Overage Agreement, Is this reasonable?

[blueg33]

Murph7355 said:

blueg33 said:

...Many people don't have the cash needed to get planning. Op just needs to ensure planning costs are deducted from the valuation and that overage is based on land value not the developed value

Then sell the land separately if they believe it has value.

Ts and Cs are a minefield IMO and I wouldn't touch it with a bargepole. Normal or not.

OP - is the property itself relatively unique or can you assess how fairly it's priced?

Selling the land separately may require rights over the property that can be messy at this stage, plus the planning stagus may mean that the site isnt ready to come forward now.

I wouldn't let the overage put me off, i would rather control what is built on land adjoining my property.

[gf15]

Hi All,
Really appreciate the info.
Negotiations ongoing.
The reason for the Overage is very plain and simple, the vendor does not want anything building on it, but needs the cash to buy some land adjacent to his land at the other end of his farm.
The reason we want the land is to stop anyone building on the land, destroying our view. The land is priced as agricultural land. It is in a national park.

We are optimistic that we can get to a good agreement.
Cheers

[gf15]

blueg33 said:

Selling the land separately may require rights over the property that can be messy at this stage, plus the planning stagus may mean that the site isnt ready to come forward now.

I wouldn't let the overage put me off, i would rather control what is built on land adjoining my property.

Nail on head. We are buying the land to prevent anyone else building on it!
House is very big, so when we get old and recover from the cost of stamp duty, we would like the option to build a retirement pad on the land, and sell the main house.
I will update once resolved.

[Vocal Minority]

dickymint said:

Am I right in saying you don't have to own the land to apply/obtain planning? Which could be a bummer for you if you don't tie this down!

Correct. You just need to notify (and possibly gain permission of, but not certain) the land owner

[Chrisgr31]

blueg33 said:

I wouldn't let the overage put me off, i would rather control what is built on land adjoining my property.

I think this is the case in a number of overage cases. Sellers may not want the land built on for sentimental reasons. They like the house like the area and want future generations to enjoy it as it is without being built on. They are therefore willing to sell at a price which does not reflect development potential but then if soeone does go against their wishes claw it back.

[RYH64E]

Some Gump said:

Some people are utter muppets. Tell them to either get planning and add value themselves, or sell you it and be done. Clearly they think that they deserve to earn from other people's work?

I have no idea how people think this is normal - you wouldn't sell a band a tape but claim ulift in value if they happen to record a popular song on it...

The seller is perfectly entitled to ask for it and the buyer is perfectly entitled to accept or decline as they choose, though declining may mean not buying.

There's no muppetry involved, if the buyer doesn't like it then they don't have to buy, but there's no obligation on any seller to comply with the wishes of any particular buyer.

[Vocal Minority]

Precisely - no one is a muppet here.

They don't have the planning and if there is an overage clause, there is presumably a very realistic chance of getting planning? Well if there is its value is higher than merely 'a field' That it is and in the state it is in.

So you are buying it under value, with the seller getting a clawback if you decide to take planning. So you don't have to pay for the benefit if you don't wish to exploit it.

Nothing sounds wholly unusual - the principal is certainly very common and widely used.

If you don't intend to exploit any development potential it works well for you

[blueg33]

Vocal Minority said:

dickymint said:

Am I right in saying you don't have to own the land to apply/obtain planning? Which could be a bummer for you if you don't tie this down!

Correct. You just need to notify (and possibly gain permission of, but not certain) the land owner

Only notify. But the planners can consider whether a consent is capable of being implemented, especially if the justification is meeting housing numbers.

[Murph7355]

gf15 said:

Nail on head. We are buying the land to prevent anyone else building on it!
House is very big, so when we get old and recover from the cost of stamp duty, we would like the option to build a retirement pad on the land, and sell the main house.
I will update once resolved.

Is the vendor aware?

From your prior post to this I would have thought a covenant on the land to prevent building on it would be possible, but then if you do want to build on it later, perhaps not...

[Equus]

blueg33 said:

...the planners can consider whether a consent is capable of being implemented.

Though only to a very limited degree, where actual ownership of the land is concerned.

Neither the applicant's personal circumstances (ie. whether or not they have the cash and the rights of ownership to deliver the scheme, amongst other things) nor private issues of land ownership are 'material considerations' under Planning law. It would indeed pretty much depend on whether the principal justification for the proposal was delivery of housing numbers in the face of a shortfall, on an otherwise not-very-suitable site, before this became a reasonable consideration for the LPA.

An idiot's guide for others (I know that you certainly don't need one, Nick!) as to what can and can't be considered when determining Planning Applications is available here.

[blueg33]

Equus said:

Though only to a very limited degree, where actual ownership of the land is concerned.

Indeed. It has happened to me once in 30 years and that was actually down to a land Registry error and an objector raised it.

[herewego]

Are you guys saying that planning don't take into account the ability of the developer/builder to complete the project? I've been given to understand that that's important to planners.

[blueg33]

herewego said:

Are you guys saying that planning don't take into account the ability of the developer/builder to complete the project? I've been given to understand that that's important to planners.

Yes, its not really a material consideration, although make some noise about it as an objector and it can have bearing.

Where are site is being justified because an Authority has a shortfall of housing numbers then the Council and Inspectorate do look at the ability of the consent to be implemented (implemented is not he same as completed).

