Overage Explained: Sharing in Future Value After You Sell

Say you sell a field today at farmland value. Ten years later the buyer gets planning permission for houses, and the same field is worth many times what you were paid. Without overage, all of that increase belongs to the buyer. With overage, you receive an agreed share of it.

Overage is simply a contract term. The buyer agrees to pay you a further sum if a defined event happens within a defined period. The event is called the trigger. The sum is usually a percentage of the increase in value the trigger creates, often called the uplift.

It works in the other direction too. If you are buying land, or if you inherited land that someone in the family bought years ago, there may be an overage owed to a previous owner. That can take a slice of your proceeds when you come to sell with planning, so it is worth finding out early.

You will see the words overage and clawback used for the same thing. Some people use clawback for arrangements imposed by public bodies when they sell surplus land, but the mechanics are the same.

Buyers often ask for a planning trigger to wait until the permission can no longer be challenged in the courts by judicial review, which in most cases means a period of about six weeks after the decision. That is a reasonable request.

A planning trigger gets you paid sooner. A disposal trigger gives you a real price to work from. For development land, a common approach is to pay on whichever comes first, with the uplift worked out by valuation if no sale has happened.

There is no fixed market rate for overage. The share and the period depend on how likely development looks when you sell, how much the buyer is paying, and how badly each side wants the deal. For farmland sales, one Strutt & Parker agent quoted in Farmers Weekly put the figure at "quite often" 30% of the uplift, typically for about 30 years, while stressing that it is always a matter for negotiation. Treat that as a reference point, not a norm.

A buyer who pays full farmland value for a field with no realistic prospect of planning may agree to a generous share for a long time, because they do not expect to pay it. A buyer who is paying a price that already reflects some hope of development will push for a lower share, a shorter period, or both. Nothing stops you negotiating a share that reduces over time, for example a higher percentage in the first ten years and a lower one after that.

• The share. Always a percentage of the uplift, not of the whole value. Ask what the uplift is measured against: the price you were paid, the value without planning at the trigger date, or a fixed figure.
• The period. Planning on land that is not yet allocated can take many years, often longer than people expect. A short overage period can expire before the land ever reaches a local plan. Our guide on how long planning takes gives a sense of the timescales.
• Indexation. If the base figure is fixed today, ask whether it rises with inflation. The buyer will usually want it to.

An overage promise is only worth having if it can be enforced against whoever owns the land when the trigger happens. That is harder than it sounds.

The general rule in English law is that the burden of a positive covenant, meaning a promise to do something such as pay money, does not automatically bind later owners of the land. If your buyer sells on to someone else, that new owner is not bound unless something makes them bound. Your solicitor will use one or more of the following methods to deal with that.

In practice, a restriction backed by a direct covenant is the usual starting point. A legal charge is stronger security and is worth asking for when the potential payment is large, but expect it to be negotiated. Retained strips are covered in more detail in our guide to access and ransom strips.

A Planning Trigger on a Field

A Disposal Trigger on a Yard

Both examples show the same thing. The percentage is only one of three numbers that matter. The other two are what the uplift is measured against and what can be deducted from it.

What Counts as Planning Permission

If overage is triggered by "planning permission", ask exactly what that means. Does it include outline permission, or only full or reserved matters approval? Permission granted on appeal? Prior approval under permitted development rights, such as a barn converted to homes under Class Q? A certificate of lawfulness for a use that has continued long enough to become lawful? A buyer can argue that a trigger which only mentions a "planning permission granted on an application" does not catch these.

Exclusions

Some exclusions are reasonable. A buyer of farmland may want to put up agricultural buildings, or a single house for their own family, without paying overage. The risk is exclusions that are wider than they look, such as "agricultural or equestrian use" that could cover a large commercial livery yard.

Deductions

Buyers will want to deduct the costs of getting planning, and sometimes infrastructure, Section 106 contributions and Community Infrastructure Levy. Some deductions are fair. Your solicitor should make sure they are listed, evidenced, capped where possible, and not counted twice. If a valuation already reflects Section 106 costs, they should not be deducted again. Our guide to Section 106 and CIL explains how those costs work.

Drafting to Stop Avoidance

• Does a sale of part of the land, or a long lease, trigger overage, not just a sale of the whole?
• If the land is owned by a company, does a sale of the company's shares count as a disposal?
• Is the overage caught if the buyer gets permission on a bigger site that includes your land, and how is your share of that value worked out?
• Can the buyer wait until the period ends and then apply? A clause catching applications submitted during the period, even if granted after it, helps.
• Is there a way to settle disagreements about value, such as an independent surveyor acting as expert?
• Is there a date by which payment must be made, with interest if it is late?

A buyer who is determined to avoid overage can sometimes find a way. Good drafting makes that expensive and unattractive, which is usually enough.

Overage cuts both ways, and families often come across it when someone has died or when land is finally sold after decades.

If Your Land Is Subject to Overage

Land bought from a council, a large estate or a developer sometimes carries an overage in favour of the original seller. It may be shown as a restriction on your title, or it may sit in an old conveyance if the land is unregistered. If it is still running, part of any uplift from planning could be payable to that seller. Anyone buying or taking an option over your land will find it on their searches, so it is better to know first. Your solicitor can check the title and the old deeds.

If a Relative Sold Land With Overage

The benefit of an overage usually passes to the seller's estate on death, unless the agreement says otherwise. Executors need to know it exists and who holds the paperwork, and it may need to be dealt with when the estate is valued and distributed. Our guide to probate and selling land covers the wider process.

The tax treatment depends on how the overage is structured, and it can be counterintuitive. Where the amount of a future payment cannot be known at the time of sale, HMRC guidance treats the right to receive it as an asset in its own right. Its value at the date of sale is added to the sale price for Capital Gains Tax, and when overage is later paid, that is treated as a separate disposal of the right, which can produce a further gain or a loss.

That can mean tax is due on money you have not yet received, and may never receive. Ask your accountant to look at the overage wording before you sign. Our guide to tax when selling land for development covers Capital Gains Tax rates and timing at the time of writing (September 2026).

Our model is different from a straight sale. We agree a price with you at the start, we pay for the planning work, and you receive the agreed price if planning is granted. You keep your land if it is not.

If you think a later, bigger permission could follow the one we pursue, raise overage when we discuss heads of terms and ask your own solicitor to review it. We contribute to your legal and professional fees so someone acting only for you checks every term. If your land is already subject to an overage in favour of a previous owner, tell us early. It does not rule a site out, but it changes the numbers and we would rather know at the start. Our guide to option agreements explains how our agreements work in more detail.

If you would like a second opinion on land with overage attached, or on whether your land could have development potential, ask for a free review.