Planning permission or permitted development?

[Tom]

Hello all, it's been a while since I last posted but we are still at the very very early stages of our build. Pre-embryonic I'd say. Anyway, we've recently bought a parcel of land with some modern-ish barns on. The plan being that we would convert one of these under permitted development/Part Q legislation.

We've got a planning consultant on board and had a meeting with our architect yesterday to produce some elevations for our application. Hopefully we can get that in before Christmas.

 

Right, we bought the land/barns with an overage clause which entitles the seller to a percentage of any increase in value of the property as/when planning permission is granted.

 

My question is this, to convert the barn to a house under Part Q is essentially permitted development (albeit requiring extra faff with proposed elevations etc) so my reading of this is that as we are not getting planning permission per se, then we are not liable for the overage.

 

The contract says "planning permission" repeatedly, never any variation of this or inference of some other change of use or whatever.

Does anyone out in buildhub-land, with a reasonably knowledgeable legal hat on, have any idea where we might stand legally on this?

Thanks all

Edited November 22, 2018 by recoveringacademic
reformatted for readability

[ToughButterCup]

37 minutes ago, Tom said:

[...]

We've got a planning consultant on board

[...]

we bought the land/barns

[...] to convert the barn to a house under Part Q [...] essentially permitted development

[...]

The contract says "planning permission" ,

[...]

Does anyone out in buildhub-land,[...] have any idea where we might stand legally on this?

 

What does your Planning Consultant say? 

[Russell griffiths]

My thoughts on this would be that,

if I was the vendor and I thought you had done this on purpose to avoid paying any uplift, I would hunt you down with the most ferocious solicitor I could find, I would make it a quest until you pay or I dropped dead. 

Would it be a case of your solicitor is bigger than their solicitor. 

Are you prepared for a fight. 

 

What you thinking. 

[Mr Punter]

I suggest you take professional legal advice, perhaps from the solicitor who dealt with the purchase.

 

You still need to make an application under part Q and gain written consent from the LPA.

 

Does the seller hold a charge over the land?

[Tom]

1 hour ago, recoveringacademic said:

 

What does your Planning Consultant say? 

 

"go get some legal advice" (though not "go ask those fellas on Buildhub", more fool her)

 

53 minutes ago, Russell griffiths said:

My thoughts on this would be that,

if I was the vendor and I thought you had done this on purpose to avoid paying any uplift, I would hunt you down with the most ferocious solicitor I could find, I would make it a quest until you pay or I dropped dead. 

Would it be a case of your solicitor is bigger than their solicitor. 

Are you prepared for a fight. 

 

What you thinking. 

 

I can certainly see you point, but there was certainly no malicious forethought. It was only once we had bought the property and were digging further in to the Part Q process that it became clear that what we were seeking was change of use rather than planning permission. If we are in the right and we are not legally bound to pay the overage then we would be mad to pay what would amount to several tens of thousands - we're legally bound by the terms of the contract, nothing more, nothing less. The seller might be better advised to sue his conveyancing solicitor if this was right. What's the "caveat emptor" equivalent for the seller?

 

I'm guessing there must be a legal precedent somewhere. As the number of part Q conversions increases there must be an example where such an overage based on planning permission existed.

 

1 minute ago, Mr Punter said:

I suggest you take professional legal advice, perhaps from the solicitor who dealt with the purchase.

 

You still need to make an application under part Q and gain written consent from the LPA.

 

Does the seller hold a charge over the land?

 

Yep, I'm guessing we're going to have to get legal advice. We already informally asked our cenveyancing solicitor and he was worryingly vague. I'm guessing that we could very well not get a clear indication and the only way to test it is to let it go to law (unless there is a precedent) - which is the last thing we need tbh.

Yes, We're in the process of making the Part Q application. The thing is, on the planning portal website it clearly says "this is not planning permission".

The seller has no charge over the property.

 

[Ferdinand]

2 hours ago, Russell griffiths said:

if I was the vendor and I thought you had done this on purpose to avoid paying any uplift, I would hunt you down with the most ferocious solicitor I could find, I would make it a quest until you pay or I dropped dead. 

