The tale of the sale of our old house

[Jeremy Harris]

31 minutes ago, AliMcLeod said:

 

If i were them, there's no way I'd agree to have such a covenant removed carte blanche - I'd want it replaced with something specific as to the new intended use. Remove it completely and the church could sell 6 months down the line to someone mending cars in their back yard, with the resultant eye-sore/noise/smell.

 

And I'd want the legal work to have the covenant changed done so at the sellers cost.

 

Its definitely worth asking the question, but i'd also be ready to reach out to the other people who put in an offer.

 

First off, I don't yet have enough information as to whether it is just the second condition, all three, or one of the other conditions. 

 

Secondly, if it is the "Not use the property for any purpose other than as a single private dwelling house" condition that is causing the problem, then there looks to be plenty of scope to amend that.  For example, the wording "single private dwelling house" seems pretty restrictive, and could be interpreted as not allowing the house to be owned by a trust and rented, perhaps (this is what I believe they wish to do).  I very much doubt that our neighbour would object to a reasonable re-phrasing of this, especially as he has a plot of land he owns, behind his house, that has planning permission for half a dozen affordable homes, with an agreement that they may be part rented, part owned.  He's a supporter of providing affordable homes in the village, now, so may well be amenable to an amendment to this condition.

 

Finally, removing that condition wouldn't change anything as far as what someone could do with the house.  There isn't a hope in hell of anyone getting planning permission for change of use from residential, for two main reasons.  The neighbourhood plan takes precedence over local planning policy, and specifically makes the points that no existing dwelling shall be converted for commercial use, and that there is a pressing need for 33 affordable homes in the village.  Our house is also right on the boundary of the Conservation Area and adjacent to two listed buildings, both of which would impact on any possible change of use from residential.  I'm convinced that the trust wants to keep the house as a residential dwelling, but possibly not just for one person/family.

 

I don't have a problem with paying to get the covenant changed, that would be less than we've already shelled out on wasted fees etc.

[Jeremy Harris]

We may be back in with a chance.  The trustees are meeting this evening and will come back to me tomorrow with whether or not they will accept my offer to try and renegotiate the conditions of the restrictive covenant and clarify the amendments they would need to be agreed.

 

Fingers crossed that any amendments are both reasonable and acceptable to our neighbour, if we get that far.  Worth trying to salvage this deal, as we've already spent a fair bit of money in fees - we were right at the point of exchanging contracts when this came up.

[joe90]

GGGGRRRRRRRRRRR?

[AliMcLeod]

5 minutes ago, JSHarris said:

Fingers crossed that any amendments are both reasonable and acceptable to our neighbour, if we get that far.  Worth trying to salvage this deal, as we've already spent a fair bit of money in fees - we were right at the point of exchanging contracts when this came up.

 

Any idea what's involved in getting a covenant changed? Cheaper than fees to move to a different buyer?

[Jeremy Harris]

9 minutes ago, AliMcLeod said:

 

Any idea what's involved in getting a covenant changed? Cheaper than fees to move to a different buyer?

 

If the beneficiary agrees to the changes then it's pretty easy, just a deed of release for the old covenant and an equivalent variation to add a new covenant, both done via the Land Registry and both can be finalised after completion, as long as there is a legal agreement in place between the beneficiary, ourselves and the purchasers to make the covenant changes.  Probably a couple of hundred pounds or so, all told, so well worth doing if we can.

 

Changing to another buyer now will set us back more than this in sunk legal costs, I'm sure, plus we may well have to accept a lower offer price for the house, so all told it seems worth trying to salvage this deal if I can.  Starting again with another buyer will also add at least two or three weeks to the process, depending on who the buyer is and how quickly their solicitor/conveyancer can get their act together.

[Mr Punter]

3 hours ago, lizzie said:

It will be number 2 and this is a standard covenant. Insurance not suitable in this case.  Your religious ppl probably looking at some sort of place of worship or school.

 This covenant is a positive to most purchasers as they would not want to find themselves next to a ‘business’ in a residential development. The covenant will  be on all the properties built there.

