Barn Conversions – Escaping Overage

With the intention to relax the planning restrictions on certain types of development, the current government has increased the scope of Permitted Development Rights (“PDR”).

Historically, PDR mainly related to domestic changes but the recent changes have extended the scope of PDR to cover the conversion of office space and agricultural buildings to residential use. In particular, the conversion of barns is covered in  part Q of the Town and Country Planning (General Permitted Development)( England) Order 2015 which permits:

(a) a change of use of a building and any land within its curtilage from a use as an agricultural building to a use falling within Class C3 (dwellinghouses) of the Schedule to the Use Classes Order; and

(b)building operations reasonably necessary to convert the building referred to in paragraph (a) to a use falling within Class C3 (dwellinghouses) of that Schedule.

Frequently, when there is the sale of agricultural land there is a clawback arrangement so that if the land is used for development purposes, the original vendor of the property can claw back some of the increase in value. This is often called “overage”.

The standard precedents often used by lawyers acknowledge that great care has to be undertaken in drafting overage agreements. However, many of these precedents use the granting of a “Planning Permission” to trigger the overage payment.

However, due to the expansion in the scope of PDR, the procedure when converting agricultural barns is not to apply for planning permission, but instead to serve notice to get approval from the Local Planning Authority that the conversion is permitted development within use Class Q. Such an application does not result in the grant of planning permission and therefore in many cases, will not trigger an overage payment.

This is a very narrow point but could have significant consequences. Many draftsmen may be in the habit of using a standard precedent overage agreement without giving thought to what would happen if there is “development” within the meaning of s 55 Town and Country Planning Act 1990 which is either unauthorised (where owner simply going ahead without planning consent) or which is a permitted development which does not requiring planning permission.

Bartons’ property and dispute resolution departments are experienced in dealing with these matters and are able to advise you on:

  1. the drafting of suitable overage provisions if you are selling land;
  2. the interpretation of overage agreements relating to land which you have bought;
  3. the enforcement of overage agreements against developers;
  4. defending claims to enforce overage agreements
  5. claims against professional advisers in relation to negligently drafted overage agreements.

About the Author

Raymond Hayes is an author on property law and graduate of London and Oxford Universities, Raymond was formerly a partner with a leading Hong Kong firm. His specialties include investment properties, second homes and high value residential plot sales for developers.

Contact Number: 01548 845000