This page is what was on the then website in 2016 convering Overage. Overage actually became due in 2016, unless none was owed. Between 2016 and about 2020 we were being told by Camden that they were endevouring to calculate and collect it so there was little activity in terms of campaigning except for regular Freedom of Information requests which can be found here. These were re-inforced by Members Requests from Cllr Alison Kelly. Then we were told that Camden were giving up, hence the campaigning from then, ongoing details of which can also be found elsewhere. Some links below have been updated since 2016
Overage ie Profit Share.
What follows is the situation as far as we can estimate it, in February 2016. It consists of a Summary, with references eg [1] to notes below. It is based on Schedules 2 and 4 of the Conditional Sales Agreements which can be found on the Land Documents page here. Linked on this page is our Financial Appraisal which justifies the assertion that Camden is owed over £3m.
Caveats and more on the availability of information used, are in note [24]
Summary
Overage is a term in a land sale contract under which, if a development makes a profit above a defined amount, the surplus is shared between a developer and a Council in defined proportions. In this case, there is no Overage unless the sales from the development exceed the costs plus 25%. Above that is what is called “Development Excess” of which 30% is payable to the Council [4].
Due to the huge increases in house prices immediately before the flats were marketed, we have estimated that Camden should be entitled to something in excess of £3m [5]. The amount that each of the 3 components of the development fetched is known- Private Flats £20,757,590 [6, 21 & 22], Affordable Flats £3.6m [7] and Freehold £2.5m [8]. We know how much was estimated to be the costs at the time the agreement was signed as it is shown in the Development Appraisal which is Schedule 4 in the Conditional Sale Agreement.. Armed with that information it is possible to make an informed guess as to the profit though the weakest link is not knowing the actual chargeable costs [9].
Since the costs are largely fixed, for every extra £1m the private flats sold for over a certain amount, Camden were entitled to about £300,000. The Development Appraisal which is Schedule 4 in the Conditional Sales Agreement showed an estimate for the sale of private flats of £8,197, 629 and profit of 19.52% which is below the 25% threshold for Overage to be payable.
Under the Agreement, Overage is payable at a defined time which would mean July 2015 at the latest [10]. The last we heard was that Camden has been asked about the situation and they have been saying that the developer maintains that no Overage is payable. Camden were seeking details from the developer to justify the assertion [11]. The Conditional Sales Agreement contains the procedure etc when there is a dispute and an “Expert” has to be appointed [23].
Overage is payable by the original owner of the land and his successors in title. That would mean the current freeholder which is Hazlewood Properties Ltd a company registered in the British Virgin Islands [12] to whom the freehold was sold in December 2014
Thus there is a distinction between obligations that fall on the freeholder and planning obligations under the s106 agreement. The freeholder appears to be the sole obligor to Camden under the Land Sale agreements. Under the s106s and planning approvals, it is as described by Camden’s QC at the public enquiry into the stopping up of Dalby Street as “ …..eg a long leaseholder in the flats, the owners of the Dr.s surgery or a housing association running the affordable housing ..” [13].
Notes
[1] There were two agreements which can be found with a lot more on the subject here on the Land Documents page. They were the Conditional Sale Agreement dated 19.4.05 between Camden and TRAC Properties Ltd and the Supplemental Sale Agreement dated 6.7.07 also between Camden and TRAC Properties Ltd. The later one was very brief, added little to the earlier one and increased the price payable by £11,000 perhaps on the grounds that it was essentially in exchange for an extension of time. In fact the whole situation had changed between the two dates since at the earlier date, the scheme required Wilkin St Mews (now largely occupied by the Camden Brewery) to become in effect a public one-way road, part of which would be access to the Sports Centre.
[2] Of the £651k, only half was payable, the other half was the land owner’s contribution to the Overage agreement so was not paid.
[3] In theory, there is no connection between the £651k and the £3.5m the land was then sold for. The £651k is meant to be the value of a site which couldn’t be developed or otherwise used. The £3.5k was for a site that could be developed because it included the derelict house that was owned by the buyer (Trac), the relocation of the traveller families living on the Travellers Site (£200k) and the existence of the planning permission. What many would criticize is (a) that Camden didn’t take into account any other alternative use for the land and (b) that after the price had been agreed, the buyer told them that it could no longer bring Wilkin St Mews into being a publicly usable one way road. Many would think that Network Rail would never have agreed to that or that, if they had, the cost to the other party (effectively Trac Properties at the time) would have been prohibitive.
[4] The relevant pages in the Conditional Sales agreement are Schedule 2, the Overage terms, and Schedule 4, the Appraisal.
[5] Our Financial Analysis is linked on this page, showing a “Base Case” of an Overage due to Camden of £3,877,298. An unprotected spreadsheet version can be make available which allows the user to vary any of the 3 key variables at the top and see the resultant Overage payable to the Council. The 2nd key variable is the important one ie increase in build costs so you can for example enter £4m in place of £837,949 and the Overage will reduce to £2,691.529.
[6] The sale price of the 36 private flats is what is recorded at the Land Registry
[7] The amount payable by the RSL for the 19 affordable flats of £3.6m is taken from Findon Urban Lofts Ltd’s report included with its accounts lodged with the Tel Aviv Stock Exchange (TASE) in March 2011 being part of the 2010 accounts. Findon were required to make such disclosures as it had borrowed money to fund its 7 projects on TASE.
[8] Freehold. Shown in clause 1.10 of the agreement lodged at the Land Registry for the sale by Cornwall to Hazlewood Properties Ltd as £2.5k made up to £2.2k for the commercial ie Medical Centre and £300k for the residential area.
[9] The Schedule 4 appraisal has £8,379,495 for “Build Costs”. In our current updated appraisal it has been increased by 10% for inflation between whatever the assumed date of start was in Schedule 4 and the actual start.
[10] The relevant date Overage became due was to be the later of three criteria but subject to a “Long Stop Date” of 12 months from practical completion. The private flats started to be occupied in July 2014.
[11] Several requests for information have been sought from Camden starting May 2014 when they said that the relevant date hadn’t been reached. They also responded to a mention in an FOI request that the developer beneficially owned the contractor by saying that this had not been envisaged in the Overage terms but that they allow for an “Expert” to be appointed. More recently, Camden confirmed that the date when Overage became due had been reached.
[12] Hazlewood Properties Ltd’s contract with Cornwall was signed on 20.6.13 and was subject to a defined completion date. Completion was shown in the Land Registry as being in December 2014. Hazlewood’s details and lender are shown as “HAZLEWOOD PROPERTIES LIMITED (incorporated in British Virgin Islands) of 3rd Floor, J & C Building, P O Box 933, Road Town, Tortola, British Virgin Islands, VG1110 and care of Nicholas & Co, 18-22 Wigmore Street, London W1U 2RG. Lender(s): Santander UK PLC”
[13]. The full text of the section in Peter Harrison QC’s final submission to the public enquiry into the stopping up of Dalby Street reads-
"Will the Arrangements stay in place?
LBC rely on the Section 106 agreement. It has to be remembered this provides three important safeguards for Camden.
A. the obligations run with the land. Anybody who buys the land from the current owners or in any other way is a successor to them (eg a long leaseholder in the flats, the owners of the Dr.s surgery or a housing association running the affordable housing) will be liable to keep the marshal on site and to maintain the footpath and the access road. This is an important point in itself. Much of the criticism of the Applicant has been that despite the background information provided they are a company registered in the BVI and this may make it difficult to take action against them. If this is so the sooner they sell the land the better! At worst it will simply be to another overseas registered company.
B. The Council can enforce the obligations of the Section 106 against the applicants even after they have parted with all interest in the land. Clause 6.8. of s106 ensure that owners will remain liable for breaches while they own the land.
C. The Council has taken a surety which, as set out when explaining the Section 106, means that should the applicant disappear after day 1 of occupation the Council can finance the marshal themselves without having to use money from other sources for at least 25 years. This is considered to be a reasonable period since the arrangements are almost bound to have to react to circumstances changing in some form or another over that period in any event. Litigation would only take a few years to get hold of the freehold."
[20] Camden originally refused requests for details of the land sale on the grounds of commercial confidentiality. It was a reporter on the CNJ who suggested we tried to find details as they had failed. To our surprise, we found that all the contracts including others not involving Camden were available at the Land Registry. Individual FOI requests were then made for confirmation of the accuracy of each of the documents involving Camden, having received informal advice from a partner in Slaughter & May that it would not be regarded as wrong to submit in that way. Shortly afterwards, Camden declared me “vexatious” so they would not accept further FOI requests – this was unknown to either the Borough Solicitor or the Head of the Central Complaints section. When I appealed to the Information Commissioner, one of the grounds was the number of FOI requests I had submitted. All correspondence can be found via the Talacrefacts site here.
[21] A list of buyers with prices, names of solicitors and lenders was created from the information available at the Land Registry. There is a basic reference number of NGL637463 which gives the reference numbers for each lease so at £3 a search the current owner can be found. Only the initial purchases were covered and in 2016 we had no information on any new owners if a flat has been sold since the original purchase.
[22] The owners learned that the list of purchasers etc, which of course was only a compilation of what was publicly available, was on a website accessible to anyone. They objected and a letter was received from a solicitor at the Land Registry saying that we had no right to do what we had done and should remove it.
[23] This is the text of the clause covering the appointment of an “Expert”
“Any dispute or difference between the parties in connection with this Agreement will be referred to and settled by an impartial chartered surveyor ("the Expert") whose decision in relation to such matter is final and binding upon the parties 21.2 The Expert acts as an expert and not an arbitrator and the provisions of the Arbitration Act1996 shall not apply to the Expert, his determination or the procedure by which he reaches his determination 21.3 he party wishing to appoint the Expert will give notice in writing to that effect to the other party together with details of the matter which he wishes to refer to the Expert 2l.4 The identity of the Expert will be agreed by the parties in writing or, failing such agreement, the Expert will be appointed by the President for the time being of the Royal Institution of Chartered Surveyors ("the President and "the Institution" respectively) on the application of any party. If the President is not for any reason available or is unable to make the appointment at the time of the application, the Expert will be appointed by the Vice President or next senior officer of the Institution then available and able to make this appointment. Any reference to the President includes a reference to the Vice President or other officer of the Institution as appropriate. If no such officer of the Institution is available or able to make the appointment the Seller will designate an impartial chartered surveyor to be the Expert 21.5 A person can only be appointed to act as an Expert if at the time of the appointment he is not:21.5.1 a director, office holder or employee of; or 21.5.2 directly or indirectly retained as a consultant or in any other professional capacity by any party to this Agreement or any company or person associated with any such party.2l-6 Within fourteen Working Days from his appointment the Expert will call the parties to a meeting at which he will give directions as to the future conduct of the matter and will from time to time give such further directions as he shall see fit, The Expert will allow the parties to make written representations and written counter-representations and will rely on his own judgement 21.7 The parties will give to the Expert such assistance as the Expert considers necessary to carry out his function 21.8 The Expert will give notice in writing of his decision to the parties within four weeks "of his appointment or within such extended period as the parties may agree in writing 2l- The costs of the reference to the Expert will be borne as he directs and failing any such direction will be shared equally between the parties. If any party pays the whole or part of the Expert's fees the other party will upon demand repay to the paying party the whole or part of any fees so paid, insofar as the Expert awards such fees against the non paying party 21.10 If the Expert ("the Original Expert"):21.10.1 fails to determine the matter referred to him; 21.10.2 fails to give notice of his decision within the time and in the manner provided for in this clause; 21.10-3 relinquishes or does not accept his appointment; 21.10.4 dies; or 21.10-5 it becomes apparent for any reason that he is unable to complete the duties of his appointment; any of the parties may apply to the President for a substitute to be appointed (but not after the Original Expert has given notice of his decision to the parties in dispute). ln such event the Original Expert is no longer the Expert, the provisions of this clause apply as if the Original Expert had not been appointed and will be repeated as many times as necessary. Any reference to the Expert in this clause is deemed to include any substitute appointed pursuant to this sub-clause 21.10”
[24] Caveats and Availability of Information. Between £3 and £4 million is our best estimate based upon what we know. That includes details of the Sale Agreements for the land copies of which were originally requested by the press and public with the Council refusing to disclosed them on grounds of “Commercial Confidentiality”. They were later found to be filed at HM Land Registry and readily available. Amounts paid by the buyers of the private flats were recorded at HM Land Registry. The total shown is from a schedule listing these amounts, owners etc and originally posted on a public website. A buyer or buyers complained to the land registry who asked that the schedule be removed – so much for transparency - correspondence with the Land Registry in here. There remains much that has had to be estimated including the actual costs and therefore we cannot do more than make a judgment that is intended to indicate the order of magnitude which is especially important when we find that it is being maintained that no Overage is payable.