Avoiding gazumping after getting planning permission accepted

Marcobarko

I’m looking at a house which would be perfect if only it had a nice space for a large office and a gym. Luckily, there’s a low lying stone barn that I think could be converted. Unluckily, this property is in a national park and the amount of money and energy I’d need to spend to put in a planning application is significant. But I’m willing to take the risk. However, I’m concerned that I could go through this whole process, spend thousands on architects and surveyors, and make the property much more valuable, causing the owners to massively increase the asking price.

What can I do? I don’t think I would buy the property without planning permission.

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

lincroft1710

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

If I was the vendor, I would be looking for a purchaser who wouldn't be encumbering the transaction with a load of conditions and penalties!

Marcobarko

lincroft1710 said:

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

If I was the vendor, I would be looking for a purchaser who wouldn't be encumbering the transaction with a load of conditions and penalties!

Me too! Which is why I’d make an offer over the asking price - as an incentive. Also, the planning permission would make their property more valuable, so they’d probably feel hard done by if they didn’t get more money for it

SavingPennies_2

Marcobarko said:

lincroft1710 said:

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

If I was the vendor, I would be looking for a purchaser who wouldn't be encumbering the transaction with a load of conditions and penalties!

Me too! Which is why I’d make an offer over the asking price - as an incentive. Also, the planning permission would make their property more valuable, so they’d probably feel hard done by if they didn’t get more money for it

But if you don't get permission, you won't buy it at all - let alone above asking price and the seller is back to square one so not sure it's much incentive. 

eddddy

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

Yes - that's more or less how it usually works.

You would use a 'Conditional Contract' (or perhaps an 'Option to Purchase').


But those contracts are usually hugely complex. Some example reasons...

• If planning consent is initially refused - would the contracts allow you (or require you) to appeal to the secretary of state? That might take 18 months - so the seller is left in limbo for 18 months.

• If planning consent it granted - but with conditions. If you don't like the conditions, can you back-out without penalty?

• If planning consent is refused for specific reasons (e.g. height of pitched roof) - does the contract allow you to re-apply for consent (e.g. with a lower pitched roof).

Typically, the seller would expect you to offer a significant amount over the asking price to accept the inconvenience.

Especially as the result could be that the seller might be stuck with the property for 18 months unable to move, then you fail to get consent - so they're back to square one.

lincroft1710

Marcobarko said:

lincroft1710 said:

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

If I was the vendor, I would be looking for a purchaser who wouldn't be encumbering the transaction with a load of conditions and penalties!

Me too! Which is why I’d make an offer over the asking price - as an incentive. Also, the planning permission would make their property more valuable, so they’d probably feel hard done by if they didn’t get more money for it

Offering over the asking price with all the conditions attached wouldn't incentivise me as a vendor, I'd much prefer a straightforward uncomplicated sale without the extra cash 

Marcobarko

eddddy said:

Marcobarko said:

One thought I’ve had is making an offer slightly over the asking price - and using a solicitor to draw up a contract making my purchase of the property dependent on the acceptance of planning permission and putting in a significant penalty for either parties pulling out if planning permission is accepted but the deal falls through. 

Yes - that's more or less how it usually works.

You would use a 'Conditional Contract' (or perhaps an 'Option to Purchase').


But those contracts are usually hugely complex. Some example reasons...

• If planning consent is initially refused - would the contracts allow you (or require you) to appeal to the secretary of state? That might take 18 months - so the seller is left in limbo for 18 months.

• If planning consent it granted - but with conditions. If you don't like the conditions, can you back-out without penalty?

• If planning consent is refused for specific reasons (e.g. height of pitched roof) - does the contract allow you to re-apply for consent (e.g. with a lower pitched roof).

Typically, the seller would expect you to offer a significant amount over the asking price to accept the inconvenience.

Especially as the result could be that the seller might be stuck with the property for 18 months unable to move, then you fail to get consent - so they're back to square one.

Thank you! And thank you, lincroft! This is exactly what this forum helps with. Showing you that you’re too deep into a problem and not living in the real world anymore!

ProDave

Offer a low offer price with an overage clause that entitles the vendor to a bit more if you get PP.  that might be enough of a sweetener for them to accept an initial low offer.

k3lvc

In many cases (esp within a National Park or similar) the vendor will know exactly the value and the chance of having planning passed. Unless they're in an urgent situation where they need to sell then if planning permission were feasible you'd have expected them to apply and value accordingly.

If you came to me with your proposal I'd be looking at countering with a betterment clause in case you managed to get permission/develop the plot

lincroft1710

ProDave's and k3lvc's approaches are far more practical

eddddy

lincroft1710 said:

ProDave's and k3lvc's approaches are far more practical

I guess the problem is that @Marcobarko only wants to buy the property if it's guaranteed to get planning consent.

So overage/betterment clauses won't help.