Key points
- Under a land promotion agreement, the promoter usually funds the planning work and recovers agreed costs, plus a fee, from the sale proceeds.
- If the land does not sell with planning, the promoter normally carries those costs itself.
- A minimum price sets a floor below which the land cannot be sold without the landowner's consent.
- Landowners still face some costs and limits, such as tax on their share and restrictions on dealing with the land while the agreement runs.
- With Land to Homes, there is nothing to pay up front on promotion, and we pay your reasonable legal fees, with the amount agreed in the heads of terms.
Who pays for land promotion?
In most land promotion agreements, the promoter pays for the planning work up front, including surveys, consultants, application fees and any appeal. If the land sells with planning permission, the promoter recovers its agreed costs from the sale proceeds and takes an agreed fee. If the land does not sell, the promoter normally bears those costs itself.
A promotion agreement is a partnership between a landowner and a promoter. The promoter takes the land through planning at its own risk, the land is then sold on the open market, usually to a housebuilder, and the proceeds are shared under an agreed formula. Because you keep ownership until the sale, how costs are handled is one of the most important parts of the deal. Our guide to option and promotion agreements explains the wider differences between the two.
What costs does a promoter usually fund?
- Planning application fees: paid to the planning authority when the application is submitted. Fees are set by each nation's government and vary with the type and size of scheme.
- Technical surveys: such as highways, drainage and flood risk, ecology and biodiversity, ground conditions, heritage, trees and noise.
- Consultants: planning consultants, architects, masterplanners and specialist advisers.
- Local plan work: representations to get the site allocated for housing, which can run across several plan stages.
- Engagement: community consultation and pre-application advice from the council.
- Appeals: where permission is refused and an appeal is worth making.
- Planning agreements: negotiating Section 106, Section 75 or Section 76 agreements with the council.
In Wales, most new developments of more than one home also need sustainable drainage approval from the SuDS approving body before work starts. Read more about the planning stage on our planning permission and architecture and masterplanning pages.
How are costs recovered when the land sells?
When the land is sold, the money is usually paid out in an order the agreement defines. A typical structure looks like this:
| Step | What happens |
|---|---|
| 1. Gross sale price | The price agreed with the buyer, usually a housebuilder. |
| 2. Sale costs | Agreed costs of selling, such as marketing and the selling agent's fees. |
| 3. Promotion costs | The promoter's agreed planning costs are repaid, often subject to a cap. |
| 4. Promoter's fee | An agreed share of the net proceeds, as set out in the agreement. |
| 5. Landowner's share | The balance is paid to the landowner. |
The details vary a great deal. Check exactly which costs can be deducted, whether they must be evidenced, whether interest can be added, and whether there is a cap. A land agent can compare the fee and cost terms with the wider market for you.
What is a minimum price, and why does it matter?
A minimum price is a floor below which the land cannot be sold without your consent. It protects you from a sale that would leave too little after costs and fees, for example if the market falls or permission is granted for fewer homes than expected. The minimum is often set by a formula or by reference to the land's value without planning, and some agreements allow it to be reviewed.
A minimum price does not guarantee that the land will sell at or above that level. It gives you a say. If offers come in below it, the usual choices are to wait, to re-market the land or to agree a lower price.
Who pays the landowner's legal fees?
A promotion agreement is a long and detailed contract, and you need your own solicitor to review it. Promoters often contribute to the landowner's legal fees, but the amount and any conditions should be clear before you instruct anyone.
With Land to Homes, we pay your reasonable legal fees on option and promotion agreements, with the amount agreed up front in the heads of terms, so you know where you stand before work starts. If you also want a land agent or chartered surveyor to advise you, raise how their fees will be met at the heads of terms stage, as that is agreed separately.
What might the landowner still pay or give up?
- Tax: any Capital Gains Tax or other tax on your share of the proceeds. Speak to an accountant early, as structure and timing can matter. Our guide to tax when selling land sets out the basics.
- Freedom to deal: while the agreement runs, you normally cannot sell or mortgage the land without the promoter's agreement, and the promoter's interest is usually protected on the title where the registration rules allow.
- Existing arrangements: agricultural tenancies, grazing licences or a mortgage may need to be ended or consented to before a sale.
- Costs on early exit: if you withdraw from or breach the agreement, you may have to repay costs, so read those clauses carefully.
- Time and uncertainty: promotion, particularly through the local plan, can take a long time, and neither planning permission nor a sale is ever certain.
Ask too how you will be kept informed while the agreement runs. Regular written updates on planning progress and on the costs being incurred make it much easier to check the final deductions when the land sells.
How does the Land to Homes approach work?
We start with a free, no-obligation site appraisal of your land's development potential. If a promotion agreement suits it, there is nothing to pay up front: we fund the planning work, and our costs are recovered from the sale proceeds only if the land sells with planning. We pay your reasonable legal fees, with the amount agreed in the heads of terms, and we set out cost recovery, our fee and the minimum price in writing before you commit.
Some sites suit a different route. Where a site suits us, we can buy it directly, with or without planning and with no onward chain, subject to survey, title and contract. We will explain the options plainly, including when a sale now may suit you better than promotion. You can begin with our free appraisal tool.
Does land promotion work the same way across the UK?
The commercial idea is the same in all four nations, but the legal documents and planning rules are not. In Scotland, land law is different, sales are concluded through missives, and title is registered with Registers of Scotland. In Northern Ireland, title is registered with Land & Property Services. In England and Wales, a promoter's interest is often protected by a notice or restriction at HM Land Registry. Planning fees, application requirements and the way land is allocated in a local or development plan also differ across England, Wales, Scotland and Northern Ireland, so use a solicitor who practises in the nation where your land sits.
Frequently asked questions
Will I have to repay planning costs if planning is refused?
Under most promotion agreements, no. The promoter carries the risk of planning being refused, and costs are recovered only from sale proceeds. With Land to Homes, our planning costs are recovered from the sale proceeds only if the land sells with planning. Agreements can still require repayment in specific situations, such as a landowner withdrawing or breaching the agreement, so ask your solicitor to explain those clauses.
Is the promoter's fee negotiable?
Yes. The fee, the costs that can be deducted, any cap on costs and the minimum price are all negotiated, and they work together, so compare whole offers rather than single figures. A land agent or chartered surveyor can tell you how a proposal compares with the wider market. Make sure everything agreed is written into the heads of terms before solicitors draft the full agreement.
Who decides when and to whom the land is sold?
Many promotion agreements give the promoter the lead on marketing once planning is granted, with the landowner's consent needed for the buyer and the price, particularly where an offer falls below the minimum price. The agreement should set out how the land will be marketed, who chooses the selling agent and how disagreements are resolved, often by an independent surveyor acting as an expert.
Can I end a promotion agreement early?
Usually only in the circumstances the agreement allows, such as the promoter failing to submit a planning application by an agreed date, or the agreement reaching the end of its term. Ending it in other circumstances may mean repaying costs or paying compensation. The length of the agreement, longstop dates and termination rights are worth negotiating with your solicitor at the outset.
Sources
- Fees for planning applications (GOV.UK)
- Tax when you sell property (GOV.UK)
- HM Land Registry Practice guide 19: notices, restrictions and the protection of third-party interests
- Welsh Government: statutory guidance on sustainable drainage systems
This guide is general information about how land and housing processes usually work. It is not legal, tax or financial advice. Rules differ between England, Wales, Scotland and Northern Ireland and change over time, so take advice from a solicitor, accountant or land agent on your own situation.