Restrictive covernant removal

[Purpleronnie]

Hi all,
Looking for some advice around removal of a restrictive covernant. I bought a small parcel of land some 20 years ago and as part of the sale the seller imposed a covernant that restricts my ability to build dwellings on the land. I have been negotiating with the company who imposed the covernant to determine the cost of removal but the fee they are quoting is hefty. To give you an idea the land value with planning permission is probably around £1m and the proposed cost of removal is being quoted at £250k. I have heard that there are limits on the cost that can be charged for removal that are based on the original purchase price / full value of the land at the time of sale but haven’t been able to find anything that backs this information up. Does anyone have any further detail around this?

[Mike4]

Probably not much help, but I can't imagine why there might be any legal controls on charges for removal of a covenant. They are an entirely private condition applied to the sale and willingly agreed between the seller and the buyer.

If the buyer changes their mind later, then the holder of the covenant can charge what they like to drop the condition, surely? If they ask too much for removal then you decline, the covenant simply stays in place and they get nothing. Which is perhaps what they want to happen.

No doubt someone better informed than me will be along soon to explain I've got it all wrong!

[scrumpyjack]

My siblings and I sold some land a couple of years ago and have a 50% share of any development gain in future, so your 25% figure does not look unreasonable (though of course it is a higher percentage than 25% as it is of the whole value not just the gain and does not allow for the hefty costs that would be incurred in getting planning permission (or in failing to get it!). Also a builder buying it would build in a hefty margin for himself when making an offer.

It might be less risky for you to offer to buy out the covenant in exchange for a percentage of any development gain?