 

I would just move on to the next in line. It wont be an issue. Just your unusual prospective purchasers. One in million chance very frustrating for you.

 

I have only taken these out twice. Once on a plot that had outline pp and an original developer covenant from the 1950s and once on a plot that could have been within a chancel repair area.  The fact that there were no objections to the pp from the 1950s developer meant the premium was negligible.

[lizzie]

1 minute ago, Mr Punter said:

 

I have only taken these out twice. Once on a plot that had outline pp and an original developer covenant from the 1950s and once on a plot that could have been within a chancel repair area.  The fact that there were no objections to the pp from the 1950s developer meant the premium was negligible.

Thats a bit different to Jeremy's neighbour having the benefit of the covenant.  The type of 1950's developer covenant you mention is very insurable and cheap to do. Chancel is not the same thing. Church tentacles reach far and chancel became almost a standard for conveyancers to recommend on most property until the stop date came in.

 

We had land that once belonged to Church of England, we did not have a chancel liability however the Diocesan solicitor that we had to deal with on covenants was non other than the man who caused the Chancel debacle cascade through his war with the Wallbank family in Aston Cantlow.  That is just a few miles from us we knew the case very well and the property.  It made history and is a precedent, through all the appeals and misery  We were at the auction when the Wallbank family finally sold the property after settling with the Diocese after many many years of legal wrangling and untold tens of thousands in legal fees.  

[AliMcLeod]

15 minutes ago, JSHarris said:

If the beneficiary agrees to the changes then it's pretty easy, just a deed of release for the old covenant and an equivalent variation to add a new covenant, both done via the Land Registry and both can be finalised after completion, as long as there is a legal agreement in place between the beneficiary, ourselves and the purchasers to make the covenant changes.  Probably a couple of hundred pounds or so, all told, so well worth doing if we can.

 

Changing to another buyer now will set us back more than this in sunk legal costs, I'm sure, plus we may well have to accept a lower offer price for the house, so all told it seems worth trying to salvage this deal if I can.  Starting again with another buyer will also add at least two or three weeks to the process, depending on who the buyer is and how quickly their solicitor/conveyancer can get their act together.

 

Definitely makes sense with your approach - hopefully it'll all go smoothly.

[Ferdinand]

I would say that the Trustw ant to be able to use it eg as a half-way house or similar, or perhaps rent out to 2 or 3 staff .. which is an HMO now or may be defined as one in the future for the 2 people.

 

There would be no problem renting as a single private dwelling.

 

F

 

 

[Jeremy Harris]

3 minutes ago, Ferdinand said:

I would say that the Trustw ant to be able to use it eg as a half-way house or similar, or perhaps rent out to 2 or 3 staff .. which is an HMO now or may be defined as one in the future for the 2 people.

 

There would be no problem renting as a single private dwelling.

 

F

 

 

 

That's my feeling too, and it's the "single private dwelling" legal interpretation that is the concern.  I also think it's the easiest covenant condition to try and get changed, as I can't see how altering the wording to allow, for example, renting it out to two or three people, would be of any concern to my neighbour, especially given how far away he is from the house and the fact that I can't see that there would be any inconvenience to him if there were two or three unrelated people living in the house. 

 

The only sticking point, if this is the issue, may be agreeing the form of words for the new covenant.  Could be as simple as just changing the wording to read: "Not use the property for any purpose other than as a single dwelling house", perhaps, if the word "private" is what's causing the problem.  There isn't room to build a second house on the plot, anyway, so this particular covenant condition is pretty pointless in practice.

 

 

[lizzie]

I think you will find that when the lawyers look at it that it may not be as simple.... trust me I have spent 30 years living with a lawyer I know how hard it is to get a straight answer to the simple question 'would you like a cup of tea' LOL!

 

But seriously they need to tell you what their sticking point is and then you will have to see how your neighbour reacts....or more likely his lawyer.  The simple amendment of one word in a sentence can change the whole sense of it and a lawyer will look at it that way. I think you may find yourself in a 3 way lawyer situation and that means time and money unless everyone is eminently sensible and reasonable.

