Land Promotion Agreements vs Option Agreements
Land Promotion Agreements & Option Agreements
A subject-to-planning agreement allows landowners to maximise the value of their land without any upfront costs or financial risk.
Under this arrangement, a third party funds and manages the planning application process. This includes covering all professional fees, surveys, and planning costs. In most cases, the landowner also receives a non-refundable, upfront fee on signing the agreement.
If planning permission is successfully granted, the third party receives either:
- An agreed percentage of the final land sale value
- A fixed purchase price for the land
If planning permission is not obtained within the agreed timeframe, the agreement simply ends. The landowner retains full ownership of the land and incurs no costs.
This approach enables landowners to unlock the development potential of their land while avoiding the financial risk of pursuing planning permission themselves.
Land Promotion Agreement
In recent years land promotion agreements, also known as planning promotion agreements, have become an increasingly popular option for landowners. This is the first option listed above where the third party receives a percentage of the final sale figure.
Land Option Agreement
The second route is an option agreement. The option to purchase the land is generally executed shortly after planning consent is received, with the sale price not changing regardless of variables such as how many dwellings have been approved, house prices at the time or the conditions attached to the planning consent.
The details on any agreement will be dependent on the potential value of the land and the level of planning risk and cost involved. Securing planning permission can be costly and take a long time, so on average sales agreements are 2-5 years and during this time the landowner cannot sell the land to any other party.
Benefits of entering into an agreement with The Land Agency
Independent Expertise
As an independent company, we are able to select the most suitable planning consultants, architects and surveyors for each individual project.
No Upfront Costs for the Landowner
We cover all costs associated with securing planning permission. If planning consent is not achieved, the landowner incurs no costs and retains full ownership of the land.
Fixed-Term Agreement
Our agreements are for a defined period, during which we are contractually committed to using reasonable endeavours to secure planning permission and achieve a successful sale as efficiently as possible.
Maximising Land Value
We explore all available marketing and sales strategies to ensure the land achieves its maximum potential value.
Open Market Promotion
Under a promotion agreement, the land is marketed on the open market for a minimum period, ensuring its full market value is realised.
Flexible Sales Strategy
Where appropriate, land may be sold as individual plots to self-build purchasers to maximise the overall value of the site.
Transparency for Landowners
Landowners are immediately informed of all offers received, and comprehensive due diligence is carried out on all prospective buyers.
Please contact us if you own a piece of land and would like an independent, no cost assessment on its potential value and if it may be suitable for a ‘subject to planning’ agreement.