Devil’s in the detail

If there’s a Hope Clause on the house you’re buying, it could come back to haunt you, warns MARY GOLD

THE Hope Clause. Ever heard of it? No? Neither had I until this disarmingly-named legal landmine blew up in my face.

I was selling my three -acre smallholding in the village of Aldington, K ent, for £722,500, and everything was going swimmingly until the day we were due to exchange contracts. That was when the buyer’s solicitor discovered there was a Hope Clause on one of the five fields.

A Hope Clause is where someone sells, but keeps rights, or ‘overage’, on a piece of land in case it goes for development at some point in the future. It’s like getting divorced, but your ex keeps the keys to the house. Properties are not advertised with the Hope Clause because the details are often buried in the deeds.

The Hope Clause had been taken out in 2000 by the owner before last and meant that any value added to that particular field meant he was entitled to half of the total extra amount.

Shortly before my husband died in 2014, he managed to get planning permission for a log cabin on that field.

Even though the cabin was never built, simply getting the planning permission triggered the Hope Clause, which meant I had to pay the former - owner a share in any uplift in value.

‘A Hope Clause is only triggered when someone develops the land in question, or changes the use of land (it depends on the wording),’ says Amanda Watts, partner at Stone & King.

In essence, it kicks in when someone does something such as getting planning permission to increase the value over and above a normal sale. F or example, building ten houses when there was only one.

Villages are under increasing pressure from developers, and sellers’ antennae have been raised to the possibility of planning permission on rural land, if not for their benefit, then for their children in the future.

Now do keep up because Hope Clauses are becoming more common as the Green Belt comes under pressure from the need to build extra homes.

What was unfortunate in my case was that so many people were in the chain — my buyers, their buyers and me. I presumed that because the log cabin didn ’t happen, and the permission was due to run out this year, that it didn’t matter, but it certainly did, as I discovered to my not inconsiderable cost.

To keep the deal on track I had to stump up £37,500 (the buyer’s solicitor estimated that the permission added £80,000 to the overall value and he settled for just less than half that amount) to pay off the buyer -before-last to settle his contract, which will stay in place until 2035.

If the new people obtain any further permission for that field, a second dwelling for instance, then they will have to pay him, too.

My agent, Alex Davies of Hobbs Parker, says: ‘Buyers are put off by Hope Clauses because people want their land to be unrestricted.

‘Hope Clauses are OK if you buy a property and have no intention of putting up a new building, but even so, the clause should be reflected in the price.

‘Buyers’ solicitors don’t like Hope Clauses either because they can mean problems when you come to sell. But in villages, Hope Clauses are becoming more common.’

My village, Aldington, is especially attractive to developers because it has a post office, delicatessen, good primary school and an excellent pub, the Walnut Tree. AND

it’s also 15 minutes from Ashford station — from where a train to London takes just 34 minutes. Two large new housing estates have gone up in the past five years on Green Belt.

In my case, it was unfortunate that the Hope Clause wasn’t picked up in the early stages of the deal.

‘Once you have found your buyer and the legal process has started, then your options are far fewer because you need to sell and there are more people hanging on your decision,’ says Mr Davies. ‘You can see the reasoning behind these clauses though.

‘Anyone who owns land close to a village and sees other land in that village being developed, will consider hanging on to a field or two before selling.

‘Where a house has land, people are more aware now that it could be developed because, due to the housing shortage, nowhere is sacrosanct. That pony paddock will be worth 50 times the value if you get permission on it.’

Buyers, it appears, are sleepwalking into these situations because Hope Clauses do not appear on a for sale board, they can only be picked up by the Land Registry.

Lay people — in other words the ordinary seller — won’t be familiar with clauses that are buried in the deeds of the house, especially if you used a different solicitor when you bought the house from the one you use when you sell.

Of course, if there’s any fairness in this world then buyers will be so put off by Hope Clauses that sellers will, therefore, not apply for them and they will die a death.

Some hope.