 

If you removed or changed  'single private dwelling house'  then it needs very careful wording so as not to leave scope for future owners to use it in all sorts of ways...bed and breakfast, hmo for students, or even a bail hostel for instance, how would that be for the neighbours.......Amending a covenant may seem simple but can be fraught.

[Jeremy Harris]

FWIW, I've already been here before, when buying our plot.  We ended up having to get three sets of deeds changed to correct errors and remove a covenant that had been included by error - just a cock-up on the previous conveyance when the land was split into two plots.  I found then that as all parties agreed it was pretty straightforward - we got the vendor to pick up the tab for the legal costs, but they weren't massive.

 

To illustrate the situation a bit better, here's an annotated Google earth shot with our boundary (red) and the boundary of our neighbour who is now the beneficiary of the covenant (blue):

 

 

The neighbour has planning permission to build 24 houses on the land to the lower left corner (his paddock extends up the hill in that corner for a fair way).

 

It's pretty obvious that another house would not fit on our plot, and it wouldn't make economic sense to convert it to two storeys (been there, done the costing, doesn't come close to the added value covering the cost, because the plot is so small).

[lizzie]

Nice windfall for the neighbour! Let us hope he feels a generosity of spirit towards his departing neighbour and does what they want to sort the sale for you.  Fingers crossed.

[Jeremy Harris]

54 minutes ago, lizzie said:

Nice windfall for the neighbour! Let us hope he feels a generosity of spirit towards his departing neighbour and does what they want to sort the sale for you.  Fingers crossed.

 

It's a long story, but it's not turned out to be a windfall for him at all. 

 

In essence, a developer approached him about 5 years ago and asked if he was interested in selling his paddock.  He said yes, and they agreed to purchase, subject to gaining PP.  The developer got PP, after a long battle, but there were some shenanigans.  One bit I heard with my own ears, after the planning meeting when I was standing outside talking to a local journalist was the agent for the developer say to the developers rep "I thought we'd have to give him a bigger bung than that". The journalist turned to me and said "Did he just say what I thought he said?" and I said "Yes, I think we can expect to see Councillor X driving a new Range Rover soon" (which we did!).  Said Councillor has come very close to being caught out, but no one has been able to get any evidence.  The young journalist was getting fed up with her editor not letting her run stories about him, because everything she picked up was hearsay, like the conversation about the "bung".

 

The developers started work on the land, before buying it, and did just enough to lock the PP in (they cleared some trees and put in a water main and foul drain, that's all).  They then just let it sit for around four years.  Last year they told my neighbour that they weren't going to buy the land after all, but have given him a condition that as they own the locked in PP, if he does sell the land then they are entitled to 15% of the sale price.  Needless to say, my neighbour is not a happy bunny about this at all.  He's been trying to sell the land, but no one is interested, as the cost to develop what is a pretty difficult sloping site is too high.

 

Currently he's sat with what amounts to a liability in his back garden.  I believe he wanted to sell the house as soon as the developer had completed the purchase of the paddock, but he's now decided to stay put and wait to see what happens.  It's unlikely that any developer will be interested now, as in the intervening years the village put together a Neighbourhood Plan, which identified several areas for development (none of which include his paddock).  Needless to say developers are already starting to work on some of the areas identified in the Neighbourhood Plan, as they are all cheaper to build on, and they are now close to having started on all the houses that the village needs for the next few years.

 

He's a nice enough chap, but I doubt he feels any real benevolence towards me.  The flip side is that I supported his planning application to build a granny annexe a year or so ago, so at least he has no reason to not listen to any proposal. 

 

Before we get to that stage, though, I need confirmation that it is that word "private" in condition 2 that is the problem for the trust.  I'm near-certain it is, and also near certain that if it ever went as far as going to the Land Tribunal they would almost certainly throw the condition out as it's worded, as they would judge it under common law and may well view it as being overly restrictive, because it may well stop a buy to let landlord, housing association, even the local authority, from purchasing the house, I believe, as well as a charitable trust.

