Land ready for development can need you to look for measures to get the best outcome. Even if you have the know-how, it is always advisable to seek the assistance of a professional developer so that you can avail yourself of the finest price. As a landowner, if you want to proceed with it, you will have two options-either an optional agreement or a promotional agreement.
With this, before you draw any conclusion, you will have to consider all the necessary facets of both the promotional agreements. The purpose of this blog is to present all the related facts to assist you draw the bottom line on opting for the best one:
What is an optional agreement?
An optional agreement is a binding arrangement between a landowner and a developer. It allows developers to have the option of arranging land from the owner of the land, generally after meeting a set of conditions. Just as it states, this agreement equips the developer to purchase the land in a specific period.
What is a promotional agreement?
A promotional agreement is an arrangement between a landowner and the planning specialist. Its purpose is to market the land with planning purposes to obtain the planning permission. After the permission, both the parties work alongside to promote and sell it to a developer. The price to be paid by developers will be distributed among both parties as decided in the arrangements.
How is an optional agreement different from a promotional agreement?
Upon entering the promotional agreements, a landowner can sell his property, but there is no such liability or obligation in the case of optional agreements. The owner thus won’t have control over his land in the case of optional agreements, but promotional agreements allow a hold.
Under promotional agreements, both the involved parties are on the same side of the table. They want to bring the best value out of land and divide the proceeds. The point of difference between them is that option is practised after planning permission is permitted and matches the developer’s satisfaction. He would want to pay as little as possible, and the landowner the most of it. As a result, both of them can be at cross purposes.
Which agreement is better?
Both the agreements have their pros and cons, impacting the bottom line. Over here, let’s have a quick look at them:
- A promotion agreement can be beneficial for the landowners as it lets them work next to developers. As a result, they do not lose any degree of control over their property. On the other side, developers keep up the control of planning applications with option agreements. They can choose to purchase the land based on that application.
- The major drawback of the option agreement is that after granting planning permission, it won’t allow testing the market during the sale to the landowner. It will not be presented on the open market to third parties. That can give rise to the possibility that landowners can trade the land for low returns under the options market instead of the outcome, which can come from the open market.
- However, with a promotion agreement, after obtaining the win-win planning permission, the promoter can persuade the landowners to sell as long as their conditions are met. It can be a con for owners if they have to deal with a developer who might not be a recognised bidder.
- An option agreement allows a developer with an alternative to purchasing land, but it will not be any obligation as such. It doesn’t mostly occur that a developer would want to leave the fields after obtaining planning permission. Considering the perception of a landowner, this may not turn out to be concerning as they will have the benefit of planning, and they can sell the same to the third party. In situations like these, a landowner has to be very particular about ensuring the transfer of planning materials and copyright of plans.
- An option agreement can allow landowners to choose the developer they want to offer to sell their land. There may be the condition that the owner can live a close distance of the land and can have a pre-decided aesthetic in their mind. They may even get impressed by how landowners can function.
An option or promotion agreement, which one to choose?
You can evaluate the straightforward answer to the question based on your needs or the purpose behind the development of the land. If you have to address the disadvantages, you can do that according to pre-decided terms such as the least amount for selling. To draw the bottom line, you must take assistance from professionals.
At Architectural Development Limited, we strive to add value to your development planning. We collaborate with homeowners, landowners, and property owners to extend the comprehensive desires that can meet your expectations. Either deciding between option and promotion agreement or for the processes, reach us now!
