Posted: 10th November 2020 | Back to news feed
At Reeve Brown we have seen an increasing number of enquiries from land owners as to how they can maximise the value of their land. However in these difficult times it can be difficult to commit to what is sometimes a lengthy, costly and, to an extent, uncertain process.
With planning applications and associated costs on minor development projects often exceeding £20,000, understandably the risk / reward ratio is not palatable, or sometimes even viable for many individuals.
Planning consultant fees are only a small part of the costs, with significant expense still arising from the council’s application fees and expert reports which any landowner will still need to find a way to finance in order to secure planning permission.
It is at this stage that Promotion Agreements should be considered a viable alternative.
What is a Promotion Agreement?
A Promotion Agreement in its most basic form is an agreement between a landowner and a promoter (Reeve Brown) whereby the latter agrees to ‘promote’ the land for development, which includes financing all associated cost of securing planning permission including:
- Planning Fees
- Consultant Fees (e.g. ecology reports, tree reports)
- Legal Fees
- Conveyancing Fees
In exchange the landowner agrees that the promoter will receive a percentage uplift in the value of the property from any sale proceeds of the land, should planning permission be obtained.
A promotion agreement is therefore an ideal solution to a landowner who wants to maximise the value of their land without committing to the risk and associated cost of the planning process.
The promoter only benefits from the ‘gain’, therefore the existing land value is protected and there is no potential financial downside for the landowner.
How does it work?
With arable / pasture land currently being marketed for in the region of £6000 - £10,000 per acre compared to undeveloped land with planning permission for development of either residential or commercial premises being worth anywhere between £500,000 - £1,000,000+, the gains to landowners in securing development can be exceedingly lucrative with the terms of a promotion agreement ensuring that the process, for them, is risk free.
For example (approximate figures):
- Your land is currently worth £100,000
- We fund and manage the promotion, achieving permission for 10 dwellings
- The site is now worth £1,000,000
- The ‘development gain’ is £900,000
- We fund the sale of land through an agreed agent
- We receive 15% of the ‘gain’ i.e. £135,000 and you receive the remaining £865,000
- If planning permission isn’t obtained after the agreed period (e.g. 3 years) then the agreement ends and you have incurred no expense
How do I know if my land is suitable?
If you have any undeveloped or partially developed land that borders a road, then simply email the details through to us and we can review the site on a no obligation basis.
We have already helped a number of clients significantly increase the value of their land in 2020 and would be delighted to speak to you to see if we can assist.
Our recent cases are posted on social media (www.linkedin.com/company/reevebrown) or please feel free to request these by email.