Non payment of development/uplift clause

[Still Farming]

Claw back should oblige landowner to keep claw back beneficiary informed of planning application but they may not.
Keeping an eye on land is advisable if claw back on perhaps a small paddock suitable for perhaps 1 house for landowner.
If the trigger for payment is the grant of planning permission or implementation of planning permission it is possible that a house could be built and lived in by owner and you would not know. The land registry restriction will only be of benefit if house sold which may be in many years time.
This of course is not a problem if you are talking about large scale development as the houses will be sold by the developer.

So in essence, all ok if someone still alive or knows about it and keep eye on it?

 

[rob1]

Know of a 500 acre farm, bought in 1986 for £600k, sold in 2012 for £7m and has a 30 year clawback on it.
he owned it 27 years, received an 11,600% return on his money, and has a clawback on the land despite zero risk.
Is that reasonable?

Its a free world no one is forced to buy land with a claw back, I did so in order to have control over the family farm and if it got sold for building would happily pay it over.

 

[ISCO]

Disagree
It’s clawbacks, covenants, iht relief, interest only mortgages and a raft of other bull muck that is the reason farmland is unrealistically and ridiculously expensive

I agree with some of the above but claw back or covenants preventing development usually depress price of land not increase it.

 

[Still Farming]

This is true as with beneficiaries under a will sometimes difficult to find.

Some or all could be dead?
Who would then go to the trouble to trace descendants and pay bill to find them?
The current owner is bound to keep quiet?

 

[Hampton]

Its a free world no one is forced to buy land with a claw back, I did so in order to have control over the family farm and if it got sold for building would happily pay it over.

I know and I understand that, I just think ten years is plenty.

 

[Still Farming]

I agree with some of the above but claw back or covenants preventing development usually depress price of land not increase it.

Plus an AHA or other long term tenancy?

 

[rob1]

Some or all could be dead?
Who would then go to the trouble to trace descendants and pay bill to find them?
The current owner is bound to keep quiet?

The cost to find them comes out of the uplift amount normally as do all costs of getting planning etc, if an uplift is registered you wont be able to sell without those who have the uplift right signing to say they have received the cash, no solicitor would allow a buyer to pass over the cash to the seller without that form being signed

 

[Doing it for the kids]

Disagree
It’s clawbacks, covenants, iht relief, interest only mortgages and a raft of other bull muck that is the reason farmland is unrealistically and ridiculously expensive

I guess it depends how your treat the land, an investment or something you want to farm. sadly (or not) farmland has, in the right location, got a lot more going for it now for non farming uses which had an affect on values.

selling land to a 3rd party for 4 figures who then sell it on a bit later for 6 would sting a bit if your father did that, especially if he inherited it.

 

[Hampton]

I guess it depends how your treat the land, an investment or something you want to farm. sadly (or not) farmland has, in the right location, got a lot more going for it now for non farming uses which had an affect on values.

selling land to a 3rd party for 4 figures who then sell it on a bit later for 6 would sting a bit if your father did that, especially if he inherited it.

The previous generations were a lot less tied to our farms than we were. Many bought and sold multiple farms over there lifetimes. It is the current farming generation that have the strongest links.

 

[ISCO]

I think that’s fine for a while, perhaps ten years, but after that I don’t think you should have any claim of it.
Imagine if it happened on houses! The housing market would collapse!

Claw back is designed to reserve a share of windfall increase due to development not just inflation increases nor, let's say, a house extension.
I doubt anyone would buy a house with a claw back on.
I would not think twice about buying land with a claw back. What's the worst that can happen; you get whatever percentage is agreed of any windfall.
There is also no obligation on landowner to sell for development so if you only give ag. value you can't lose.

 

[Doing it for the kids]

The previous generations were a lot less tied to our farms than we were. Many bought and sold multiple farms over there lifetimes. It is the current farming generation that have the strongest links.

i can’t disagree but how many farms got sold for development, or pockets off in our parents life time, vs today?

farm land was for farming back then, now it seems to have so many other more profitable uses (location, luck and patients depending)

 

[ISCO]

Know of a 500 acre farm, bought in 1986 for £600k, sold in 2012 for £7m and has a 30 year clawback on it.
he owned it 27 years, received an 11,600% return on his money, and has a clawback on the land despite zero risk.
Is that reasonable?

The deal would be freely entered into so yes it is reasonable in my view. No one is forced to accept a claw back, you can always walk away.
Personally, if I had £7m, I would happily have bought the farm and would be praying for development and would love to.make a large payment as there would be plenty left for me.

 

[ISCO]

So in essence, all ok if someone still alive or knows about it and keep eye on it?

