The days when the majority of land was sold without reservation seem long forgotten. For many landowners, the Government’s growth agenda, under which more land is to be bought forward for development, has highlighted the need to safeguard their position through the reservation of some benefit from future planning gains at the time of disposal.
In some cases, this might involve nothing more than a simple restrictive covenant. In the majority of cases, however, something very much more complicated is required. ‘Clawback’, ‘Uplift’ or ‘Overage’ agreements are now the most frequently used devices to secure ‘a slice of the action’ from a planning opportunity yet to be realised at the time of disposal.
Each arrangement offers a slightly differing basis for sharing in a proportion of any increased or enhanced value realised at an unspecified future date. However, against an often clearly expressed intention when negotiating the terms of a disposal, many agreements fail to deliver the level of benefits intended, are unenforceable or unworkable. To add insult to injury, many also carry with them unwelcome and often unexpected tax implications which, in extreme cases can result in a tax charge without any guarantee that the value upon which the charge is made will be realised.
For anyone considering disposing of land subject to a restriction or reservation of this sort specialist advice should be obtained prior to negotiating the terms of disposal. Whilst in the majority of cases, the benefit of good advice will not be realised until sometime after the transaction has been completed, it is a matter, none-the-less, upon which specialist advice should be obtained in order to avoid future disappointment.