Just saw this on a house on the market. I think it’s shocking to be honest, but does anyone actually think it’s the right thing to do?

Future Development
Depending on the level of offer received it may be an essential condition of sale that any future development of the site will be subject to claw back provisions in favour of the seller. Further details on request from the agents.

I think its quite normal, especially on land purchases?

Either through a percentage of future added value by development, or a ransom strip along a road frontage to prevent development (i.e. another house on the plot) without having to negotiate with the original owner.

Whether its fair is another matter…

Suggests that the market wherever you live isn’t “healthy”. I can’t see that its so shocking, just surprised that more people don’t try it on.
What that statement suggests is that the people selling will be complete bell-ends and that however nice that property is it gets crossed off the list immediately.

It’s a good clause if you can get away with it. Seen it in a few commercial property purchase contracts. One wanted 50% of the increase in value if planning permission for change of use was granted. Easy money for them.

It’s very normal in my line of work.

In fact it’s even borderline mandatory in some government sales contracts (I’m looking at you MET police 😉 ) thanks to the NAO.

At the individual residential sale level (talking garden plot infill here) I think it’s taking the piss. If the vendor hasn’t got the gumption to work up an approved scheme for PP themselves, I dont see how they should have a piece of the uplift achieved by the buyer. But in land trades it’s quite common. An excessive overage clause will kill a deal so an intelligent seller will bear that in mind (commercial stuff anyway)

As an aside however, I believe that there should be a statutory planning gain tax of 50% of uplift in value achieved from any enhanced PP anyway, making most overage clauses (for that is what ^ they are) pretty meaningless or low value anyway.

Fairly common, especially on land. Land next to my parents house is for sale with such a clause and we owned a house which should have had a clawback but the original seller/landowner never claimed it (likely died) – we actually had insurance against any claim

We’ve walked away from several ventures after finding these causes included. As stoner says it’s just vendors who think they can make a bit extra without having the balls or funds to do it themselves.

You can always instruct your solicitor to make an offer subject to that clause being removed

Or negotiate percentage and duration; had it on the 2 acre field behind the last house, which was purchased from the Diocese. Initial clause was a ludicrous 100% uplift in perpetuity, but agreed to 50% for 80 years. Didn’t mind, as the house deal was so good, field development potential was so low and the large garden was not subject to the restriction. When we sold, our purchasers were unphased by the clause.

I don’t have a real problem with it – it’s really just a (fair?) way of of pricing in a foreseeable but uncertain value. Our planning/development process is inconsistent and not transparent. It results in very large windfall profits (Stoners planning gain tax would be a fair and equitable measure). There are many plots where there is no chance of planning permission now but possible in future (eg depending on which direction the council decides the town/village should expand in/ large plot of land in current green belt)

As a buyer it costs you nothing now. If you develop in future and win big you still keep some of it. What’s the issue?

Fairly standard practice…… In 2008 when everyone was dumping distressed assets, I purchased a block of six garages on a site I speculated would be a target for house builders. 4 years later and a long battle with Barratts and the Local authority I sold the garages to Barratts who needed the site to bring forward a 150 new houses development. The purchase price was below my valuation so I had a series of overage clauses in the sale which were triggered on sales values of the houses on site as well as the overall profit targets, which if exceeded would trigger overage payments to me.

My general take on it is that it’s for lazy, greedy sellers who can’t be arsed to do anything themselves. But I can see why it could be considered protecting against losing out in respect to any major planning legislation changes in the future where previously you had no chance of getting planning but then something changes and land you sold for peanuts is now worth a lot.

We have a 50% uplift on land we bought last year. Still has 10 years left but is worded very specifically to say “ouline or detail planning permission”. We are going for permitted development on the site and then will later apply for detail planning to add a green oak extension and I expect that will trigger the uplift on the value increase of the planning for the extension, all costs up to that point are taken into the base value (ie land cost, planning costs, converting the building initially etc) and not the value increase of the extra building works.

We do need to be careful as we need the original sellers (11 years ago into a 21 year uplift) permission to sell but with 10 years left and I expect 2 years until it’s all finished that only means 8 years of living in it and then we are free to do as we wish.

The uplift is only on C3 residential so my planning application for a new farm workshop/office don’t count either.

Apart from escaping £50-60k in uplift the PD is more likely to go through as they council will be very much against planning permission as it’s a rural location despite being within a village (closer to the centre of the village than some other houses further down the road).

Why not?
Its perfectly fair as no one needs to but the place if they don’t like it.
In some case I see it as a good thing as it may be a way of protecting an area ie stopping more development in a place that doesn’t deserve being developed.

We’re hoping to sell up this year, our Bungalow stands in approximately one and a quarter acres, the land has restricted access so chances of development are slim. If the plot had unfettered access it would be worth a million quid.
The bungalow itself is worth about £385k, now when we sell we don’t want an offer from some dreamer/speculator who strings us along while he/she looks into development feasibility and then after they hit a wall the sale falls through.
A future development clause would keep these clowns at bay.

