Overage in property sales - Revision history

Designing Buildings at 05:25, 22 October 2020

2020-10-22T05:25:58Z

← Older revision		Revision as of 05:25, 22 October 2020
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	* Technical due diligence.		* Technical due diligence.

−	[[Category:Property_law]] [[Category:Property_development]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Property_law]] [[Category:Property_development]]

Editor at 12:42, 26 April 2017

2017-04-26T12:42:26Z

← Older revision		Revision as of 12:42, 26 April 2017
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		+	Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional payment may be made to the seller after the sale has been completed as a consequence of the property increasing in value.

−	Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional payment may be made to the seller after the sale has been completed as a consequence of the property increasing in value. Such circumstances generally relate to the granting of new or additional planning permissions, for example:	+	Such circumstances generally relate to the granting of new or additional planning permissions, for example:
−	*The granting of planning permission for more intensive development of a site than was envisaged at the time of the sale.	+
−	*The granting of detailed permission for more intensive development than was permitted in a previous outline permission.	+	* The granting of planning permission for more intensive development of a site than was envisaged at the time of the sale.
−	*The granting of permission for the demolition of an existing property and redevelopment of the land.	+	* The granting of detailed permission for more intensive development than was permitted in a previous outline permission.
−	*The granting of permission for change of use.	+	* The granting of permission for the demolition of an existing property and redevelopment of the land.
		+	* The granting of permission for change of use.

	Other circumstances might include:		Other circumstances might include:
−	*Development costs being lower than expected, for example where decontamination of a site is required	+
−	*A sale being necessary at a low point in the market.	+	* Development costs being lower than expected, for example where decontamination of a site is required
		+	* A sale being necessary at a low point in the market.

	These agreements are a means of sharing the risk and potential benefits of the future value of property between the buyer and the seller at a time when there may be some uncertainty, but where both parties wish to complete the transaction.		These agreements are a means of sharing the risk and potential benefits of the future value of property between the buyer and the seller at a time when there may be some uncertainty, but where both parties wish to complete the transaction.
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	=== Related articles on Designing Buildings Wiki ===		=== Related articles on Designing Buildings Wiki ===
−	*Partnering and joint ventures for construction.
−	*Property development finance.
−	*Residual valuation of land.
−	*Restrictive covenant.
−	*Site appraisal.
−	*Site information.
−	*Site selection and acquisition.
−	*Site surveys.
−	*Technical due diligence.

−	[[Category:Property_law]]	+	* Mezzanine finance.
−	[[Category:Property_development]]	+	* Partnering and joint ventures for construction.
		+	* Property development finance.
		+	* Residual valuation of land.
		+	* Restrictive covenant.
		+	* Site appraisal.
		+	* Site information.
		+	* Site selection and acquisition.
		+	* Site surveys.
		+	* Technical due diligence.
		+
		+	[[Category:Property_law]] [[Category:Property_development]]

Designing Buildings: moved Overage to Overage in property sales

2014-12-15T08:10:07Z

moved Overage to Overage in property sales

← Older revision

Revision as of 08:10, 15 December 2014

Designing Buildings at 08:15, 19 August 2014

2014-08-19T08:15:23Z

← Older revision		Revision as of 08:15, 19 August 2014
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−		+	Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional payment may be made to the seller after the sale has been completed as a consequence of the property increasing in value. Such circumstances generally relate to the granting of new or additional planning permissions, for example:
−	Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional payment may be made to the seller after the sale has been completed as a consequence of the property increasing in value. Such circumstances generally relate to granting of new or additional planning permissions, for example:	+
	*The granting of planning permission for more intensive development of a site than was envisaged at the time of the sale.		*The granting of planning permission for more intensive development of a site than was envisaged at the time of the sale.
−	*The granting of detailed permission for more intensive development was permitted in a previous outline permission.	+	*The granting of detailed permission for more intensive development than was permitted in a previous outline permission.
−	*The granting of permission for the demolition of existing property and redevelopment of the land.	+	*The granting of permission for the demolition of an existing property and redevelopment of the land.
	*The granting of permission for change of use.		*The granting of permission for change of use.

−	Other circumstances might include~~, development~~ costs being lower than expected, for example where decontamination of a site is required~~, or where the~~ sale ~~was forced~~ at a low point in the market.	+	Other circumstances might include:
		+	*Development costs being lower than expected, for example where decontamination of a site is required
		+	*A sale being necessary at a low point in the market.

