Option Agreement | Promotion Agreement |
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Typically entered into with a housebuilder looking to buy land as cheaply as possible. Land value arrived at by negotiation between the parties with no exposure to the market. | Interests of landowner and promoter are aligned: both are looking to secure the best possible price as the proceeds of sale are split between the parties on a pre-agreed basis. |
Single buyer identified at outset and price is negotiated upon receipt of planning. Limited to one party: can therefore depress value. | Planning is secured and site openly marketed with the benefit of that planning. A competitive bidding situation can drive up value. |
Housebuilder can choose to walk away if market conditions or priorities change, as not obliged to buy. | Promoter paid upon sale of land and is therefore fully committed to the process, however long it may take. |