 

 

Yes, but if the agreement has holes in it, they may as well be pursuing St George's Dragon on a shetland pony with a knitting needle. Both sides should have good enough advice in such circumstances that they both know which party is the Emperor With No Clothes.

 

If they created a duff agreement, more fool them. The purchaser is not responsible for the vendor's cockups. If there had been deception by the vendor, then my attitude would be different, but Overage Agreements are a Big Boy's Game and those who play it should know the score.

 

We had one of these that was really quite onerous ... it was 20 years in duration, and half of the uplift in value would have been due on receipt of planning permission. It was on a super wide rural bungalow on a square half acre plot that the family had to buy to protect us from the restaurant / nightclub the other side buying to develop into something that would have been up against our house. I can't remember whether the uplift was on the value of the bungalow-with-planning-permission or using a valuation of the final value of the project.

 

We identified 2 options which could have avoided the overage within the period - one was to do permitted development, and the other was to do a small Planning Application to trigger the clause (eg PP for a detached garage), then the more valuable PP for the housing estate (say) some years later after the agreement had been dealt with. The latter was based on the thought that the agreement as worded was probably a one-shot thing. At that point we would have had to rely on our legal advice to face the other party down should they come after us.

 

In the event we sold after about 12 years, and the purchasers converted the integral garage and roofspace into a self-contained annexe-unit, and also extended within Permitted Development. We probably got some benefit on the value from demonstrating that there were viable options to avoid the potential overage charges.

 

As has been said, practically you need quality legal advice, a thinking cap, and a willingness to gird your loins.

 

Ethical considerations are a matter for your conscience. We felt our agreement was rather abusive and imposed at the last minute by an every-pound-of-flesh seeking family member in the family who sold it to us, so did not feel guilty.

 

Ferdinand

 

 

 

Edited November 22, 2018 by Ferdinand

[Russell griffiths]

I can see your point, if they messed up their contract and it’s full of holes then go for it

 

however I will add this

if you purchased knowing there was an uplift clause then you new full well the costs involved, you have then found a loophole because of some shoddy paperwork, is that really fair, what if the boot was on the other foot, what if you had put up the question 

: my purchaser doesn’t want to pay me my uplift money: 

 

What does your conscience tell you, do you believe in karma ?

[jack]

1 hour ago, Russell griffiths said:

What does your conscience tell you, do you believe in karma ?

 

My conscience says that uplift clauses are an abuse of power by those who are unwilling to take risks themselves, but are happy to take a cut of the gains that come from another's efforts, costs and willingness to bear risk. Karma to me would be converting the barn without having to pay uplift charges.

 

Another question though: are you sure the phrase "planning permission" has the narrow meaning in law that you're attributing to it? Are you sure, for example, that planning permission definitely doesn't cover a change of use? It may be permitted development, but as I understand it you still need to seek a form of permission to undertake the conversion.

 

[Guest Alphonsox]

My take on this .... The vendor will have sought legal advice to draw up the paper work. If the vendors solicitor has left big holes in agreement then the vendors gripe is with their solicitor not you. He/She paid for professional advice at a cost/quality they were happy with, if they went for the cheapest option it's their lookout not yours.

 

That being said Jack's point on the definition of "planning" vs "change of use" needs consideration. I'd also have an ethical problem pocketing a little old ladies retirement fund, it all depends...

[Ed Davies]

54 minutes ago, jack said:

My conscience says that uplift clauses are an abuse of power by those who are unwilling to take risks themselves, but are happy to take a cut of the gains that come from another's efforts, costs and willingness to bear risk. Karma to me would be converting the barn without having to pay uplift charges.

 

OTOH, the uplift clause was presumably reflected in the original selling price. If not it's difficult to understand why the OP agreed to it.

 

Other approaches might have been something like negotiating an option or just buying outright without the clause but they'd have likely resulted in a higher overall price.

