Overage when buying land.

Procrastinator2

Does anyone know about overages. We are considering the purchase of a small piece of agricultural land land but the seller insists on an overage clause for 25 years. Our conveyancer said it covers any planning permission, permitted development or building reg approval. The owner applied about 2 years previous but was refused. Due to objections from neighbours and the council. Our conveyancer said that it covers any building, therefore you cant' build a shed,stable place a caravan on it or develop the land in any way. I have seen overages on land before but usually agricultural buildings are exempt but not in this case.  The trigger is applying for any planning, carrying out any permitted development or applying for building regs which may even cover an access road if concreted.

I thought of digging a lake and placing a house boat on it ( just a joke). There is even a reinstatement clause. Wonder if a large truck converted with living accommodation requires planning. Any overage payment is due within 10 days of submitting planning  applications. Plus each application triggers another overage payment and so on for each uplift in value.

Just a thought what if someone else makes an application such as a developer. are you then liable for any possible uplift, as you do not have to own land to apply for planning.  I never intended to build a house but would like to build a large shed or barn for a couple of animals and machinery.my opinion is that this would also put off any future purchaser of the land.

user1977

Depends on how the clause is drafted, and we can't see it from here...you'd be best to ask your conveyancer. There's no "standard" wording so in theory it's all up for negotiation.

SarahB16

In very simple terms with overages the seller of the land is ensuring that if the land increases in value (e.g. planning permission is granted to build twenty new homes) they receive a share of this increase in value and in my opinion they are very common and are fair and understandable from the position of the seller.   

You can build whatever you want subject to planning permission and any applicable covenants and the seller wishes to ensure they get a share of the uplift in value if your planning permission is approved.    

Typical overages that I see are Farmer Giles sells a piece of his farmland to Developer Big Bucks.  The developer pays £x for the land subject to planning permission to build x number of new homes.  The overage agreement says that each home that sells for more than £300k Farmer Giles receives 10% of the sales proceeds, i.e. each home sells for £400k so the farmer receives an additional £10k from the sale of each of those homes.  

I don't think the overage payment would be due based on the submission of the planning application but instead on the approval of the planning application.  

Overages are not the easiest of agreements to explain but from what you are saying I think you could agree a fair agreement with the landowner and it to be based on uplift in value of the land due to you (or a developer) receiving planning approval.  

This is it in very basic terms and not from a legal perspective but more from a developer and landowner perspective.  

user1977

SarahB16 said:

I don't think the overage payment would be due based on the submission of the planning application but instead on the approval of the planning application.  

Or perhaps on commencement of development, or perhaps upon a sale - after all, the planning which is granted may be completely unworkable. And it makes more sense for money to be payable when there's actually some liquid funds sloshing around.

FreeBear

Procrastinator2 said: I thought of digging a lake and placing a house boat on it ( just a joke). There is even a reinstatement clause. Wonder if a large truck converted with living accommodation requires planning.

You could haul a canal boat in without digging a pond. Being flat bottomed, it wouldn't need much in the way of supports, and it wouldn't be a caravan
I know of someone that had a smallholding with a restriction on constructing buildings on the site. She dug out a fair sized hole and plonked a large box van in it. Don't know how it turned out in the long term....

Procrastinator2

Thanks for the replies. I have read the agreement and it states each time a planning application is submitted  they will engage a surveyor at my cost and I have to pay 10% of any uplift in value within 10 days. FreeBear said:

Procrastinator2 said: I thought of digging a lake and placing a house boat on it ( just a joke). There is even a reinstatement clause. Wonder if a large truck converted with living accommodation requires planning.

You could haul a canal boat in without digging a pond. Being flat bottomed, it wouldn't need much in the way of supports, and it wouldn't be a caravan
I know of someone that had a smallholding with a restriction on constructing buildings on the site. She dug out a fair sized hole and plonked a large box van in it. Don't know how it turned out in the long term....

Sounds a good  idea.

FlorayG

I have land with an overage clause. Mine only has 'residential dwelling' on it but I think it's reasonable to include any buildings that may increase the value. A shed isn't going to increase the value of your land by much and a caravan by nothing at all, so you're possibly worrying for no reason. Also remember that land increases rapidly in value anyway, so even paying an overage clause you will still own land worth more than that in a couple of years time

anselld

It is unreasonable to assess value and claim payment before planning is even approved.  Get your conveyancer to negotiate terms which are fair to both parties.

user1977

Procrastinator2 said:

I have read the agreement and it states each time a planning application is submitted  they will engage a surveyor at my cost and I have to pay 10% of any uplift in value within 10 days.

I think either you've missed out some stuff or it's been ineptly drafted. Merely applying for planning does not affect the value...

MeteredOut

user1977 said:

Procrastinator2 said:

I have read the agreement and it states each time a planning application is submitted  they will engage a surveyor at my cost and I have to pay 10% of any uplift in value within 10 days.

I think either you've missed out some stuff or it's been ineptly drafted. Merely applying for planning does not affect the value...

But if OP applies for any sort of planning, and the vendor engages a surveyor at the OPs cost, they'd have to pay 10% of any uplift in value. If worded as stated, and the market value of the land has increased, simply applying for planning would mean the OP is due to pay the previous owner10% of that increase in market value.

OP, there's no way I'd sign up for that. Can you post the actual wording?

Slinky

Does the canal boat have a very long barge pole handy? I'd not be touching the OP's deal without one.