Should be

 

[Hampton]

I understand all your arguments and you are factually correct. I just don’t agree with the sentiment of your argument for the reasons a stated above

 

[ISCO]

I can understand and respect your view, not saying you are wrong, just differing opinions.

 

[steveR]

I agree with some of the above but claw back or covenants preventing development usually depress price of land not increase it.

I thought the same recently when a block of land got sold, but all it needs is 2 keen folks at an auction....

 

[Doing it for the kids]

Be boring if we agreed on everything

 

[Farmer1001]

The term "uplift" or "clawback" is massively misleading, people tend to see those and made assumptions as to what they mean, whereas its the detail in the "deed" that needs looking at, ie what triggers the uplift date, what triggers the payment date etc as you can trigger the uplift date but not the payment. I recently saw an auction property that triggers the uplift date for valuation purposes as the date on which planning is "approved", yet the payment of uplift is the date on which the property is "sold", the logic of the solicitor was the payment would be easier to obtain if it coincided with a sale, he conveniently missed the point the property may never be sold after planning passed. the really stupid thing was the vendor was an elderly couple with no children!

We bought a farm in 2002 with a "50% uplift on the barns", the "supplemental deed" that covered the terms of the uplift was released 2 weeks before auction, the farm was a council property and the councils legal team drafted the deed, its was shocking in its drafting, it didn't allow for the fact the uplift was on the title of the farm but only related to the "barns", yet the farm was sold as a whole. It also stated the valuation was to be the "property" (not barns) the day before planning was granted, the uplift value was the value of the "barns" the day after planning was granted but before development had started, better still the deed allowed for certain cost deductions, these are normally those restricted to the cost of obtaining PP, our deed allowed the "costs to be incurred in bringing the barns into residential use"!

We knew the detail of the deed, we have bought numerous properties at auction, the latest was a farm on Thursday night this week, we never buy without getting the legal pack and obtaining legal advice, we never paid a penny in uplift, but did pay £15k in legal fees getting the deed released - 18 years after buying the farm and 14 years after getting the PP for our home.

Uplifts have their place, but they are being applied to many properties that are not suitable and without due consideration. The OP and the gypsy buyers shows the risk, because quite often the uplift gain is less than the legal costs associated with enforcing the uplift on those who dont have the cash or simply dont wish to pay it.

(edit) - uplifts put off buyers, therefore a clean title property can command a lot of the potential uplift value on the day, whereas an uplift can depress the sale price and delay the release of the actual value. Lot to be said for selling the hope than owning it.

 

[Wombat]

So legal team,agents to get back for who ever survives the former owner of said clawback.

The one on some of mine means it needs a signature from the holder of the claim if i sold it on

 

[ISCO]

The term "uplift" or "clawback" is massively misleading, people tend to see those and made assumptions as to what they mean, whereas its the detail in the "deed" that needs looking at, ie what triggers the uplift date, what triggers the payment date etc as you can trigger the uplift date but not the payment. I recently saw an auction property that triggers the uplift date for valuation purposes as the date on which planning is "approved", yet the payment of uplift is the date on which the property is "sold", the logic of the solicitor was the payment would be easier to obtain if it coincided with a sale, he conveniently missed the point the property may never be sold after planning passed. the really stupid thing was the vendor was an elderly couple with no children!

We bought a farm in 2002 with a "50% uplift on the barns", the "supplemental deed" that covered the terms of the uplift was released 2 weeks before auction, the farm was a council property and the councils legal team drafted the deed, its was shocking in its drafting, it didn't allow for the fact the uplift was on the title of the farm but only related to the "barns", yet the farm was sold as a whole. It also stated the valuation was to be the "property" (not barns) the day before planning was granted, the uplift value was the value of the "barns" the day after planning was granted but before development had started, better still the deed allowed for certain cost deductions, these are normally those restricted to the cost of obtaining PP, our deed allowed the "costs to be incurred in bringing the barns into residential use"!

We knew the detail of the deed, we have bought numerous properties at auction, the latest was a farm on Thursday night this week, we never buy without getting the legal pack and obtaining legal advice, we never paid a penny in uplift, but did pay £15k in legal fees getting the deed released - 18 years after buying the farm and 14 years after getting the PP for our home.

Uplifts have their place, but they are being applied to many properties that are not suitable and without due consideration. The OP and the gypsy buyers shows the risk, because quite often the uplift gain is less than the legal costs associated with enforcing the uplift on those who dont have the cash or simply dont wish to pay it.

(edit) - uplifts put off buyers, therefore a clean title property can command a lot of the potential uplift value on the day, whereas an uplift can depress the sale price and delay the release of the actual value. Lot to be said for selling the hope than owning it.

Problem with council legal departments is they don't have actual clients to keep them on their toes.