Solicitor highlights power of promotion agreements for landowners eager to sell
Landowners can help use promotion agreements to unlock the development potential of their land without any upfront cost or financial risk, a Midlands-based solicitor has advised.
Such agreements are legal profit-sharing arrangements between a landowner and a specialist property developer, known as a land promoter. In this scenario, the promoter bears the initial cost of obtaining planning permission and marketing the land to maximise its value in exchange for a fee on sale, which is repaid if planning is achieved.
Paul Harris, senior associate and residential development specialist at mfg Solicitors, said: “Landowners can benefit from the expertise of promoters to obtain planning permission, while retaining ownership of their property. Once the planning process completes, the promoter usually helps market the land to prospective buyers, with the benefit of having planning permission already in place.
Increased chance of planning permission
“Promotion agreements are particularly attractive to landowners because they increase their chances of gaining planning permission, therefore increasing the value of their land for low cost and minimal effort.”
Under the agreement, the landowner will often agree to sell the land once a buyer is secured, with the promoter receiving a pre-agreed percentage fee, as well as the planning and legal costs. If the promoter is unable to secure planning permission within an agreed time frame, the agreement will end and the landowner is usually not required to pay any of the promoter’s costs or expenses.
Harris admitted there were also challenges. “The main drawback for landowners is the restrictions placed on the land for the period of the promotion agreement, and lack of control over the planning process.
“However, most landowners take the view that it is best to leave the financial and administrative burden of obtaining planning permission to a promoter in an attempt to unlock the development potential of the land and maximise its value.”
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