Land Promotion Agreements allow landowners and land promoters to work together to deliver planning permission on the landowners site but at the cost and risk of the land promoter. The agreements are tailored to each site and the landowners’ specific requirements, but they do have some common features such as an agreement fee, promotion period, planning objectives and marketing plans.
This is a sum of money paid to the landowner on the day the agreement is signed. It’s a “thank you” for agreeing to work with the promoter and is retained by the landowner regardless of whether they succeed.
The land promoter will have a fixed period in which to secure planning permission. For most sites this is likely to be related to the council’s timetable for preparing their new Local Plan - with a buffer in case the Plan is delayed (which, unfortunately, they often are).
In many cases, the promoter will also be able to extend the agreement for a further fixed period provided the promotion still has a chance of succeeding.
Whatever the time period, this isn’t an estimate or a forecast of how long the project will take – it’s simply the maximum amount of time allowed. It is in the interests of the promoter to progress the site as quickly as possible - they don’t get paid until it delivers - but the Local Plan timetable is beyond their control.
This is the fee payable to the promoter once planning permission is in place and the site is sold, and is typically made up of two parts.
Firstly, the promoter is reimbursed for what it has spent securing planning permission - usually subject to a maximum cap - as well as other costs associated with marketing the site for sale following the grant of planning consent.
The second part of the fee is a fixed percentage share of the selling price actually achieved. This ensures that the promoter is incentivised to get the best price possible.
The exact percentage will depend on the specifics of the site and will take into account factors like the size of the site, the strength of the local housing market, the time it is likely to take to secure planning permission and the risk associated with doing so.
Ordinarily, however, it is likely to be somewhere between 15% and 25% of the eventual selling price.
A set of planning objectives detail what the promoter is going to try and achieve. They will explain what type of development the site will be promoted for - often a housing scheme – and will include other objectives like maximising both the area to be developed and the site’s value, while minimising the costs of development.
Once planning permission is in place, a buyer needs to be found. The Promotion Agreement will explain how and when the site will be marketed for sale, and how to decide which offer to accept.
Normally a selling agent will be appointed to help with that process. This should be a joint instruction between the promoter and landowner (but at the promoter’s cost), ensuring the agent must act in the best interests of both parties.
While the promoter is running the project, they will need to keep the landowner updated on progress. The Promotion Agreement will set out the minimum reporting requirements - usually at least four written updates and one meeting a year.
The landowner should have other input into the process too. All Strategic Land Group agreements ask partners to approve a detailed planning strategy - including the consultant team - at the outset of a project. Landowners also have the right to approve the masterplan layout used during promotion work, as well as the eventual planning application. This gives them confidence that we are doing the right things.
As the promoter will be spending a lot of money on their site, there are some light-touch expectations of the landowner. For example, although the landowner is free to continue using the site in the same way as before they signed the Promotion Agreement, they won’t be allowed to do anything that would dramatically increase the cost of development - like digging a hole and filling it with asbestos, for example.
The landowner will also be expected to help the land promoter secure planning permission (at the promoter’s cost, of course) by, for example, allowing access to the land for site surveys. The promoter should clearly explain what each survey involves, however.
Finally, you'll want the support of a lawyer to help you put this agreement in place. Although you're free to use whichever lawyer you choose, you can expect the promoter to cover their costs.
The Strategic Land Group has been using Promotion Agreements to work with landowners - and deliver successful results - for more than 15 years. If you want to learn more about how they work, get in touch today. You can even take advantage of our free, no obligation assessment of your site’s development potential.