In the SHLAA (strategic housing land availability assessment) the Council have to consider whether the proposed/identified sites are likely to be available for development. eg there is no point is saying that a brownfield site can accommodate 200 houses, if that site is occupied by a successful and working factory, likewise houses with huge back gardens may be assembled to create a site, but unless that assembly has been done and a developer has control then the land can't be used to support the housing numbers.

[Equus]

herewego said:

Are you guys saying that planning don't take into account the ability of the developer/builder to complete the project? I've been given to understand that that's important to planners.

Broadly correct, yes... but more than that: with very limited exceptions, they're legally not allowed to take it into consideration.

As blueg33 says, the reality is that it can help sway a Planning Committee (or even a professional Planning Officer) to some degree, but it shouldn't, and if it were the main or only reason for refusal, chances are it would be very easy to get that refusal overturned at Appeal.



Off-topic, but have a look at that list of material and non-material considerations that I linked to above: it's surprising how many objectors to Planning applications whinge on about stuff that simply isn't legally capable of being considered when determining the application.

Favourites are 'you're devaluing my property' (we don't care, it's a house, not an investment fund), 'you're blocking the lovely view of open countryside that I've enjoyed for 50 years' (sorry, you don't have a 'right' to that view) and 'the construction traffic will make my life a misery' (live with it; construction phase impacts are not a valid consideration).

My personal favourite is to use pre-application public consultation events to wind the NIMBYs up into a blue funk over all those nasty Affordable houses we're going to fill with scrotes and low-lifes, devaluing their properties, shagging their daughters and selling their sons drugs, safe in the knowledge that the resultant objections will just make them look like reactionary idiots and will (metaphorically) go straight in the bin...

[blueg33]

Equus said:

My personal favourite is to use pre-application public consultation events to wind the NIMBYs up into a blue funk over all those nasty Affordable houses we're going to fill with scrotes and low-lifes, devaluing their properties, shagging their daughters and selling their sons drugs, safe in the knowledge that the resultant objections will just make them look like reactionary idiots and will (metaphorically) go straight in the bin...

Bad person

We had a public consultation get very scary last year. Two of us presenting, the plan involved the demolition of a pub.

Turns out the pub is a favourite of Hells Angels and about 100 of them turned up en-masse complete with knuckle dusters etc. Suddenly the alternate site looked a lot more appealing!

We are now in build on the alternate, the other is still a pub but it has closed

[Mr Pointy]

Equus said:

Broadly correct, yes... but more than that: with very limited exceptions, they're legally not allowed to take it into consideration.

As blueg33 says, the reality is that it can help sway a Planning Committee (or even a professional Planning Officer) to some degree, but it shouldn't, and if it were the main or only reason for refusal, chances are it would be very easy to get that refusal overturned at Appeal.

Off-topic, but have a look at that list of material and non-material considerations that I linked to above: it's surprising how many objectors to Planning applications whinge on about stuff that simply isn't legally capable of being considered when determining the application.

Favourites are 'you're devaluing my property' (we don't care, it's a house, not an investment fund), 'you're blocking the lovely view of open countryside that I've enjoyed for 50 years' (sorry, you don't have a 'right' to that view) and 'the construction traffic will make my life a misery' (live with it; construction phase impacts are not a valid consideration).

My personal favourite is to use pre-application public consultation events to wind the NIMBYs up into a blue funk over all those nasty Affordable houses we're going to fill with scrotes and low-lifes, devaluing their properties, shagging their daughters and selling their sons drugs, safe in the knowledge that the resultant objections will just make them look like reactionary idiots and will (metaphorically) go straight in the bin..

Excellent. The Daily Mail are going to love this quote.

[gf15]

HI All,

OK, all resolved to our satisfaction. Land has been purchased at agricultural rate. Overage duration and percentage have both been negotiated down by a reasonable chunk. It is in a National park and unlikely to ever be granted planning, it is all about peace of mind and protecting us from someone developing in our view.

Your advice has contributing to ensuring that we have ended up in an advantageous position.
Thank you as always.
GF15

[blueg33]

Well done op.

[Thundersports]

Need a little advice please. I've read through various threads on here about overage but have a question;

what happens if the company buying the land giving the vendor an overage goes under? Does the overage go with them?

Thanks.

[blueg33]

Thundersports said:

Need a little advice please. I've read through various threads on here about overage but have a question;

what happens if the company buying the land giving the vendor an overage goes under? Does the overage go with them?

Thanks.

The overage is paid by the land owner under which development takes place to the previous land owner who put the overage in place.

The overage is usually protected by an entry on the title (via the transfer). So whoever buys the land the pays the overage.

It get complex depending on the wording of the overage and whether:
a. The buyer has exchanged contracts or completed
b. Whether the buyer has obtained planning

But basically -

if the sale has completed and the land has planning the overage should have already been paid (if not then the landowner is a creditor, but a sensible lawyer would have put a charge on the land so that the overage can be recovered when the land is sold to settle the company's debts)

If the sale has exchanged , then usually there is a clause that means the contract falls away in the event of insolvency, so the land isn't sold and the overage is not due. If that clause isn't there, then the buyer will default on the purchase, or the administrators will progress the sale, add the land to the asset register and the overage should be paid.

But - there are many nuances depending on the wording of every agreement and the planning status and status of other events that trigger the overage.

The 1 word answer to the question is - MESSY