 

 

[lizzie]

Oh dear it does sound as though he was very foolish with the developers

[Jeremy Harris]

25 minutes ago, lizzie said:

Oh dear it does sound as though he was very foolish with the developers

 

Suckered, is, I think, the word you're looking for.  I have a feeling he may well have started spending some of the money he was expecting from the sale before they had exchanged contracts, too.

 

One thing I learned from this is that developers are absolute bastards, of the first order.  They always seem to play the long game, to maximise their gain.  We had a conversation with one young couple who came to view our house who had made the same observation.  They had been going around the local new developments and had quickly worked out that the developers were very deliberately throttling the supply of houses by stopping work after they finished a handful, then letting demand (and price) build up before they built a few more.

[NSS]

49 minutes ago, JSHarris said:

 

One thing I learned from this is that developers are absolute bastards, of the first order.  They always seem to play the long game, to maximise their gain.  We had a conversation with one young couple who came to view our house who had made the same observation.  They had been going around the local new developments and had quickly worked out that the developers were very deliberately throttling the supply of houses by stopping work after they finished a handful, then letting demand (and price) build up before they built a few more.

That (on its own) doesn't make them "absolute bastards" IMHO, it's just sensible business practice. No business will manufacture or stock more goods than they believe they can sell in a given period, and to do so would potentially cause huge cashflow problems. 

[Jeremy Harris]

6 minutes ago, NSS said:

That (on its own) doesn't make them "absolute bastards" IMHO, it's just sensible business practice. No business will manufacture or stock more goods than they believe they can sell in a given period, and to do so would potentially cause huge cashflow problems. 

 

 

I agree in principle, but it's the way they game the planning system that gets me.  The local authority has a target to ensure there are a given number of houses built to cover the housing needs for 5 years.  They grant PP on this basis - if they are below the target that will be built they grant PP on greenfield sites, if they are at the target they stop granting PP.  The developers know this, so get PP, start a development, do enough to lock in the PP, then stop the development.  This means the local authority now won't meet their 5 year target, so they have to grant more PP to the developers on new sites, who then repeat the cycle. 

 

Sure they are a business, and need to make a profit, but housing is also a major social issue, and one that the government and local authorities are constantly trying to address by increasing the supply.  When developers are deliberately throttling back the supply to push up prices and allow more PP to be granted then they are not acting in the interest of society as a whole.  In fact they are helping to create the very problem that government and local authorities are trying to resolve.

[NSS]

4 minutes ago, JSHarris said:

 

 

I agree in principle, but it's the way they game the planning system that gets me.  The local authority has a target to ensure there are a given number of houses built to cover the housing needs for 5 years.  They grant PP on this basis - if they are below the target that will be built they grant PP on greenfield sites, if they are at the target they stop granting PP.  The developers know this, so get PP, start a development, do enough to lock in the PP, then stop the development.  This means the local authority now won't meet their 5 year target, so they have to grant more PP to the developers on new sites, who then repeat the cycle. 

 

Sure they are a business, and need to make a profit, but housing is also a major social issue, and one that the government and local authorities are constantly trying to address by increasing the supply.  When developers are deliberately throttling back the supply to push up prices and allow more PP to be granted then they are not acting in the interest of society as a whole.  In fact they are helping to create the very problem that government and local authorities are trying to resolve.

But that's a different scenario to what you described in your previous post ("then letting demand (and price) build up before they built a few more."). And some of the blame for what you're now describing has to sit with the LA for not stipulating a defined period in which a development should be completed.

[Ferdinand]

You could point out to your neighbour that their covenant will not stop it being a private family dwelling with 2 or 3 lodgers, and perhaps replace with a covenant for max number of adults.

 

Or potentially via the rent a room scheme, which could potentially override te covenant through being explicit Statute Law. That one is me slightly shooting from the hip, though.

 

Maybe.

 

F

Edited August 13, 2018 by Ferdinand

[Jeremy Harris]

1 hour ago, NSS said:

But that's a different scenario to what you described in your previous post ("then letting demand (and price) build up before they built a few more."). And some of the blame for what you're now describing has to sit with the LA for not stipulating a defined period in which a development should be completed.

 

 

The law doesn't allow any LA to define a period in which a house must be built.  If it did, then perhaps the problem would be relieved, but there would then be a significant impact on self-builders, some of whom may take many years to complete their home.

