Promotion Agreements

Published on 30th August 2016

Promotion Agreements  (PA) v Traditional Option Contracts (TOC)

Both are legally binding contracts but differ in several ways.

PAs will produce a bidding situation once a development zoning is achieved in the Local Development Plan and this will produce a land price (at today’s levels which can go up and down – see below) whereas in our experience TOCs  will tend to maximise costs although individual situations vary and indeed there can be ‘hybrids’.

PAs will result in a real time market price , whereas TOCs unless completely ‘open book ‘ to costs  in some cases can  inherently conservative  in terms of land price and going to Arbitration with two surveyors looking at and negotiating using market evidence which may be scant.

Indeed, post Brexit vote,  currently there is likely to be softening of land prices compared to a year ago for example.

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