due to unforeseen circumstances we had to sell in 10 or 15 years time?

pimento

The vendors sound like right greedy so and sos.

DRP

i would definitely find out more details - most importantly how long the clause and the % .

10 years may be acceptable, but 25+ years ?

TBagpuss

get your solicitor to check the clause.

Has it ben imposed by the current sellers or does it pre-date them?
If imposed by the current sellers then you could negotiate to remove itor to ensure that it is for a limied time (maybe 3-5 years)

If it predates them then they probably don't have any ppower to change it. It would not affect you if you have no plans to build but as davidmcn says you'd nneed to check that it is not going to make matters dificult in relation to your mortgage.

Also double check the wording and when it kicks in, to make sure that it would only be relevant if you built / sold a whole new house, not if you built an extension or made other changes.

AnotherJoe

PrincessJR wrote: »

We understand that the vendors will not drop a penny below £280k (we tried!)

I suppose that as we have no intention of building on the garden, it has no effect however I wonder if it would affect the resale if, due to unforeseen circumstances we had to sell in 10 or 15 years time?

You can still negotiate for a discount but on the % of the clawback and the length of the term rather than the purchase price.

I personally would not want something that was going to affect buyers beyond me because who knows how that would affect selling the house, so if you think 10 years is your likely term, go for that.

PrincessJR

Thanks everyone. Ive now heard back from the solicitors and its a 15 year term although she hasn't mentioned the %. She has said she is going to speak with the vendors to get their thoughts.

Im guessing it will be a "you might lose your buyers if..." conversation.