HHLE PROPERTY MATTERS SPRING 2021 - Flipbook - Page 23
Director of Residential
& Commercial Development
M: 07710 396074
The route to
– what are
Landowners have several routes to realising land for development where
potential has been identified and which have different implications in
terms of timing, structure, cost and the quantum of the value generated
Typically, the first step of promoting land at the landowner’s own cost is the
promotion of the site through a local plan process, although where a Local
Authority has not delivered the required number of houses, then the potential
for an immediate application may be open. Less often, but occasionally,
Local Plans include provision for unallocated sites to come forward although
smaller, ‘windfall’ sites, can often secure consent. The cost of a planning
application, with the required attendant supporting information, is often
prohibitive for landowners.
Alternative options are to enter either an option agreement, promotion
agreement or more rarely a hybrid of the two. These agreements are often
much longer term based upon the assessment of the time it may take to
secure planning consent.
An option agreement will usually be with a developer who will then
promote the land; either through an immediate application or longer term
promotion through a Local Plan process. The developer will be expected to
pay all costs including the landowner’s professional fees, the preparation of
all technical reports, and planning costs. The costs will be deductible if the
developer is successful in securing consent but in return for their risks in
picking up all the costs at risk, the developer will have the right to acquire the
site at a discount to market value.
A promotion agreement is similar in many ways except that once the
site has planning approval, it will be marketed on the open market with the
promoter being paid a proportion of the sale price when the land is sold but
again with costs of securing consent being deductible.
A hybrid agreement is usually only employed on larger sites. Again, this
type of agreement is generally with a developer and operates much in the
same way as an option. The difference is the landowner can retain a right
to require the developer to sell part of the site on the open market to a
Inevitably, the choice between these differing potential routes to bringing
forward a site can be driven by market demand but is also influenced by the
landowners’ appetite for risk.