Clawbacks in Land Purchase

Landlord Discussion Property Investment
1

Hi,
I am planning to buy a leasehold land which is owned by the Highway Authority.
I can see some clawbacks in the document like

if I get planning permission or if I do any development in the land within the next 25 years, I need to pay 30% of the market value.

This property is used for some storage purpose at the moment.

This is a leasehold land. If I buy the Freehold of it (it belongs to a third party), will I still need to honour the clawback when any event in the clawback happens?

Thanks,

2

I am not an expert in this but i suspect that the highways would not have put this clawback in if it was not enforceable under any circumstance

3

If it is the granting of planning permision that triggers the payment back to highways , then you will probably know that anyone can apply for planning on someone elses land ! So at the very least have it written in that only you or your descendants will be liable to trigger it. Also anyone you sell onto within this timeframe will be liable to pay the uplift

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4

If I buy the Freehold, will the clawbacks removed automatically or will it be still the case - I need to honour the clawbacks?

5

you are making an agreement with the current seller it has nothing to do with a freeholder

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6

Thanks @Colin3, if that is the case then I will not go for this land, I will try to find something without any clawbacks.

7

you may find this difficult . Although i have just bought my home with 3/4 acre near the canal in lancs with enough room to put three homes in the garden . Surprisingly no clawbacks . not that I intend to build unless it is a home for my kids . 3 years ago I bought an older industrial building near Liverpool city centre Which I run a business from . If demolished 3 houses could go on that No clawbacks.This is like finding Hens teeth . I acted and bought within a month You have to be quick and jump in , There is always someone with more cash! Maybe a surveyor could tell you what a poential £££ clawback would be? It may be still worthwhile. The clawback fee can be set against capital gains

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8

Thanks @Colin3, That is great.
The legal pack for this land says something like this -

  • The period that the clawback provisions are present is 25 years from the date of completion.
  • The permitted use of the land is storage, and the provisions of a temporary office building.
  • A Trigger Event is:
    • The grant of planning permission, including change of use.
    • The issue of a Section 192 Certificate (certificate of lawfulness)
    • The inclusion of the land as an allocate site in the development plan at the adoption stage of the development plan process.
    • The inclusion of the land as an allocate site in the development plan at the deposit draft stage in the development plan process with no objection received by local authority.

I believe, this purchase is going to put me in trouble.

9

This seems to be all one sided >on their side !! You could put in a higher offer Without a clawback and see what they say?

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10

Thanks @Colin3, Yes, that is really bad, the clawbacks are one sided. They are selling it in auction. So, if it is not sold in auction then I will try to contact the auction team to see if National Highways want to sell it without any clawbacks.

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11

is this open storage on the land with no permanent building?

12

There is a building in the land.

13

so a change in use will trigger a clawback. They have it sewn up unless it is still put to the same use AND is lawfull. AND so if you get aC of L from the local authority saying you do NOT need planning permision you still pay the uplift??!! Terrible clawback

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14

Yes, I am planning to build a semi-commercial. So, when I do a change of use, it will trigger clawback.
So, I believe the best thing I can do is, if the land is not sold in auction then contact them to see if they can sell it without clawbacks.

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15

Ask them to remove the clawback as a condition of continuing. Don’t touch anything where the trigger is granting of planning permission. Anyone can apply for planning they do not need to own the land.

16

I said this way back in this posting

17

They did not want to remove the clawbacks, so I am not buying it - it is going to be very expensive in the future if I buy it with clawbacks. Thank you so much.

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18

This is a common condition when buying a disused church - we’ve done this on a few occasions and have had to share the consequential uplift in value when we did the development.

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