Selling Land ' Have You Considered Everything?

• Published date: 13 August 2020
• Subject Matter: Real Estate and Construction, Real Estate
• Law Firm: Butcher & Barlow
• Author: Ms Jade Atkinson

If you are selling a piece of land, there is more to consider than just asking price. Solicitor Jade Aktinson explains what other factors should be taken in to account.

In my work at Butcher and Barlow I can often act for people with land to sell. Many imagine it's a straight-forward transaction. You set a price and wait for the offers. Whilst this can be the case there are things you should consider other than just the asking price of the land itself. You should also think about its potential use and if that could provide you with an additional income long after the ink has dried on the initial sale contract.

The UK needs to build around 250,000 new homes each year to meet the current housing demand. Sellers of land should consider whether there is potential for the land they're selling to be re-developed in the future. Where there is development potential, sellers ought to consider protecting their position by imposing an Overage Provision. If you don't, you could miss out on a higher sale price if the value of the land subsequently increases.

This overage describes a sum of money, a seller may be entitled to receive, in addition to the original sale price. Within the land sale contract, it is possible for a seller to establish a right to a future payment if a relevant trigger event occurs within a defined period of time after completion.

A simple version of an Overage Provision might state that a further fixed sum would be payable for each additional dwelling built on the land. There are, however, numerous different forms of wording - some of which rely on a more complex valuation mechanism to calculate the additional payment. For example, a seller and a buyer might agree that if the land is developed within 25 years of completion the buyer will...