Clawbacks in Land Purchase

2 Aug 2021
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United Kingdom
I am planning to buy a leasehold land which is owned by the Highway Authority.
I can see some clawbacks in the document like

if I get planning permission or if I do any development in the land within the next 25 years, I need to pay 30% of the market value.

This property is used for some storage purpose at the moment.

This is a leasehold land. If I buy the Freehold of it (it belongs to a third party), will I still need to honour the clawback when any event in the clawback happens?

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It’s the conditions of sale. If you don’t like it, don’t buy it. Who's going to develop a leasehold piece of land anyway. You'd need the permission of the freeholder, presumably. How much more do you think the freehold will cost? 100%? 200%? They can still put those conditions in on a freehold. It’s all down to how much you are prepared to pay and how hard you negotiate.
Thank you so much Mottie, I did not know in Freehold also they can do the same.

I think I should not buy this piece of land, my intention was to get planning permission and build a semi-commercial building. It looks like I will end up spending thousands of pounds in the future.
The HA don't control change of use or physical development of the land, the freeholder does. HA will have no interest in it when they transfer the lease. Taking the p**s big time......... it seems....

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What I understand is it is the National Highways' clawbacks. The freeholder has a lease with National Highways for 979 years and they are selling the leasehold land. In the legal pack it says, if any Trigger Event happens, I need to inform National Highways.
Steer wel lclear of anything leasehold. It clearly means someone is going to suck the blood out of you at some stage. The clawback clause is a clear indication that anything you try to do is going to be very costly.

The sooner leasehold is abolished the betterZ
It is for houses and flats. In fact in Northern Ireland all leasehold houses will automatically revert to being freehold after 2040. As unusual as it it NI is ahead of the game for once.

I’m not sure about land Rules changing. The clawback/uplift in value thing is quite common here. Basically if you get planning permission for a house or houses on a piece of land the greedy seller will want you to pay them the difference between what you paid for the land in the first place and the new valuation after you spent loads of time and money getting the permissions they couldn’t be bothered to sort out. It’s cheaper for them to let you take the risk by doing it.

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