With the Planning Gain Promotion Agreement, we strive to provide you with a mutually benefiting scenario. Before we begin, we are first going to take a closer view of the concept over here:
Planning Gain
Planning obligations or planning gain are legal obligations, which allows the United Kingdom’s local authorities to secure added public benefits while permitting planning permission. Planning gains take from the increase in value of the land after planning permission. They ensure that commercially practical development can make an ecological balance through environmental and social aspects.
Planning Gain Promotion
Land Promotion agreement
A land promotion agreement allows the developer and owner to agree on a planning permission scenario for the property. It permits them to promote the land post after securing permission. Over here, we will learn about aspects of promotion agreements-
The purpose is to promote the land using the planning process to gain planning permission. Even though sites of all kinds can apply in it, more commonly, you can find their usage in situations where secure planning seems intricate and can need a longer duration.
The land promoter has to commit to leveraging the funding and proficiency for obtaining planning permission on that piece of property. The promoter takes the risk for these efforts as the landowner doesn’t provide any funding for the processes.
Option Agreement
You have learned what a promotion agreement is. On the other side, an option agreement is a deal that involves two parties- landowner and developer. In the case of an option agreement, the developer gets the option to purchase land from its owner.
For the potential development, the developer can purchase the land. The land must obtain planning permission at a pre-decided value. The cost may be fixed or the sum pre-agreed, its assessment can be done when planning permission is assured equivalent to the market value.
Difference between option and promotional agreement
As a landowner, it is necessary for you to know which of the concepts is the most beneficial for you.
- A promotional agreement allows the owner to work with the developer, allowing them to work with the developer, allowing control. With an option agreement, the developer gets control over the planning application and whether they can buy the land according to its usage.
- In an option agreement, a developer can seek a change of cost of the land. However, there is a fixed price, or you can decide it on the basis of the market value. It can uplift the tension that can come as per alleviation of the final price.
- Option agreements can be operative for landowners as developers will deal with the risks and expenses connected with gaining planning permission. Generally, options do not have a way out for lessening the costs, but they have it in promotions.
- Developers can find promotional agreements to be appealing considering the present scenario. However, there are high costs connected with stamp duty to consider. Landowners can also contemplate that in both the scenarios, they can have developers pay for fees and if not that, then a proportion at least.
Now, the need is to draw the bottom line on the discussion of planning promotion versus options agreement. In the land promotion agreement, the interest of both the parties involved, promoter and landowner are contemplated to increase the value. In the case of an option agreement, the developer wants to purchase the land at the lowest possible price. The conflicting interests do prevail among developer and owner by the cost paid by the promoter.
Promotion Agreement and its impact on landlords
Advantages of the promotion agreement on landlords
This land promotion agreement allows the landowner to avail of the skills and the expertise of the promoter/developer. He doesn’t have to put in the effort, which provides the apt power balance. Both the parties have a mutual interest to gain, as compared to the option that makes landowner and promoter set against each other for the final price.
The landowner also will not have to face any direct costs due to the absence of direct risks. Being one, you can also take advantage of the promoter’s interest. You can also get the most profitable price considering land is properly promoted. It can happen because of the following reasons-
- Absence of the option of the fixed price.
- The formation is not based on the open market valuation on certain assumptions.
- Depending on the conditions such as the absence of good marketing conditions, you can witness the flexible timings. A planning agreement can also get you the possibilities of eliminating the need for intricate overage provision to safeguard you from the chances of promoter/developer taking the edge. With common interests, you can find easy negotiation of the promotion agreement.
How does land promotion work?
Here is how the process of land promotion works:
- As a landowner, you need to look for a promoter/developer. While doing so, you must look for someone who possesses the right skills and knowledge along with the right set of contacts. You must increase the possibilities of getting the best outcome.
- When setting the agreement, make sure that it specifies clear objectives and responsibilities on the promoter’s aspect to increase the value and reduce the planning gain and affordable housing.Along with these, as the owner of the land, you must also take into account these specifications:
- A clear termination clause to safeguard yourself from any situation of the promoter not working as per the terms and conditions. It can also be favourable if you do not find the possibilities of the outcome.
You must also determine the need for control for the planning process, especially during the retention of the land.
What is the need for planning ?
The safety/ security concerns as a promoter may also deal with competing sites. You can ask the promoter to not deal with them.
To seek approval of agreements and approval for the landowner. Will the promoter have to appeal, and what other land will be required?
Combating with the risk that the promoter might influence the sale.
There exists the need of controlling costs that the promoter gives rise to, which you can reduce at odds with the sales price.
Promotion Agreement and Sales
Considering the sales aspect, a promotion agreement will allow you to market the land, which will increase the possibility of several buyers. You can expect an increase in the value of the property. The costs will not be technical valuation likely of assumptions. You can be sure of getting the market value for the sale of the property. However, such reassurance will need you to pay the commission to the agents who promote the land.
The Taxation
Here are the current regulations for the taxation that implies on land:
As the landowner, you will have to check the payment structure for sale.
The promoter will have to impose VAT on his promotion fee. As a result, you may want to go ahead with the VAT election.
The promoter will not have to pay the stamp duty land text, considering the absence of acquisition of land.
The role of Architectural Development Limited (ADL)
If you own land with the potential of short term or long-term development, you can go ahead with an option or promotional agreement. The planning gain promotion agreement is recommended. At ADL, we are familiar with working with the property owners. We strive to assist in the development of the project and maximise the value of the land. For more information or to get started, you can connect with us.
Check Our Planning Gain Promotion Case Study
