Are you a landowner but aren’t sure how to realise your land’s value? Maximise your land’s potential and create capital through a Promotion Agreement.
Simon Wake, Head of Commercial Property, at Endeavour Partnership explains the process of adding value to developable land through a Promotion Agreement and the benefits of doing so…
What is a Promotion Agreement?
A Promotion Agreement is a mechanism by which a landowner who owns developable land but hasn’t got the time or expertise to go through the process of obtaining planning permission, can get a promoter to do that for them.
How does a Promotion Agreement work?
- A promoter and landowner enter into a Promotion Agreement, usually with a small fee being paid to the landowner.
- The promoter will apply for planning permission for a development on the landowner’s property at their own expense and risk in order to maximise the land’s worth. Once planning permission has been obtained, the promoter will market the property for sale on the open market.
- In return the landowner will be under an obligation to sell the land and pay a proportion of the land value obtained as a result of the promoter’s efforts.
- Once the land is sold the costs of sale e.g. agents and legal fees are repaid, the promoter’s costs are reimbursed and the remainder is split between the landowner and promoter in the agreed proportions.
What are the advantages of a Promotion Agreement?
In contrast to an option agreement, where a developer wants to purchase the land for as little as possible, with a Promotion Agreement both the landowner and promoter want to maximise the value of developable land.
The promoter will work hard to obtain the land’s full potential as the property’s value will be determined by an actual sale of the land rather than a speculative market valuation as might be obtained under an option agreement. Crucially, if planning permission is not obtained, the landowner doesn’t have to reimburse the promoter’s costs and the agreement between the landowner and promoter will terminate.
If you are a landowner with potentially developable land and have been approached by a promoter please contact our promotion agreement expert, Simon Wake, on 01642 610336 or by email at firstname.lastname@example.org
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