[Tom]

1 hour ago, jack said:

Another question though: are you sure the phrase "planning permission" has the narrow meaning in law that you're attributing to it? Are you sure, for example, that planning permission definitely doesn't cover a change of use? It may be permitted development, but as I understand it you still need to seek a form of permission to undertake the conversion.

 

 

That's the nub of it I reckon and will be where the arguments for both sides will be made.

 

2 hours ago, Russell griffiths said:

What does your conscience tell you, do you believe in karma ?

 

I believe in contractual obligations, nothing more, nothing less. If I'm going to give money away so I don't reincarnate as a whelk then I'd rather is went to cancer research!

 

14 minutes ago, Ed Davies said:

 

OTOH, the uplift clause was presumably reflected in the original selling price. If not it's difficult to understand why the OP agreed to it.

 

It was reflected, to a greater or lesser extent - but we can only be expected to pay what the vendor wants for something. It's up to them to appraise market value and price accordingly and, as above, make sure the contract includes everything they want it to.

[Temp]

Does your council have the CIL? It's not clear (to me) if the self build exemption applies to a convertion built under permitted development.

 

The guidelines on my council web site are very confusing...

 

https://www.eastcambs.gov.uk/planning/cil-frequently-asked-questions

 

Scroll down to "What development is liable for the CIL"

 

Edit: On second thoughts it probably is exempt. Just make sure it's been in legal use for 6 months. Get that in writing from the seller. And don't do any work on site until you have done all the paperwork needed for the exemption.

Edited November 22, 2018 by Temp

[Tom]

Hmmm, not sure Temp. Is that relevant?

[Temp]

A new build would be exempt from the CIL but you would have to get pp and pay the previous owner his uplift.

 

If a conversation isnt exempt then the CIL might outweigh some of the saving. I think it should be exempt but the Cambridge link mentions situations when it isnt.

[Ferdinand]

10 hours ago, Russell griffiths said:

I can see your point, if they messed up their contract and it’s full of holes then go for it

 

however I will add this

if you purchased knowing there was an uplift clause then you new full well the costs involved, you have then found a loophole because of some shoddy paperwork, is that really fair, what if the boot was on the other foot, what if you had put up the question 

: my purchaser doesn’t want to pay me my uplift money: 

 

What does your conscience tell you, do you believe in karma ?

 

Worthwhile points, but there is the intention of Parliament, what the law as drafted says, what the Courts interpret the law as saying, things in the law that do not  reflect the interpretation, and our own opinions. What we all think and do which can be different for each of us. Also, the circumstances where I might make a decision for reasons of what I regard as principle may be different from yours; specific examples are easy to construct or to find in the wild.

 

And all the time people attempt to change the law to reflect their personal opinions or damage other for what in their opinion is the greater good. Over a long period (eg a generation) one hopes that the law reflects some sort of average of what society considers acceptable. 

 

In the end I (and you) have to live with the decisions we make - and I may make the different decision in similar circumstances, depending eg if something threatens my business viability or I currently have capacity to take a hit and emerge still standing.

 

I tend to be quite skeptical of planning systems because there is very wide interpretation, and I know damned well that they make decisions on a whim of a local politician, or someone who does (or does) not want something new round the corner, and used their personal position to effect or prevent change. I know that my family smallholding was taken out of the local plan as housing land on the basis of a flawed (in this case, a stupidly superficial evaluation) decision after about 7 years, during the final stage of the Shlaa process - so we took the decision to do a Planning App then rather than wait until 2030. When we got to committee some Councillors were woefully ignorant.

 

But I do not know of a better system.

 

8 hours ago, Alphonsox said:

That being said Jack's point on the definition of "planning" vs "change of use" needs consideration. I'd also have an ethical problem pocketing a little old ladies retirement fund, it all depends...

 

Agree that both points matter. 

 

But there is a reason why little old ladies rule the world ? .

 

F

Edited November 23, 2018 by Ferdinand

[Ferdinand]

7 hours ago, Temp said:

A new build would be exempt from the CIL but you would have to get pp and pay the previous owner his uplift.

 

If a conversation isnt exempt then the CIL might outweigh some of the saving. I think it should be exempt but the Cambridge link mentions situations when it isnt.

