PROMOTIONAL AGREEMENT
Option agreements have traditionally been the most popular method for landowners and developers to engage in a subject to planning sale. The option agreement allows the developer an agreed period to obtain planning permission whilst the seller is bound to not sell the land to another party. An option fee upfront is often paid.
A new approach has been emerging in recent years, in the form a Promotional Agreement.
A promotional agreement allows for more joined up thinking between landowner and buyer and reduces conflict around negotiating a price, as in the traditional Option Agreement method.
The agreement allows for the developer to promote the land through the planning process, to secure planning permission for development. Provided planning permission is granted, the developer agrees
to market the land for sale. The landowner is bound to sell the promoted land and the net proceeds are shared between both parties. The split of the shares is agreed in advance and can vary depending on level of risk, scheme size etc.
A promotional agreement is popular with developers as it doesn’t require them to purchase the land themselves, instead they can concentrate all efforts on ensuring a uplift is generated through planning permission. The promoted land with planning permission passed is much more desirable to builders/developers alike as they can purchase and start work immediately
Option Agreements and Promotional Agreements are excellent ways for a landowner to partner with a developer and benefit from their expertise in the minefield that is planning. With the developer covering the costs involved in obtaining planning, it is very much low risk to the landowner, and the gains can be significant.
If you believe that you have a plot or property with potential and would like to discuss a Promotional Agreement, then please contact us to arrange a meeting.