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To Promote or not to Promote, that is the Option: Top 10 Tips with Promotion Agreements

  1. Identify a promoter with experience in the local area and expertise relevant to the scheme size and planning proposals
  2. Agree upfront clear objectives which may include maximising value and minimising affordable housing and planning contributions, unless either party has particular requirements
  3. Consider whether the landowner should be protected by a minimum price so that it is not forced to sell in poor market conditions
  4. The landowner and promoter need to decide who is liable for the costs of promotion and whether such costs are reasonable deductions and whether any caps should apply.
  5. Once permission is obtained, will there be sales in tranches or infrastructure works? If so, agree the timing of cost deductions and the impact on the landowner’s tax position.
  6. The parties should consider whether the landowner grants the promoter pre-emption rights. Understandably landowners may resist such rights to ensure true market testing keeps interests aligned. The key is to strike the right balance.  
  7. Promoters require security over the land, whether a charge, residual option or restriction. Agree in advance what type of security is required to protect the promoter but allow the landowner to continue to easily deal with the land.
  8. If a greater degree of control is important to a landowner, for example where land is being retained, the landowner may seek more involvement for example in setting or approving the design parameters for the scheme during and after planning.
  9. Promoters often prefer to retain control of the marketing and sale process although it can be beneficial for landowners to deal as interests are not fully aligned
  10. Tax advice should always be obtained by landowners early on to ensure efficiency.

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