Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Help sought, please, to get around a non-development covenant on an ex-LA house.
We live in an ex-LA semi on a corner plot in a commuter town in Hertfordshire. The plot is large enough to add at least one more dwelling, and there are smaller (non-LA) plots nearby that have had two and even three new houses built on them (probably not ex-LA), so Planning is not likely to be an issue.
However, at the time it was sold off to the previous owner under Right-to-Buy, the LA put a covenant on the property preventing the plot being split. I asked the LA a few years back about relaxing that part of the covenant, and they replied:
“In the event that the Council is able to agree to a particular proposal as not being detrimental to the neighbourhood, the Council is bound under s123 of the Local Government Act to obtain full value for the landed interest being granted” [in modifying that covenant]. You will appreciate that this would be the same with any private landowner. The price sought is an equal share of the net profit arising out of the relaxation. The net profit is the actual benefit produced after allowing all outgoings including any diminution in the value of the existing property.”
So even though we would be doing all the work and taking all the commercial risk for the construction works and sale, they would expect to take half the net profit created by building and selling any extra dwellings. This killed the idea at the time, but I am hoping things may have changed with this housing crisis?
One solution could be building to let (i.e. never selling them off), but their definition of “benefit” in their last sentence above, might still trigger such a payment to them.
Has anyone faced and overcome similar situations?
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