 

[NSS]

31 minutes ago, JSHarris said:

 

 

The law doesn't allow any LA to define a period in which a house must be built.  If it did, then perhaps the problem would be relieved, but there would then be a significant impact on self-builders, some of whom may take many years to complete their home.

 

Okay, I thought they could specify a timescale, but maybe not. However, if they could it need have no effect on self-builders as they wouldn't be the ones holding back on builds to facilitate new planning applications and I wasn't suggesting a one-size-fits-all period for every development.

[PeterW]

12 minutes ago, NSS said:

Okay, I thought they could specify a timescale, but maybe not. However, if they could it need have no effect on self-builders as they wouldn't be the ones holding back on builds to facilitate new planning applications and I wasn't suggesting a one-size-fits-all period for every development.

 

That is the issue with anything that affects statute law - you end up with a one size fits all solution unless you create very specific legislation.

 

And the developers are very good at lobbying ..... 

[NSS]

Seems there is a mechanism, a development completion notice, but it is seldom used and usually ineffective. Funnily enough, I'd heard that our local authority have issued such a notice recently against a development (a block of apartments) which has stalled without even having got out of the ground. I'll watch with interest to see if it has any impact!

[Ferdinand]

5 hours ago, JSHarris said:

 

It's a long story, but it's not turned out to be a windfall for him at all. 

 

In essence, a developer approached him about 5 years ago and asked if he was interested in selling his paddock.  He said yes, and they agreed to purchase, subject to gaining PP.  The developer got PP, after a long battle, but there were some shenanigans.  One bit I heard with my own ears, after the planning meeting when I was standing outside talking to a local journalist was the agent for the developer say to the developers rep "I thought we'd have to give him a bigger bung than that". The journalist turned to me and said "Did he just say what I thought he said?" and I said "Yes, I think we can expect to see Councillor X driving a new Range Rover soon" (which we did!).  Said Councillor has come very close to being caught out, but no one has been able to get any evidence.  The young journalist was getting fed up with her editor not letting her run stories about him, because everything she picked up was hearsay, like the conversation about the "bung".

 

The developers started work on the land, before buying it, and did just enough to lock the PP in (they cleared some trees and put in a water main and foul drain, that's all).  They then just let it sit for around four years.  Last year they told my neighbour that they weren't going to buy the land after all, but have given him a condition that as they own the locked in PP, if he does sell the land then they are entitled to 15% of the sale price.  Needless to say, my neighbour is not a happy bunny about this at all.  He's been trying to sell the land, but no one is interested, as the cost to develop what is a pretty difficult sloping site is too high.

 

Currently he's sat with what amounts to a liability in his back garden.  I believe he wanted to sell the house as soon as the developer had completed the purchase of the paddock, but he's now decided to stay put and wait to see what happens.  It's unlikely that any developer will be interested now, as in the intervening years the village put together a Neighbourhood Plan, which identified several areas for development (none of which include his paddock).  Needless to say developers are already starting to work on some of the areas identified in the Neighbourhood Plan, as they are all cheaper to build on, and they are now close to having started on all the houses that the village needs for the next few years.

 

 

 

I am not convinced that it is possible to own a locked in PP on somebody else’s land and enforce a charge against the owner. Is there any law that allows that to happen without an explicit agreement?

 

That is unless your neighbour signed a contract which bound him in those terms, which means that it would at least partially be his responsibility. That may seem a blunt thing to say, but was he by any chance playing in the big boys’ game without making sure the necessary specialist legal advice was available to him?  Given that he was approached that might be an easy mistake to fall into unawares.

 

Essentially they should have been kept from doing development as opposed to due diligence until the mone6 had changed hands, or a really tight agreement was in place. In our case with our land sale we had so much runaround and buggeration that we demanded a walk-away-clean offer from developers and took a reasonably significant hit on the price. But at least we could move on and by then i5 had been several years.

 

In any case, a cautionary tale and he has my sympathy.

 

Ferdinand

 

Edited August 13, 2018 by Ferdinand