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Property options revealed by Howes Percival

Written by Howes Percival
Tuesday, 19 February 2008
A cooling property sector will generate new interest in tools to help landowners and developers continue to agree to deals in an uncertain market, a law firm’s commercial property experts have predicted. Partners from the leading law firm Howes Percival LLP told a packed audience of property developers and professional advisers to expect a rise in the use of overage and option agreements. The free seminar at Leicester’s Walkers Stadium attracted more than 70 delegates from major housebuilders, property agents, surveyors and banks from Leicestershire and beyond. They heard Howes Percival partners Gavin Le Chat and Mark Brown discuss the plusses and potential pitfalls of overage and options. Overage is when a landowner has a right to receive further payments after selling his land if and when events occur such as planning permission being granted or construction beginning. Sometimes called “claw back”, an example is when a farmer sells agricultural land at an agricultural price but with a right to a further payment if residential planning permission is later granted. An option to purchase land can involve a developer securing a right to purchase the land within a specified time but without the developer being obliged to do so. Mr Brown said: “When there is a downturn in the market for land, overage and options can work for both the landowner and the developer. The landowner retains an interest in any potential recovery in land values; the developer does not have to tie up large amounts of capital in land on which he does not wish to build on at present.” Mr Le Chat said: “We expect to see a lot more of these agreements in the next 12 months. They need careful drafting to work for both sides, with particular care needed on any formula used to calculate payments.” The seminar is to be repeated on March 7 in Northampton. To reserve a free place at either event, call Jen Lawson on 0116 247 3522 or email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .