What is a 'Residential Unit'? High Court Rules

A couple who made £13 million by selling their land for residential development are in line for a further very substantial sum after the High Court interpreted in their favour a contractual term which entitled them to additional payments, depending on the outcome of the planning process.

As well as the initial purchase price, which was agreed at the height of the housing boom, the couple were entitled under the terms of the sale contract to 'overage' payments from the developer, the amounts of which would be determined by the number of residential units for which planning permission was ultimately granted.

In those circumstances, an issue arose as to whether 60 flats within a care home built on the land were 'units of residential accommodation' within the meaning of the contract. The developer argued that the flats, which enjoyed communal facilities including a café, lounge and hairdressing salon, should be viewed as an integral part of a single residential institution.

However, in preferring the couple's arguments, the Court found that, on a correct analysis of the planning permission, the development which it had permitted and the 'ordinary English meaning' of the contract, each of the 60 flats was a residential unit on which overage was payable by the developer.

When entering into a property contract with a conditional element, the wording of the conditions is crucial. For assistance in this area, contact us.
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