It’s been going on for decades. Vendor tried it on when I bought our house in 2002 – I told them to get stuffed and the sale still went ahead.
We have 6 acres and will def be trying to get planning on part of it when we eventually decide to move on.

Guess you can look at it two ways:

1) Seller is a lazy/greed so and so, knows the land has development but cant be bothered to do the work themselves

2) (More likely imo): Seller has big garden, but despite selling the property, doesn’t really want to see it developed on. It’s there as a deterrent to developers? A house we were looking at, with a reasonable (for city center) garden, went to a guy who but another two houses on the garden, leaving three houses with no gardens at all. Kind of sad to see the patches of green disappearing. He wont care, as he’ll sell all three and move on.

Can you put a similar clause on a house to discourage/prevent it from being sold to BTL?

in the case of (2) above then why not just put a legal clause on it stating that the garden is not to built on for X years?

It all comes down to money. They want their cake now and a piece of someone else’s in future.

Family friends put in similar clauses when they had to sell their farm.
One small field on the edge of town that they couldn’t get planning on as they wouldn’t wine and dine the people that could approve it. They also added similar clauses to other fields that bordered the town with a hope of keeping the farm a farm as to lose 20 acres or so wouldn’t really make it viable for anyone.

Was fairly well planned as the eventual buyer was a developer (only bit of countryside between a popular north Cornwall town and a golf course). House and barns now converted and he just got a good payback on the small field as the developer has his ways of getting planning. Developer rents out the rest of the fields.

Assuming the seller is moving away and won’t be impacted by a house development or noisy tenants, is this some kind of nostalgic community spirited intention at play here? The buyers have the chance not to buy so it can’t be unfair on them.

A development for profit is different though.

A developer will be able to build houses for much cheaper per unit and is doing it purely for profit and no regard to the community etc. They will also be making enough money that the uplift doesnt concern them as there is still a good deal of profit left in it and they will probably be able to manipulate the books to make themselves even better off – eg have their own separate building company undertake the work and then only make a small profit on the actual house sales so the uplift residual is small.

But it can really affect someone who wants to build a single house for themselves to live in. Buying/building a farm/smallholding is nigh on impossible these days due to developers, horsey types and uplifts hiking up the costs of land and that is before you have to do battle with the local planning department.

I once knew of a buyer who bought a house that was only half finished (it had PP to develop a first floor on a bungalow) . There was a clause in the contract which stated that the vendor would be entitled to a percentage of any increase in value should the house sell over a certain figure. At the time of purchase the figure appeared fantastical, so the purchaser agreed. The house sold again during a boom in the market that was entirely unexpected, and the value doubled over the clause amount.

The original vendor was indeed a speculative greedy bastard who had been too skint to complete the work required, but the buyer couldn’t find a way out of the contract. They fell out big style, and it all got very, very messy.

I wouldn’t have anything to do with that sort of clause personally.

It all comes down to money. They want their cake now and a piece of someone else’s in future.

Whereas you just want all the cake, with sprinkles.
Lucky they are lazy gits, or you wouldn’t be getting it so cheap…

Sour grapes are oozing between your toes and dribbling onto this thread.

What if it was another commodity, say classic cars. If someone was selling a poor condition shell would anyone in their right mind buy it if they owed some of the value uplift to that seller after they’ve restored and sold it?

Depending on the level of offer received it may be an essential condition of sale that any future development of the site will be subject to claw back provisions in favour of the seller

Sounds to me like there is some scope for negotiation around that.

A nice house with a big garden was up for sale in our village last year with one of these clauses. They are not uncommon but – imo – if you can’t be arsed to make money developing a site yourself you are an annoying cheeky **** for expecting a kickback from the person who does make the effort, and I just wouldn’t buy a normal house with that kind of clause

Looking at it another way, it does give an opportunity to buyers who wouldn’t otherwise afford these houses. So you can buy the house at say 400k but pledge not to develop it, or you can pay 600k and be free to do so.

Edited… No one will know.

No, it doesn’t necessarily mean the seller is lazy, greedy or doesn’t have the balls to do it themselves. It might actually mean the seller doesn’t want to see development. Yes, I know that technically it’s not their business after they leave, but selling to a developer (even accidentally) would be likely to sour relationships with those still remaining there.

I sold a house recently where the owners (parents) were in their late 70s and wanted (needed!) shot of the house, does that make them lazy or greedy? As it happens we didn’t include the clause but we did consider it and the buyers would have been fine with it cos they didn’t want to develop anyway (so they said, and several months on, I’m confident they were honest).

We aren’t talking about a “no development” covenant though. If you don’t want development, you specify that in the contract.

We are talking about someone wanting a kickback in case the buyer takes advantage of an opportunity to do something the seller hasn’t done, for whatever reason.

for whatever reason

and that’s the thing, the reason might be that the current local plan prohibits development even if the current owner wishes to do it, all they’re doing is hedging against a change. The person buying pays a lower price than they would have done if dev was currently allowed.

My uncle faced this decision a few years back -sell his house and land for ‘x’ and see a developer knock down and build 2 other houses together worth ‘2.5x’ or do the job himself. He had the skills and time to organise the latter but not everyone does.