Overage

lostinrates

Primelocation sent me way more than average number of things to look at today. Most of them with overage.

Overage seems so wretchedly unfair to me. I would sort o understand if selling to develepers to put on a huge plot, but for one residential dwelling on a property to remain a rural enterprise....no wonder people are priced out of their local rural areas. Then people complain when 'city folks' move in or the site is overeveloped.

Sorry, rant over.:o

dopester

Explain to me what overage is in this example please.

I always thought it was if you sell land on, there are conditions that if the next person develops it and sell it on for a profit, the previous owner gets a share of that profit?

Am I wrong?

lostinrates

dopester wrote: »

Explain to me what overage is in this example please.

I always thought it was if you sell land on, there are conditions that if the next person develops it and sell it on for a profit, the previous owner gets a share of that profit?

Am I wrong?

I don't know now, you only have to pay it if you sell? Hang on, let me check some details......I thought from the way it read on a few it was if you got the planning through you had to pay....

now if its only when you sell, well, thats a different kettle of fish.....

I'll be back on this when I've foun the details I sent to the recycle tray in frustration......

Thank you dopester

lostinrates

A typical scenario would be : On completion a Buyer pays £x for a piece of land and the Seller is aware of the Buyer’s intention to develop the land. Overage provisions are negotiated into the contract of sale to ensure that once planning is obtained, the Seller receives a proportion of thhe increase in the value of the land.

From this soliciter's site : http://www.tltsolicitors.com/legal-update/Property-Update/P4776.asp

Hmm, so that indicates when value is increased, not when realised.....

I don't know!

Debt_Free_Chick

lostinrates wrote: »

A typical scenario would be : On completion a Buyer pays £x for a piece of land and the Seller is aware of the Buyer’s intention to develop the land. Overage provisions are negotiated into the contract of sale to ensure that once planning is obtained, the Seller receives a proportion of thhe increase in the value of the land.

From this soliciter's site : http://www.tltsolicitors.com/legal-update/Property-Update/P4776.asp

Hmm, so that indicates when value is increased, not when realised.....

I don't know!

My view (FWIW) .....

Overage conditions are specific to each property. The term describes just the general principle. So some sellers will want £x if planning is granted; others only want it if you sell.

But .... it's all up for negotiation.

You could ask PL for a brief description of what the seller has in mind.

BUT ...... you don't have to develop what you buy. If what you buy is what you want without the need to develop, then you can agree to any overage conditions you like if you have no desire to develop

So .... don't automatically dismiss all properties with overage

lostinrates

Thanks Debt_Free_Chick, I agree, but in this instance i would be looking to build a home on the site (while running a rural enterprise )

Reds-on-Sea

hiya, I just bought an ex-MOD home that has an overage provision attached to it. It does seem unfair to put it on residential properties hey? 3 bed semi - large garden, whole garden subject to overage for the next 80 years. Anything that requires planning permission, and gets built, we have to pay 50% of the difference in value of the house with the new extension (or whatever) to Annington Homes when we sell. So if we spent £20k on an extension, but the extension increased the house price by say, £40k, we'd then have to pay £20K overage - therefore in essence paying a total of £40k for our extension. There are other, similar provisions around, one of which being 'clawback' this is worse - it's when you have to pay the increase in the value of that area of land as soon as planning permission is obtained, regardless of whether you build on it or not. it's all to do with potential value, and not current value.

Needless to say, lucky that OH and I hate extension s and would never build one. Provision also affects House value (and valuations need to know about it) We tried to negotiate, but they wouldn't budge an inch!! i posted about this a while back Iostrinates if you do a search, you might find my post

Captain_Mainwaring_2

What did you pay for it?

dubsey

We looked at property that had something like that on the huge garden which the current owner didn't want turned into lots of houses. He had real trouble selling because of it and because of the wording used. His basically meant that if we had later sold and the land had increased in value by us either building an extension, or even landscaping that bit of garden he was entitled to half the profit. This was in place to even pass to his children if he died, so forever pretty much. We didn't buy it, but someone has although that was about three years ago and there's no sign of any improvements to the land.

As debt-free chick says, don't dismiss them but do get a solicitor to check the exact wording on the terms.

zebulon

mh, I wonder, does it work the other way round :rolleyes:

if by the time you build an extansion the house price/value drop (like...right now) - do you get to receive money then :rotfl:

Reds-on-Sea

Captain_Mainwaring wrote: »

What did you pay for it?

take it that was for me? 201k a LOT of house for my money round our way in a lovely location too.