 

Perhaps. But there are umpteen options, all balancing risk vs reward, and different lenses that potential buyers look through.

 

eg Consider a value without PP for this site - £X. Once it has full PP the value is Y.

 

In which case the original owner can:

 

1 - Invest say £5k in PP, increase the value by £A to £X+A, and gives them £A-5k in extra money.

2 - Assign a higher value for the potential, which gives them £X+B. Where £B is the subject of estimates and the price of a willing buyer. If Fred and Fiona the Self-Building family  come along they may be running out of sprog-space so will pay more than Bob than Batchelor or Sheila the Speculator. But Fred and Fiona or Bob pay no CiL and get their VAT back on the build, and Sheila may have an extra 3% Stamp Duty to pay (OK - may not apply to a plot, but makes the point), which may mean that Sheila's offer is forced by the tax treatment to be £25k lower than if there were a different playing field.

3 - Impose an Overage Agreement, which may give them a potential uplift £C in the future, depending, but may also drive people away.

4 - Take a middle route eg Outline PP.

 

Then that increased value goes through the lens to Price, P, and then of Personal Opinions (eg it may save Fiona a 90 minute commute and a second car, so may save £5k a year, which annualises up to £25k or £50k on the price, depending on the current return that Fiona can obtain on £25k used elsewhere, and how much time she wants to spend with her horse and/or her family).

 

Who knows, Owen the Owner may have had some legover with 25 years ago and want to help his illegitimate child for the future, and so be inclined towards selling to Fanny-Mae his Former-Mistress at a lower price.

 

But then the Buyer may only get PP for something smaller than they want, which may mean having paralysed themselves with analysis, they have a financial bloodbath anyway, and end up hiding behind excuses such as "I got my dream forever home" or "it was worth it to get exactly what I wanted". Or perhaps those are features, not bugs ? . Or they may read a self-build website and save £50k on build costs because they build it differently.

 

And that is before the art of the deal and the knowledge of the Planning System or Local Politics, and that Harry the Hoary Old Git thinks he can get four houses on there at Appeal, or if he sells to a housing association and gets local opinion on his side. but OTOH the limitations of Part Q will affect all of those.

 

Favourite quote:

 

Quote

All this time the Guard was looking at her, first through a telescope, then through a microscope, and then through an opera- glass. At last he said, `You're travelling the wrong way,' and shut up the window and went away.

 

Which train are you on? But then some people are travelling on the High Road or the Low Road, not the train.

 

You takes your choice, after working out what you can / can't control, taking advice on what you may be able to do, influenced by your own circs, and then makes your offer depending on everything else, and pays your money if you win.

 

I try to envisage it in terms of money vs risk, in the circumstances, and then wait until I feel I know enough to make a decision.

 

But I really wish you success. Apologies for my early morning maunderings.

 

Ferdinand

 

Edited November 23, 2018 by Ferdinand

[AliMcLeod]

18 hours ago, Tom said:

The contract says "planning permission" repeatedly, never any variation of this or inference of some other change of use or whatever.

 

I assume there's no definition of what is meant by 'planning permission' in the contract? I note you've not capitalised it, as would typically be the case in a legal document if it was a defined term.

 

Does the contract determine how the uplift would be calculated? eg, get an independent assessor in or will it be someone of their choosing....

[Tom]

45 minutes ago, AliMcLeod said:

 

I assume there's no definition of what is meant by 'planning permission' in the contract? I note you've not capitalised it, as would typically be the case in a legal document if it was a defined term.

 

Does the contract determine how the uplift would be calculated? eg, get an independent assessor in or will it be someone of their choosing....

 

It is capitalised in the contract, and is defined -  the definition certainly does not mention permitted development, change of use, Part Q etc.

The uplift would be mutually agreed or determined by a mutually agreed independent surveyor.

 

 

3 hours ago, Ferdinand said:

 

But I really wish you success. Apologies for my early morning maunderings.

 

Ferdinand

 

 

Maunder away my friend!

