By Bhavesh Amlani, Michael Callaghan
Overage provisions are a common feature of the development landscape, helping to ensure that a landowner receives a “fair” price for its land.
Overage provisions give a landowner the right to receive a future payment following the sale of the property if the developer enhances the value of that property.
For residential developments, overage may be payable if the developer’s profit from the sale of flats and houses exceeds an agreed threshold. Careful consideration needs to be given to how the developer’s profit is calculated and what should and should not be included in the calculations.