Overage Clause - help!

new_house_buyer

Hi everyone,

We're in the process of buying our first house but have come across a problem.. When the property was advertised, it stated: N.B Please note there will be an Overage Clause attached to the sale of this property. This enables the vendor to seek a percentage of the increase in value if an additional dwelling was put on the site.
Now, we might be gullible, but we took this to mean any building which is lived in (is that not what dwelling means?) but have since found out that the clause is actually for any building. The overage clause would mean that if we build any type of building (including a garage or shed - which we plan to do) in the next 30 years, we would need to pay the seller 30% of that build cost (even though it is a freehold property).

Our solicitor has already gone back to the sellers solicitor to say we reject the overage clause and asked them to re-word it to [FONT=Times New Roman,serif][FONT=Calibri,sans-serif]‘any development of the whole or any part or parts of the property for residential housing.’ [/FONT][/FONT][FONT=Times New Roman,serif][FONT=Calibri,sans-serif]No luck there - their response was to refuse the change as they [/FONT][/FONT][FONT=Times New Roman,serif][FONT=Calibri,sans-serif]wish to define development under s55 of the Planning Act 1990. I won't go into the details but basically it's a very wide definition to make sure any building works is included in the clause.

So far the only advice our solicitor has given us is to threaten to withdraw our offer - which could backfire and leave us without the house. We're feeling really deflated because this house seemed perfect for us, but we just can't agree to pay 30% of any build cost.[/FONT][/FONT][FONT=Times New Roman,serif][/FONT] Any ideas/suggestions/feedback would be very much appreciated!

Thanks,
Rosie & Richard
(first-time stressed-out house buyers)

glasgowdan

It's not 30% of the build cost though. Surely your solicitor knows that?!

Read the exact words you've written above, it explains it clearly.

new_house_buyer

That's part of the problem - the wording on the selling website seems to be totally different to what the overage clause actually is. Apparently it's not the increase in value that we'd pay, it's the development value.
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Cakeguts

It is nothing to do with build cost it is to do with if you get planning permission for a house or other building then you have to pay 30% of the value of the increase of the whole plot of land that the house is on. I assume that there is quite a big garden?

G_M

Quote the overage clause.

new_house_buyer

Our solicitor has said this: [FONT=Calibri,sans-serif]This is an agree for you to pay 30% of the development value back to the Havebury Housing Partnership should you develop the property by adding any buildings or other structure in the next 30 years. This could include garages and smaller buildings such as a “granny annex” or summer house.[/FONT]

new_house_buyer

It's a fairly large garden compared to some in the area, but certainly not more than an acre (probably not even half an acre)

Cakeguts

The smaller buildings are there in case someone builds a small bungalow and calls it a double garage. Or a large timber framed lodge building and calls it a summer house. It is to cover the Havebury Housing Partnership for any attempt for someone to build another house on the plot but call it something else. This is all to do with the increase in value of the plot that the house is on by planning permission to develop another dwelling even if what is built is being called a double garage.

new_house_buyer

So if we build a garage/shed that doesn't require planning permission, the overage clause wouldn't come into play? I've asked for a copy of the clause because we haven't actually been shown it..

Cakeguts

new_house_buyer wrote: »

It's a fairly large garden compared to some in the area, but certainly not more than an acre (probably not even half an acre)

But if you could get planning permission you could build several more houses on the garden. The overage is to make sure that the original owners get a percentage of the increase in value of the land with more houses on it.

Cakeguts

new_house_buyer wrote: »

So if we build a garage/shed that doesn't require planning permission, the overage clause wouldn't come into play? I've asked for a copy of the clause because we haven't actually been shown it..

The overage clause would if by building a shed or garage you increased the value of the house I believe. You may find that there is a problem getting planning permission to build anything on the garden.