VATLP02910 - Supply: Overage payments: Introduction to overage payments
What is an overage payment?
An overage payment is an additional payment or payments to be made by a buyer for a property sometime after its purchase has been completed, where the amount of that payment is not determinable at the time of sale. This extra payment is generally intended to reflect an increase in the value of the property following its purchase, thereby enabling the seller to also benefit. Where this occurs the purchase agreement between the seller and the buyer will contain an overage provision setting out the method for calculating the overage payment, when it is to be made, and to whom the payment is to be made. The trigger for an overage payment may, for example, be the granting of planning permission or the completion of a development by the buyer.