−	These agreements are a means of sharing the risk and potential benefits of the future value ~~use~~ of ~~the~~ property between the buyer and the seller at a time when there may be some uncertainty, but where both parties wish to complete the transaction.	+	These agreements are a means of sharing the risk and potential benefits of the future value of property between the buyer and the seller at a time when there may be some uncertainty, but where both parties wish to complete the transaction.

−	This is particularly common on residential plots ~~when~~ there is often uncertainty about the density of development that will be achieved, and so the parties might agree to share additional sales revenue beyond a base figure agreed at the time of the sale. Overage agreements might also be made with mezzanine lenders who finance the gap between the costs of development and limited recourse loans.	+	This is particularly common on residential plots where there is often uncertainty about the density of development that will be achieved, and so the parties might agree to share additional sales revenue beyond a base figure agreed at the time of the sale. Overage agreements might also be made with mezzanine lenders who finance the gap between the costs of development and limited recourse loans.

	The exact nature, circumstances and duration of overage agreements will depend on the particular arrangements that the parties agree to, but they may not last more than eighty years. Agreements may be positive, with an agreement to additional payment under certain circumstances, or negative, with certain development requiring the consent of the seller.		The exact nature, circumstances and duration of overage agreements will depend on the particular arrangements that the parties agree to, but they may not last more than eighty years. Agreements may be positive, with an agreement to additional payment under certain circumstances, or negative, with certain development requiring the consent of the seller.
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	Agreements may be enforced on future owners, either by making restrictions on the title to the property requiring future owners to enter into a deed of covenant, or by imposing a charge on the property.		Agreements may be enforced on future owners, either by making restrictions on the title to the property requiring future owners to enter into a deed of covenant, or by imposing a charge on the property.

−	Overage agreements might influence the willingness of lenders to lend against a property, and can cause delays in future sales, which take place many years after the original agreement was made~~, with some uncertainty about who the beneficiaries are~~.	+	Overage agreements might influence the willingness of lenders to lend against a property, and can cause delays in future sales, which take place many years after the original agreement was made.

	Additional stamp duty land tax may be payable by the buyer when an overage payment is made.		Additional stamp duty land tax may be payable by the buyer when an overage payment is made.

Designing Buildings: Created page with " Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional pa..."

2014-08-19T08:11:38Z

Created page with " Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional pa..."

New page

Overage (sometimes referred to as ‘clawback’ or ‘uplift’) is an agreement between the buyer of a property and the seller that under certain circumstances, additional payment may be made to the seller after the sale has been completed as a consequence of the property increasing in value. Such circumstances generally relate to granting of new or additional planning permissions, for example:
*The granting of planning permission for more intensive development of a site than was envisaged at the time of the sale.
*The granting of detailed permission for more intensive development was permitted in a previous outline permission.
*The granting of permission for the demolition of existing property and redevelopment of the land.
*The granting of permission for change of use.

Other circumstances might include, development costs being lower than expected, for example where decontamination of a site is required, or where the sale was forced at a low point in the market.

These agreements are a means of sharing the risk and potential benefits of the future value use of the property between the buyer and the seller at a time when there may be some uncertainty, but where both parties wish to complete the transaction.

This is particularly common on residential plots when there is often uncertainty about the density of development that will be achieved, and so the parties might agree to share additional sales revenue beyond a base figure agreed at the time of the sale. Overage agreements might also be made with mezzanine lenders who finance the gap between the costs of development and limited recourse loans.

The exact nature, circumstances and duration of overage agreements will depend on the particular arrangements that the parties agree to, but they may not last more than eighty years. Agreements may be positive, with an agreement to additional payment under certain circumstances, or negative, with certain development requiring the consent of the seller.

Overage may become payable on completion of the development, on the granting or implementation of planning permission, or on the re-sale or leasing of the property. It is important that this trigger point is set so that the original buyer is not able to continually delay the payment, for example by not ‘completing’ the development.

Agreements may be enforced on future owners, either by making restrictions on the title to the property requiring future owners to enter into a deed of covenant, or by imposing a charge on the property.

Overage agreements might influence the willingness of lenders to lend against a property, and can cause delays in future sales, which take place many years after the original agreement was made, with some uncertainty about who the beneficiaries are.

Additional stamp duty land tax may be payable by the buyer when an overage payment is made.

= Find out more =

=== Related articles on Designing Buildings Wiki ===
*Partnering and joint ventures for construction.
*Property development finance.
*Residual valuation of land.
*Restrictive covenant.
*Site appraisal.
*Site information.
*Site selection and acquisition.
*Site surveys.
*Technical due diligence.

[[Category:Property_law]]
[[Category:Property_development]]