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Overage clause

mugatool
mugatool Posts: 16 Forumite
in House buying, renting & selling
I will consult a specialist lawyer but wanted to get some opinions from MSE.

I've come across a piece of land that has overage provision that entitles the seller to 35% of increase in land value if planning permission is granted. This is quite a large piece of land in a good area. If planning permission was granted for the whole area (about 40 acres) and the land value shot up, would the money have to be paid immediately to the sellers or could property be developed on it before payment is given. I believe the overage provision has prevented any large scale developers from buying it or anyone else really.

Comments

  • davidmcn
    davidmcn Posts: 23,596 Forumite
    Name Dropper First Anniversary First Post
    It depends what the clause says. Do you have the full wording?
  • da_rule
    da_rule Posts: 3,618 Forumite
    First Post First Anniversary
    As has been said it will depend on the exact wording as to when the payment becomes due. However, if it is silent then you may be able to negotiate.
  • mugatool
    mugatool Posts: 16 Forumite
    The exact clause:

    All sites are sold subject to an overage provision that shall entitle the seller to 35% of the increase in land value resulting from planning permission being granted within the next 80 years.
  • da_rule
    da_rule Posts: 3,618 Forumite
    First Post First Anniversary
    That sounds more like a summary than the actual clause. In my experience, overage provisions can run to multiple pages.
  • mugatool
    mugatool Posts: 16 Forumite
    I have asked for the legal documents from the vendor for my solicitor but in my experience, farmland like this usually has overage clauses
  • eddddy
    eddddy Posts: 16,436 Forumite
    First Anniversary First Post Name Dropper
    mugatool wrote: »
    The exact clause:

    All sites are sold subject to an overage provision that shall entitle the seller to 35% of the increase in land value resulting from planning permission being granted within the next 80 years.

    As others say, that sounds like it's come from some marketing material, rather than a contract or deed.

    But it suggests that the overage becomes payable when planning consent is granted - as opposed to when development is completed, or when the land is re-sold following planning consent.

    At this stage, it's probably best to ask whoever is marketing the property.
  • Richard_Webster
    Richard_Webster Posts: 7,646 Forumite
    First Anniversary First Post Combo Breaker
    Unless they've changed the rules I think you have to pay SDLT on the extra value now. You can claim the extra back in 80 years time if no planning permission is given!
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
  • Surrey_EA
    Surrey_EA Posts: 2,042 Forumite
    First Anniversary First Post
    eddddy wrote: »

    But it suggests that the overage becomes payable when planning consent is granted - as opposed to when development is completed, or when the land is re-sold following planning consent.

    That's what it suggests to me to, given the way the OP has phrased it.

    Which is a problem as there may not be anything to prevent the beneficiary of the overage clause putting in a planning application, which turns out to be successful, and triggering the payment.

    80 years would seem to be a rather long period of time for an overage clause to be in place.
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