Five things every landowner should know before signing a promotion agreement

If you own land with development potential, there is agood chance someone has already approached you about a promotion agreement. Itmight be a land promoter, a planning consultancy, or a developer’s agent. Thepitch usually sounds attractive: we will obtain planning permission on yourland at our cost, then manage the sale, and take an agreed percentage of theproceeds. You pay nothing upfront.

In principle, this can be a good deal. A well-structuredpromotion agreement allows you to unlock value from your land without bearingthe cost and risk of the planning process yourself. But the detail mattersenormously, and it is in the detail that landowners most commonly lose out.

Here are five things we think every landowner shouldunderstand before signing.

1. The promoter’s percentage is negotiable

Most promoters will open with a fee of between 20% and30% of the net sale proceeds. Many landowners assume this is fixed. It is not.The percentage should reflect the level of risk the promoter is taking, thecomplexity of the planning case, and the likely sale value of the site. Astraightforward site in a strong market warrants a lower percentage than acomplex site with uncertain prospects.

If a promoter is not willing to discuss the percentage,that tells you something about how they view the relationship.

2. Understand who controls the planning application

The promotion agreement will specify who has the right todecide the planning strategy, what type of application is submitted, how manydwellings are proposed, and which consultants are appointed. In mostagreements, these decisions sit with the promoter, not the landowner.

That is not necessarily a problem — the promoter has theplanning expertise, after all. But you should understand the implications. Apromoter who is incentivised to maximise the sale price may pursue a higherdensity scheme than you are comfortable with, or push for a consent thatprovokes local opposition. Make sure the agreement includes a mechanism for youto be consulted on key decisions, and that your solicitor has reviewed theclauses that govern what happens if you disagree.

3. Check what costs are deducted before you are paid

The headline percentage is applied to “net proceeds” —but the definition of net proceeds varies significantly between agreements.Some promoters deduct their own costs (legal fees, planning application fees,consultant fees, marketing costs) before calculating your share. Others absorbthose costs within their percentage.

The difference can be substantial. On a site selling for£1 million, deductible costs of £100,000 mean you are effectively sharing from£900,000, not £1 million. Always ask for a clear breakdown of what is deductedand what is included, and compare like with like when assessing competingoffers.

4. The term of the agreement matters more than you think

Promotion agreements typically run for a fixed period —often five to ten years, sometimes longer. During that period, the promoter hasthe exclusive right to promote and sell your land. If the promoter fails tosecure planning permission within the agreed term, the agreement expires andyou get your land back. But you have lost years.

Pay close attention to any clauses that allow thepromoter to extend the term automatically — particularly if the extension istriggered by the promoter submitting an application or lodging an appeal,rather than by actually achieving consent. A poorly drafted extension clausecan lock your land up for much longer than you intended.

5. Get independent advice before you sign

The promoter who presents you with an agreement has theirown commercial interests. They may be entirely professional andwell-intentioned, but they are not acting for you. Their agreement has beendrafted by their solicitor to protect their position.

Before you sign anything, instruct your own solicitor toreview the terms. And consider getting independent planning and commercialadvice on whether the proposed approach is the right one for your site. Apromotion agreement is a long-term commitment involving your most valuableasset. The cost of independent advice is a fraction of what is at stake.

How we can help

At DDR & Partners, we advise landowners on promotionagreements regularly. We review the terms, assess whether the proposed planningstrategy is sound, and negotiate on your behalf to make sure the deal structureprotects your interests. We also act as promoters ourselves on sites where webelieve we can deliver a better outcome than the alternatives on offer.

If you have been approached about a promotion agreementand want an honest second opinion, get in touch. That first conversation isfree.