property sale & uplift
Discussion
Some advice please - I have a commercial property which the current tenant would like to buy freehold. There's a commercial valuation for it however if it were to change use, or even become a house(s) it would obviously be worth a whole lot more. I'd happily sell if it were to continue it's current use, however I'd hate to lose out if they decide to make a quick-buck by change of use.
Is there a way to put a realistic uplift clause on the sale to protect me for subsequent sales - any recommendations for where to get advice on this?
thank-you
Is there a way to put a realistic uplift clause on the sale to protect me for subsequent sales - any recommendations for where to get advice on this?
thank-you
When does the lease expire? Even if the tenant is protected under the 54 Act you could object to a new lease under the grounds you wish to redevelop. Development would be to convert to residential.
You could do a valuation which would be existing use upto the end of the term and followed by conversion to domestic.
You could do a valuation which would be existing use upto the end of the term and followed by conversion to domestic.
What you are talking about is generally called "overage" and this crops up regularly on commercial property
There are several ways of setting this up but generally you would impose a contractual provision saying that if there was a change of use you would get a proportion of the additional value. Usually this would be between 25 and 50% so that there is some incentive on the buyer to try to realise the additional worth
You need some protection to avoid a couple of legal pitfalls but there are means of dealing with that - lawyer stuff that you don't really need to go into here. But it is easy to get wrong. You need someone who deals with these sorts of transactions on a regular basis to get it right
Depending on the circumstances a set up such as this would run for between five and ten years. That is long enough to catch any quick deal without tying up the land for too long
We do quite a few of these sorts of deals - acting for both sellers and buyers. If you want to chew the fat on the concept then email me off line
There are several ways of setting this up but generally you would impose a contractual provision saying that if there was a change of use you would get a proportion of the additional value. Usually this would be between 25 and 50% so that there is some incentive on the buyer to try to realise the additional worth
You need some protection to avoid a couple of legal pitfalls but there are means of dealing with that - lawyer stuff that you don't really need to go into here. But it is easy to get wrong. You need someone who deals with these sorts of transactions on a regular basis to get it right
Depending on the circumstances a set up such as this would run for between five and ten years. That is long enough to catch any quick deal without tying up the land for too long
We do quite a few of these sorts of deals - acting for both sellers and buyers. If you want to chew the fat on the concept then email me off line
billsnemesis said:
There are several ways of setting this up but generally you would impose a contractual provision saying that if there was a change of use you would get a proportion of the additional value. Usually this would be between 25 and 50% so that there is some incentive on the buyer to try to realise the additional worth
Little O/T but I saw details last week for an industrial estate for sale that had a 90% overage provision on change of use for 20 years!
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