Land Promotion Agreements

When it comes to selling land, choosing the right route to go down at the outset can make a significant difference to the eventual outcome. 

Land Promotion Agreements are an increasingly common way for land owners to get the expertise and financial support they need to secure planning permission for development on land they own.

What is a promotion agreement?

A Promotion Agreement is a contract entered into by a landowner and a ‘land promoter’. By entering into a Promotion Agreement, the landowner agrees to sell the land once planning permission has been secured. The promoter agrees to undertake the work to achieve planning permission, and thereafter promote the land to suitable buyers. This is all done at the cost of the promoter, with the landowner often bearing no up front cost at all. In return, the promoter takes a percentage of the eventual sale price achieved for the land.

The Promotion Agreement will cover the following elements:

  • the length of time the promoter has to successfully secure planning permission;
  • the share of the eventual sales price the land promoter will receive.

When is a promotion agreement suitable?

Promotion agreements are often used where securing planning permission is not straight-forward and may take several years to achieve, or where the owner of the land requires financial assistance to gain planning permission before selling the land to a housing developer, for the maximised value.

Landowners that wish to retain control of their land and continue to make use of it until the point of sale may choose to go down the Promotion Agreement route.

What other factors are there to consider?

As the final price that is paid for the land is reached by a competitive bidding process, involving bids from interested parties once planning permission is secured, it is often considered that the price reached is higher than would have been via other routes of sale (such as by an Option Agreement). On the other hand, there is a degree of uncertainty and the landowner won’t know how much they will receive from the sale until a buyer is selected.

Promotion Agreements can be seen as more preferable to landowners as they have a shared interest with the land promoter – to achieve the best possible price for the land. This is opposed to Option Agreements, where the buyer (usually a developer) will want to buy for the lowest price, and sooner.

Contact our Land and Development Team

Lea Hough has a specialist team offering advice on Planning and Land Development. We can work with land owners from the very early stages of preparing for sale, providing advice relating to the circumstances involved and the best route to sale. Our team’s experience also affords us a good position to consider the best strategy to market land to developers to achieve the best sale price for our clients. For more information, please get in touch.

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