Land Promotion - An Alternative To Options?

With the downturn in the property market, developers have been turning to medium or long-term strategic options in respect of land. There has been an emergence over the last few years of Promotion Agreements as a popular alternative to the use of the more traditional Option Agreements.

Promotion Agreements are a type of joint venture between landowners and a developer. The developer uses its expertise and funds to "promote" the land with the Local Authority with a view to procuring the preferred allocation for the land in the relevant Local Plan and obtaining a satisfactory planning permission for development of the land. Once planning consent has been granted, the land can be sold on the open market with the benefit of the consent. The net proceeds of sale (having deducted sale costs, reimbursement to the promoter of the costs of obtaining planning consent, any planning gain and other deductible expenditure) are divided between the landowner and the promoter in an