[Tom]

...and just thinking this through again, an overage/uplift clause is intended to allow the seller to recover money when the value of the land/property sold goes up as a result of planning permission being granted. Part Q is permitted development - as such the value of the land should essentially remain unchanged: the right to convert to residential existed before and after the sale of the land. So, even if we found we had to pay an overage, we could potentially argue that the value of the property was unchanged, therefore the overage due was £0? Hmmm...

[AliMcLeod]

2 hours ago, Tom said:

It is capitalised in the contract, and is defined

 

You might get additional/more applicable thoughts if you share the contract definition of Planning Permission.

[AliMcLeod]

2 hours ago, Tom said:

as such the value of the land should essentially remain unchanged: the right to convert to residential existed before and after the sale of the land. So, even if we found we had to pay an overage, we could potentially argue that the value of the property was unchanged, therefore the overage due was £0?

 

That's certainly what I'd be arguing if i were in your shoes and decided to go down that road. Whether I would do that would be based on the discussions that had taken place leading to the purchase.

[Ferdinand]

22 hours ago, Tom said:

 

The contract says "planning permission" repeatedly, never any variation of this or inference of some other change of use or whatever.

Does anyone out in buildhub-land, with a reasonably knowledgeable legal hat on, have any idea where we might stand legally on this?

Thanks all

 

@Tom

 

The interesting comments in the thread have made me think up a tool design to help thought about "Knowns" and "Unknowns", which is a type of analysis I did when thinking about my own site, and found useful when thinking about factors influencing a situation where I knew very little such as the legal or physical factors around an offer for a building plot, but I have not done a grid before. The difficult thing is to create a list of factors that may or may not be relevant.

 

My method was to brainstorm a list of potential risk factors (eg potential sewer or mineshaft no one has told me about), then categorise on the chart, then prioritise and identify what I could do to manage the risk - even if it was nothing.

 

Hopefully it is useful for someone out there. The grid and download links are below.

 

Ferdinand

 

Cheney Chart

 

 

Known-Unknowns-v1.pdf

Known-Unknowns-Blank-v1.pdf

[Brickie]

@Tom any chance you could cast your eyes over the Brexit bill :))

Edited November 23, 2018 by Brickie

[Mr Punter]

6 hours ago, Tom said:

...and just thinking this through again, an overage/uplift clause is intended to allow the seller to recover money when the value of the land/property sold goes up as a result of planning permission being granted. Part Q is permitted development - as such the value of the land should essentially remain unchanged: the right to convert to residential existed before and after the sale of the land. So, even if we found we had to pay an overage, we could potentially argue that the value of the property was unchanged, therefore the overage due was £0? Hmmm...

 

I did an office to resi when it was first introduced. Although it was PD, the bank would not lend a penny until we had the prior approval consent from the LA.  Even to get this, we had to commission some contaminated land reports and submit plans and an application form.

 

We had another scheme elsewhere turned down as the LA were concerned that the building was near to the site of some redundant underground tanks, so we withdrew from the purchase as it tipped the viability balance.

 

Like I said in my first post:

 

23 hours ago, Mr Punter said:

I suggest you take professional legal advice, perhaps from the solicitor who dealt with the purchase.

 

There is no need for you to fall out with the seller over this as should the overage not be payable, the seller will have a claim against their solicitor (or their PI insurance) for negligence and so need not be out of pocket.

[scottishjohn]

4 hours ago, Brickie said:

@Tom any chance you could cast your eyes over the Brexit bill :))

its been so  fxxxd up the only answer now is to get out--how can you sign up to something that says you can  never ever  get out+ don,t even have a vote  !!! .

its like the maastricht  treaty that stopped us ever having a  vote on captiol punishment--the point is we should allowed to at least have the choice.

If not we are slaves --that,s not what i voted for when we joined the "common market "

It might be hard to start with --but the future will only be better --this way it just keeps getting worse.

just think if we could have only taken quotes from uk companies for all these wind turbines --employment and the subsidies would at least go to UK companies--and as WE are paying them from our electric bills   thats only fair.

rant over LOL