Land promotion agreement- What is it and how does it work?

A land promotion agreement (LPA) is a contract between a landowner and a developer that enables the developer to promote the landowner`s property for development. The agreement stipulates the terms and conditions under which the developer can promote the land and, in return, the landowner receives a percentage of the profits generated from the development.

The main benefit of an LPA is that it gives the landowner peace of mind that their land will be developed, while the developer takes on the risk and expense of securing planning permission. This is especially useful for landowners who may not have the expertise or resources to handle the complex planning process themselves.

Here are some important components of an LPA:

– Promotion period: This sets the length of time that the developer has to secure planning permission for the site. Generally, this can range from 18 months to three years.

– Planning obligations: The LPA should outline the responsibilities of the developer in relation to planning permission, such as submitting planning applications, paying planning fees, and meeting planning conditions.

– Profit share: The agreement should clearly state how profits will be shared between the landowner and the developer. This can be a fixed percentage or a sliding scale based on the profitability of the development.

– Development costs: The developer is responsible for all costs associated with securing planning permission, such as survey fees, legal fees, and environmental impact assessments.

– Termination: The agreement should allow for termination if the developer fails to secure planning permission within the promotion period or if they breach any other terms of the agreement.

It’s essential to have a solicitor review the agreement before signing as they can help to negotiate favorable terms and ensure that the contract protects the interests of the landowner.

In conclusion, an LPA can be an excellent way for landowners to monetize their land while reducing their risk and costs. The developer, in turn, gains the opportunity to develop a profitable site without the risk of owning the land. However, it’s essential to thoroughly understand the terms and conditions of an LPA to ensure that it aligns with your objectives and interests.