Following Boris Johnson’s pledge to “Build Build Build” now may be the best time to consider your options in respect of any land you own.
The Government have committed to making the planning process swifter and simpler and to build more homes than ever. However, it is still likely that getting planning permission and marketing your land will be a time consuming and complicated process and this can put many land owners off cashing on their investments.
It may be then that a Promotion Agreement is a good solution for you.
A Promotion Agreement is an agreement between a land owner and a “promotor” whereby the promotor looks into obtaining planning permission on the owner’s behalf and, if successful, then markets the land on behalf of the owner with the benefit of the planning consent. Should the promotor be successful in finding a purchaser, they then keep a set percentage of the proceeds of sale for their efforts.
If you are considering this for your land, it is important to bear a number of things in mind:
- Length of the Agreement
In entering into the agreement with the promotor, you are effectively tying your land up for a period of time. If you were to sell the land during this period, it would be either with the benefit of the agreement, meaning that potential purchasers might be put off, or you may even need to pay the promotor a fee under the Promotion Agreement.
Whilst you need to agree on the promotor’s fee for any sale, you also need to decide if the Promotor will pay an initial premium for the rights to the Promotion Agreement over your land.
- Minimum Value
Under the terms of the Promotion Agreement, should the promotor find an appropriate buyer, you would be obliged to see the land. It would therefore be wise to include a minimum value for any offer which would obligate you to sell – you wouldn’t want to find yourself having to sell your land for a fraction of its worth just because the promotor had got an offer!
For further advice on promotion agreements, contact Farleys’ commercial property team on 0845 287 0939 or send your enquiry through our online contact form.