Overage when buying land.

Procrastinator2

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...

I am not an expert but for example I want to build a stable . The surveyor values the land as equestrian and not agricultural then I would have to pay 10% of the value of the land when the planning permission is submitted. Perhaps  10 year after the sale.

user1977

Procrastinator2 said:

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...

I am not an expert but for example I want to build a stable . The surveyor values the land as equestrian and not agricultural then I would have to pay 10% of the value of the land when the planning permission is submitted. Perhaps  10 year after the sale.

But like I said, submitting the application doesn't mean you'll get the permission? Doesn't make much sense to be paying overage if nothing actually changes.

Procrastinator2

Just been doing some research and seen a similar post from  2012 regarding tax and potential value when an overage is placed on a property. Sounds even worse now regarding tax implications       

https://forums.moneysavingexpert.com/discussion/3889561/stamp-duty-land-tax-on-overage

https://www.eccles-heddon.co.uk/post/implications-of-sdlt-when-entering-into-overage-agreements-1

From what I have read when you buy  land with an overage you can be assesed for SDLT, at the r
time of purchase  on any future total value that the development would add to  the land , even if you do not intend to ever carry out that development.

Procrastinator2

MeteredOut said:

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?

Not only does it state planning applications but also states any permitted development and technical applications.

MobileSaver

Procrastinator2 said:

MeteredOut said:

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?

Not only does it state planning applications but also states any permitted development and technical applications.

Which are ridiculous clauses so you either need to renegotiate the contract or walk away...

user1977

Procrastinator2 said:

MeteredOut said:

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?

Not only does it state planning applications but also states any permitted development and technical applications.

It would help if you posted the actual wording rather than just your precis, so we can tell how badly worded it currently is.

FlorayG

Just looked at OP's link and I have to say this phrase is totally unfair;
"For example, if an individual acquired a plot of land for £300,000 and agreed to pay a further £100,000 if they later obtained planning permission for development, the total consideration upon which the SDLT is calculated £400,000. The entirety of that liability is payable to HMRC within 14 days of completion."
I have an overage on my land which it seem would trigger this regardless of the fact that due to it's location and aspect there is NO CHANCE of  ever getting planning permission on it.

user1977

FlorayG said:

Just looked at OP's link and I have to say this phrase is totally unfair;
"For example, if an individual acquired a plot of land for £300,000 and agreed to pay a further £100,000 if they later obtained planning permission for development, the total consideration upon which the SDLT is calculated £400,000. The entirety of that liability is payable to HMRC within 14 days of completion."
I have an overage on my land which it seem would trigger this regardless of the fact that due to it's location and aspect there is NO CHANCE of  ever getting planning permission on it.

The additional SDLT wouldn't be payable in that case (unless and until planning was somehow obtained). It only needs to be a reasonable estimate of any future uplift. So if you reasonably think there's no chance of there ever being overage, you don't need to account for it.

Procrastinator2

user1977 said:

Procrastinator2 said:

MeteredOut said:

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?

Not only does it state planning applications but also states any permitted development and technical applications.

It would help if you posted the actual wording rather than just your precis, so we can tell how badly worded it currently is.

I would like to to post the actual wording but I am not sure if I would be in breach of confidentiality. I already had one rollicking this week from my solicitor for contacting the sellers solicitor and trying to have the overage removed.The whole thing is complicated, my conveyancer does not deal with  overages he said I will have to engage his boss at an extra £2.5 K. we are buying a house and the land is in front and there is no legal access to the house without owning the land. The agent selling the house is not interested in dealing with it. I have been told that I should not contact the sellers direct by my solicitor..This situation is getting silly and I think the best option is to walk away.

anselld

If you are planning to walk anyway then the first step would be to tell the vendors you will walk if they do not remove the overage.  You don’t need the expensive boss solicitor to do that.