Promotion agreements vs option agreements: a plain-English guide for landowners

A plain-English guide for landowners by Jordon Nattress. Checked against the sources below on 18 October 2026.

Please note: this guide is general information only, not legal or financial advice. I’m a land introducer, not a solicitor, planner or estate agent, and I don’t value land. Every site and every agreement is different, so always take advice from your own solicitor before signing anything.

How a promotion agreement works

You appoint a promoter, which uses reasonable endeavours to get planning permission at its own risk and cost. Once a satisfactory consent is secured, the land is sold on the open market rather than to the promoter. The promoter’s planning costs are reimbursed from the sale, and it then takes an agreed share of what’s left (Michelmores). The agreement sets out how marketing, accepting an offer and the sale will be handled (Farrer & Co).

How an option agreement works

A developer pays for the planning work and, in return, gets the exclusive right to buy your land once planning is secured, within a set period. The price is either fixed at the start or worked out as a percentage of open market value at the time. A developer may also pay you an upfront option fee. If the developer doesn’t use its option, the agreement comes to an end. Options are generally preferred by developers, and are more common where planning is likely to take more than two or three years (Michelmores).

There are also hybrid agreements, which mix the two: the developer can buy part of the site, while the rest is sold on the open market (Michelmores).

Who pays for planning?

In both cases, the promoter or developer funds the planning work up front. Either way, you usually get those costs back off your side of the deal: under an option they are usually deducted from the land value, often up to an agreed cap (Michelmores), and under a promotion they are usually repaid first from the sale proceeds (FBC Manby Bowdler). If a promotion fails and the agreement expires, the promoter normally bears the loss (FBC Manby Bowdler).

How the price or share is set

• Promotion: a share of the sale value. The land is sold to the best bidder, costs come off, and the promoter takes its share of the net proceeds. Michelmores puts the promoter’s share typically at 10–25% after deductions (Michelmores), and Farrer & Co at five to 20 per cent (Farrer & Co). The actual figure depends on the site and the deal.
• Option: a discount to market value, or a fixed price. Where the price is linked to market value, Michelmores says it’s usually between 75% and 90% of open market value, depending on risk (Michelmores). Because the developer is also the buyer, the price isn’t tested on the open market, which can create a conflict when agreeing it (Michelmores).
• Minimum price. Either type can include a minimum price or minimum return, so you aren’t forced to sell at a price you find unacceptable, for example after a market downturn (Farrer & Co). A cap on deductible costs gives more certainty too (Michelmores).

Promotion agreements are often preferred by landowners because the sale price is market tested, but a developer may offer very competitive option terms if it wants to build the site itself (Michelmores). Your solicitor and agent can help you compare offers properly.

How long they last, and extensions

Many promotion agreements last between five and ten years, partly because councils typically review planning policy around every five years. Most include provisions to extend the term in certain circumstances, such as when a planning application has been submitted but not yet decided (FBC Manby Bowdler). An option also runs for a specified period, and ends if it isn’t exercised (Michelmores). Ask exactly what would trigger an extension, and whether there’s a final cut-off date.

While it runs, the agreement is usually registered against your title, and the entry is removed if it ends without a sale (Birkett Long).

Key clauses to ask your solicitor about

• What counts as a “satisfactory” planning permission, since that usually triggers the sale (Birkett Long).
• Which costs can be deducted, whether they’re capped, and your right to inspect the records (Farrer & Co) (Birkett Long).
• Minimum price or minimum return (Farrer & Co).
• How market value is defined in an option, and how disputes are settled (Birkett Long) (RICS).
• The marketing and sale strategy, and how much say you have over accepting offers (Farrer & Co).
• The term, extensions and final end date (FBC Manby Bowdler).
• Your obligations while it runs, such as not objecting to the application and not granting leases that would stop a sale with vacant possession (RICS).
• Any land you keep next door, and how much say you have over the design of the scheme (Farrer & Co).
• Your own legal and agent costs, and whether the other side will give an undertaking to pay them (Birkett Long).
• Tax. Ask your accountant how any sale would be taxed in your situation before you sign.

Frequently asked questions

Which is better for a landowner?

It depends on the site and the terms offered. Landowners are often advised that promotion gives the best result because the price is tested on the open market, but good option terms do exist (Michelmores). Always compare with your own solicitor and agent.

Do I have to sell if planning is granted?

If a permission that meets the agreed criteria is secured and a buyer is found within the agreed period, a promotion agreement usually obliges you to sell on the agreed terms (Farrer & Co). Under an option, the developer can choose to buy.

Will I get any money up front?

Sometimes. Developers may pay an upfront option fee (Michelmores), and promoters often pay something for entering the agreement (FBC Manby Bowdler). It varies from deal to deal.

Can you advise me on which to sign?

No. I’m an introducer, not a solicitor, planner or estate agent. I can introduce you to an experienced promoter, but you should take independent legal advice before signing anything.

Sources

• Michelmores (solicitors), Structuring strategic land transactions, Part 1: the basics, February 2023
• Farrer & Co (solicitors), Promoting development opportunities
• RICS, Land agreements for development purposes, 1st edition (professional standard)
• FBC Manby Bowdler (solicitors), Promotion Agreements: Frequently Asked Questions answered
• Birkett Long (solicitors), Land promotion... worth considering?

Please note: this guide is general information only, not legal or financial advice. I’m a land introducer, not a solicitor, planner or estate agent, and I don’t value land. Every site and every agreement is different, so always take advice from your own solicitor before signing anything.

Related guides: Should I talk to a land promoter? Honest pros and cons · What is grey belt land?