House Sale Agreement on Planning Permission

[lufup]

Hello,

We are interested in a house where the vendors have signed a legal agreement with a developer that essentially says if they get granted planning in the next 15 years the house will be sold to them at that point in time. They purchase the house and use it as part of whatever new development gets approved, and you get 200k for the trouble + market value of the house at that time.

I'm trying to work out if this is a decent opportunity or a something to run from?

Pros:

• 200k is a nice bonus if you don't mind potentially having to move house again, I dont.

Cons:

• Might be difficult to sell the property if required in the mean time? Especially during the window of a planning application being assessed.
• What happens if forced to sell during a period of low house prices? I guess the 200k would hopefully balance everything out
• After the agreement expires in 15 years, I guess they either give up or find alternate plans. No better or worse off.

Unsures:

• Could the market value of the property be loads lower at the point it is independently assessed due to planning just being granted? I guess the 200k would make up for this.

It's a 400k house for reference, that we really like - what would you do?

Can the vendors actually sell? When I had an option agreement with a builder which it sounds like this is I could not sell to anyone else.

Is the agreement capable of being assigned? Are the developers not interested in buying it?

Being forced to sell when prices are low isn't the issue - if you are, then what you are buying will be lower too.

But if you are forced to sell/buy when prices are rising or fluctuating you could get stung. What does 'market value' mean? Who decides and how long is this valid?

Thanks all - the option is transferable if they wish to sell the property. And market value comes from a neutral/independent surveyor.

I think the 200k will devalue over the 15 years, and the developers would potentially be getting a bargain. I wouldn’t buy the house. I wouldn’t be able to settle in it if I may be forced to sell. Plus if you wanted to sell again within the 15 years I think you could struggle

I would not be happy with one valuation. Part of the problem is that you have to accept the contract as it stands with no option to negotiate.

If you are buying with a mortgage your mortgage company will need to consent to the option which cause problems.

15 years is a very long time.the closer that deadline gets the harder it will be to sell on ahain. You'll burn through a fair bit of the £200k with and extra set of moving costs.

Actually, I would consider going for this, as you don't mind having to move again. I would definitely low-ball my offer though, lots of people would shy away from this sort of complication so, as you say, there may be difficulty selling it on in the future.

My biggest worry would be timescales. Do you know how long you will have between the developer informing you that they have planning permission and you having to move out? I find that my life has a tendency to cluster fuck, so you can bet that getting notice to move out would coincide with a ton of other one-off but time consuming things.

Usually open market valuation clauses are drafted so that options/overgage proviosns are disregarded for the purposes of the valuation.

Thanks, I hand't considered it might be a problem with getting a mortgage. Thinking about it though, the mortgage valuer would more than likely come to the conclusion that the option/overage would effect resale possibilities. The risk of getting rejected by the bank once they get to the point of valuing sounds like too much hassle I think sadly.