Buying a small piece of land with an overage clause

Jonx999

Our house backs directly onto a large empty field, and we are looking to buy a small piece (less than 0.2 acres) of it to provide a buffer between us and any future development in the field.  However, the field is covered by an overage clause which rewards an earlier landowner with 50% of any increase in its value due to development. 

We are struggling to (a) put a value on the piece of field (frustratingly the current landowner won't name a price, just says "what's it worth to you?"), and (b) judge the potential impact of the overage clause.

Focusing on (b), we've got hold of a copy of the existing overage contract.  It defines the Trigger Event as:

"Disposal further to grant of Planning Permission or commencement of Development further to grant of Planning Permission."

If we do acquire the piece of field then we have no plans to develop on it.  If we just plant some shrubs and fruit trees etc. and do nothing that requires PP would I be right in assuming we would not trigger the overage?  Would applying for a change of use from agricultural to domestic be problematic?

Any advice from anyone familiar with such a situation would be much appreciated.

davidmcn

Jonx999 said:

If we just plant some shrubs and fruit trees etc. and do nothing that requires PP would I be right in assuming we would not trigger the overage?  Would applying for a change of use from agricultural to domestic be problematic?

Being granted change of use and then actually changing use would trigger the overage (or being granted change of use, and then selling). Though what the difference in value between agricultural and domestic garden use is likely to be, I don't know.

Zorillo

Has the landowner given you any indication he wants to sell it? 

Jonx999

Zorillo said:

Has the landowner given you any indication he wants to sell it? 

Yes, "in principle", he's now pushing to get our offer.

Jonx999

davidmcn said:

Jonx999 said:

If we just plant some shrubs and fruit trees etc. and do nothing that requires PP would I be right in assuming we would not trigger the overage?  Would applying for a change of use from agricultural to domestic be problematic?

Being granted change of use and then actually changing use would trigger the overage (or being granted change of use, and then selling). Though what the difference in value between agricultural and domestic garden use is likely to be, I don't know.

That's the problem, if we leave it as agricultural land then would it be OK to plant a few trees, put in a vegetable bed, and/or stick a shed on it.  The rules are unclear.

davidmcn

Jonx999 said:

davidmcn said:

Jonx999 said:

If we just plant some shrubs and fruit trees etc. and do nothing that requires PP would I be right in assuming we would not trigger the overage?  Would applying for a change of use from agricultural to domestic be problematic?

Being granted change of use and then actually changing use would trigger the overage (or being granted change of use, and then selling). Though what the difference in value between agricultural and domestic garden use is likely to be, I don't know.

That's the problem, if we leave it as agricultural land then would it be OK to plant a few trees, put in a vegetable bed, and/or stick a shed on it.  The rules are unclear.

Which rules? In terms of the overage agreement, your purchase would be neither a "Disposal further to grant of Planning Permission" (because planning permission hasn't been granted), nor would it be "commencement of Development further to grant of Planning Permission" (again, because planning permission hasn't been granted). Or is there something else in the agreement which you think would trigger the overage?

Of course, actually making a change of use which requires planning permission would be a breach of planning laws, and potentially the planners could take enforcement action. You'd also likely to have difficulties when you come to sell (or remortgage) if part of your property has the overage agreement burdening it, and/or is lacking planning consent for its then use.

AdrianC

Jonx999 said:

Our house backs directly onto a large empty field, and we are looking to buy a small piece (less than 0.2 acres) of it to provide a buffer between us and any future development in the field. However, the field is covered by an overage clause which rewards an earlier landowner with 50% of any increase in its value due to development. We are struggling to (a) put a value on the piece of field (frustratingly the current landowner won't name a price, just says "what's it worth to you?")

And what IS it worth to you? At what price will you walk away? Why is it up to him to come with the figure? You want it. He's quite happy not to sell. Starting point: What is your house worth without this land being bought? What is it worth with it?

and (b) judge the potential impact of the overage clause. Focusing on (b), we've got hold of a copy of the existing overage contract. It defines the Trigger Event as: "Disposal further to grant of Planning Permission or commencement of Development further to grant of Planning Permission." If we do acquire the piece of field then we have no plans to develop on it. If we just plant some shrubs and fruit trees etc. and do nothing that requires PP would I be right in assuming we would not trigger the overage?

If you don't increase the value of it by doing either of the triggers described in the overage, then there's no issue. 1. Get PP then sell. 2. Get PP then start work.

Would applying for a change of use from agricultural to domestic be problematic?

If you apply for PP to convert from agricultural to domestic, then actually do things that you couldn't do on agricultural, there's a very strong argument that you've increased the value from the purchase price to 0.2 acres of domestic...

Jonx999

davidmcn said:

Which rules? In terms of the overage agreement, your purchase would be neither a "Disposal further to grant of Planning Permission" (because planning permission hasn't been granted), nor would it be "commencement of Development further to grant of Planning Permission" (again, because planning permission hasn't been granted). Or is there something else in the agreement which you think would trigger the overage?

I mean the rules dictating what can and can't be done on agricultural land.  We're not bothered about turning into a fancy formal garden, but would just using it as, say, an allotment be problematic?

davidmcn

Jonx999 said:

davidmcn said:

Which rules? In terms of the overage agreement, your purchase would be neither a "Disposal further to grant of Planning Permission" (because planning permission hasn't been granted), nor would it be "commencement of Development further to grant of Planning Permission" (again, because planning permission hasn't been granted). Or is there something else in the agreement which you think would trigger the overage?

I mean the rules dictating what can and can't be done on agricultural land.  We're not bothered about turning into a fancy formal garden, but would just using it as, say, an allotment be problematic?

I think the problem would be convincing anyone that the 0.2 acres at the bottom of your garden somehow has a distinct agricultural use rather than just forming part of your garden.

Jonx999

I agree, we would probably need to maintain a clear boundary, e.g. a low fence or row of bushes, between our "real" garden and the extra agricultural piece.

As I explained at the start, the main purpose of the extra piece of land is just to provide a buffer between us and any future development in the rest of the field (which we know is being actively pursued).

AdrianC

Jonx999 said:

I mean the rules dictating what can and can't be done on agricultural land.  We're not bothered about turning into a fancy formal garden, but would just using it as, say, an allotment be problematic?

No, growing veg there would be fine.