Land Promotion Agreements

Land promotion agreements (LPAs) are becoming increasingly popular in the UK property development industry. They are a type of agreement between a landowner and a property developer, whereby the developer agrees to promote the land for development in exchange for a share of the profits when planning permission is granted.

So, what exactly is a land promotion agreement, and why might a landowner and developer enter into one?

Essentially, an LPA is a type of contract that sets out the terms under which the developer will promote the land for development. This may involve conducting site surveys, negotiating with local authorities, and submitting planning applications. The landowner, in turn, agrees to grant the developer certain exclusivity rights over the land during the promotion period.

LPAs are often used when a landowner wants to sell their land for development but is unable or unwilling to undertake the promotion process themselves. This may be because they lack the expertise or resources to navigate the complex planning system, or simply because they prefer to let someone else take on the risk and responsibility.

From the developer`s perspective, LPAs can be an attractive option because they allow them to secure valuable development opportunities without having to buy the land outright. Instead, they can enter into an agreement that only requires them to pay the landowner if and when planning permission is granted. This can significantly reduce their upfront costs and financial risk, making it easier to take on larger and more complex projects.

It`s worth noting that LPAs are not without their drawbacks. For one thing, they can be more complex and time-consuming than traditional land sales, as they typically involve a lot of negotiation and legal work. Additionally, because the developer`s payment is contingent on planning permission being granted, there is always the risk that the land may not be suitable for development or that planning permission may not be granted, leaving the developer with nothing to show for their efforts.

Despite these potential drawbacks, LPAs are becoming an increasingly popular tool for both landowners and developers looking to maximise the potential value of their land. If you`re considering entering into an LPA, it`s important to seek independent legal and financial advice to ensure that the agreement is fair and transparent for all parties involved.

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