Option vs. Promotion Agreements: Which Works Best for Landowners?
Introduction
When a developer approaches you about your land, the conversation often turns to option agreements or promotion agreements. Both can unlock significant value — but they work in very different ways.
For many landowners, the terminology feels legalistic and confusing. The wrong choice could mean leaving money on the table, or worse, being tied into an agreement that doesn’t serve your long-term interests.
This article explains both approaches in plain English: what they are, how they work, the pros and cons, and how to decide which might be right for you.
What is an Option Agreement?
An option agreement is a contract giving a developer the right (but not the obligation) to buy your land within a set period, usually 3–10 years, once planning permission is secured.
Key Features:
Developer funds the planning application.
If planning is successful, the developer can exercise the option and purchase the land.
The price is typically set at a discount to market value (e.g. 80–90% of open market value).
Advantages for Landowners:
No upfront planning cost — developer carries the risk.
Certainty of sale if the option is exercised.
Potential for a quick exit once planning is secured.
Disadvantages:
Price discount reduces your ultimate return.
Control shifts heavily to the developer.
If planning is achieved but the developer doesn’t exercise the option, you may be left in limbo.
What is a Promotion Agreement?
A promotion agreement is where you and a land promoter (not necessarily a developer) work together to secure planning permission and then sell the land on the open market.
Key Features:
Promoter funds the planning process.
Once planning is achieved, the land is marketed to multiple developers.
Sale proceeds are split between you and the promoter (after costs).
Advantages for Landowners:
Land is sold competitively, often achieving the best price.
Aligned incentives — both you and the promoter want maximum value.
Transparency: you see the true open-market sale price.
Disadvantages:
Longer process — marketing and sale can take time.
Promoter fees/percentage reduce your net proceeds.
Less certainty than an option, as sale relies on finding the right buyer.
Side-by-Side Comparison
Which Works Best for Landowners?
Choose an Option Agreement if:
You want certainty of a sale to a specific developer.
You prefer a quicker, simpler process.
You are comfortable trading some value for lower risk.
Choose a Promotion Agreement if:
You want to maximise sale value.
You’re comfortable with a longer timeline.
You want aligned incentives with a partner who markets widely.
Case Example 1: Option Agreement
A developer approaches a landowner in Bedfordshire with a 20-acre site.
Developer funds planning for 200 homes.
Option price: 85% of market value.
Land sells for £6m under the option. Landowner receives £5.1m.
Quick exit, no planning cost — but landowner misses out on £900k compared to open market value.
Case Example 2: Promotion Agreement
A promoter works with a landowner in Nottinghamshire on a 30-acre site.
Promoter funds planning for 350 homes.
Land marketed to multiple developers.
Final sale price: £12m. Promoter takes 20% (£2.4m).
Landowner receives £9.6m.
Higher return overall, but took longer and involved a revenue share.
Other Considerations
Tax Implications – Different structures may have capital gains tax or inheritance planning consequences.
Legal Advice – Always take specialist advice before signing.
Local Plan Timing – If your land is near allocation, timing could influence the best agreement.
Market Conditions – Strong demand for housing land often favours promotion agreements; slower markets may suit options.
The TEG Advantage
At Taylor Edwards Group, we help landowners understand their choices and connect with the right partners. Whether you’re approached with an option, considering promotion, or simply exploring possibilities, we provide:
Independent, conflict-free advice.
Introductions to vetted developers and promoters.
Market context to inform your decision.
Discreet brokerage to protect your interests.
Key Takeaways
Option agreements = quicker, developer-led, discounted price.
Promotion agreements = longer, market-led, higher value.
The best choice depends on your priorities: certainty vs. maximisation.
Specialist advice and brokerage are critical to getting it right.
Final CTA
If you’ve been approached by a developer or promoter, don’t sign anything until you’ve explored your options. Taylor Edwards Group can help you weigh up the best route and connect with the right partners.
