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Has anyone ever bought a house with an overage attached?(11 Posts)
Seems to be an increasingly common thing for houses we're looking at (houses with between 1-4 acres of land with them, currently used as gardens or agricultural). One of the houses we love wants 50% of "increase in value" overage for any planning permission granted for up to 25 years which seems outrageous. Has anyone bought a house with overage, or ideally negotiated one that was for sale with overage so it was reduced or removed? If you've bought with overage what was your experience if you tried to do anything in terms of planning?
No experience but I’ve seen such adverts asking for 20-25% so should be negotiable.
Thanks, I've seen a range (that's why the 50% seemed very steep in comparison) - but I suppose was hoping someone had had some experience negotiating, either to get rid of it entirely, reduce etc, or have bought with one in place
I work in an industry where overage is very much standard. It's due to the size of the plot and the potential that you could acquire planning for development and then sell the land on for massive profit.
Now I suppose it depends on whether you actually plan on selling it for development? If you don't then the overage clause should be of no consequence to you?
If you do want to develop on it in future like everything else in life the overage should be negotiable but you'll need a land agent whose experienced in this to advise what might be the best level? Lots of things can be deducted from the overage so 50% might seem a lot but might only amount fo a few thousand ££ by the time the deductions are made
If you're going to agree to this the clause needs to be drafted carefully by someone with an idea what they are talking about. You need to make sure that all the planning costs, professional fees etc etc etc are taken off any "profit" before you look at a split. This isn't something for a bulk conveyancer to play with.......
Personally I'd work more on reducing the time period hugely and making sure you carve-out extensions which you may want to do as the first priority.
I wouldn't be looking at developing anything to sell on - its more about improving the house/buildings already there (extension/granny annex type thing) for continued own residential use - which mostly means planning permission. This next house is the forever home so wouldn't be looking at selling - but then would have to fork out for 'increased value' (how is this even calculated given not sold?)
Obviously we'd be getting formal legal advice if we did do anything but more wanting to get a mumsnet sounding board for other peoples' experiences/thoughts!
I bought garden land off a neighbour with a covenant to remain garden land, but if not then an overage of 50% of the increase in value would be due to the successors of the person who sold it to me.
I second the person who said get a conveyancer who knows what they are doing. Neither of ours really did - it took a year to get the wording right and even then the previous poster's point about costs was missed!
Value is defined by a RICS surveyor.
Be clear what the mean by development if that term is used. Also it used to be that anyone could apply for planning permission - so that might leave you out of pocket! We went with planning permission and development started (foundations dug) as the trigger point for the overage.
A defined term of 25 years is reasonable - then it doesn't hang around forever into the future.
Every time the property is sold the restriction needs to transfer over - so the beneficiary needs to be involved.
I specifically wanted to exclude things like sheds, greenhouses, home offices from triggering the overage. They would be fine as long as they come under permitted development. So not planning permission. Permitted development is a lot larger now than it was.
I wouldn't extend my house onto the bought land so don't have your issue - but the permitted development rules allow a lot, unless you are in an AONB.
However planning rules may change in the 25 year life of it too!
Will it be a new overage (i.e. form the current owners), or historic and runnign with the land?
I often write my overage agreements for my clients.
50% is not unusual
Thanks @Rollercoaster1920 and others very helpful advice so far. The houses we're looking at would be for new overages (not sure if that's the plural...)
I think potential issue that would mean we would need pp might be that (in the case of one of the options), there are a couple of buildings that are currently agricultural right next to the house itself (old barns/sheds) that we'd want to convert into our own residential use.
Good point about the costs, I guess you would normally deduct the actual costs of build etc from the increase in value.
One of my relatives sold a house with some sort of covenent/overage clause (long time ago so I'm not sure of details). It was a beautiful house, with a large garden and could have been pulled down for a block of flats, but she wanted the neighbours to be reassured that wouldn't happen.
I think they can be used as a money grab, but more often it's about ensuring properties are kept reasonable for the surrounding area, rather than immediately developed. Hopefully that means ou can negotiate reasonable domestic use, but agree with pp that good legal advice is required.