A promotion agreement is a legal contract designed to achieve a fair balance between a land promoter/or developer, and a land owner, when looking to achieve planning permission on a piece of land.
This collaborative approach puts both parties on the same of the table, both working to achieve a common goal; successfully achieving planning consent that enhances the value of the land.
A land promoter uses their expertise and resources to obtain planning consents, and typically funds the process resulting in no financial risk to the landowner.
The process is started by establishing an Existing Use Value (EUV) for the land. Once planning has been achieved, the EUV and the cost of obtaining planning permission is deducted from the Post Planning Value (PPV). The resulting net uplift is then shared between the land promoter and the landowner. A common share percentage is 75:25, with the majority share going to the land owner.
This approach incentivises both the promoter and landowner in optimising the land value as much as possible.
If, for whatever reason, the promoter is unsuccessful in obtaining planning consent then the agreement is terminated with no reimbursement of any costs.
To ensure consistent action is being taken, and steady progress is made milestone points are often written into the agreement. This prevents the promoter from signing multiple landowners into agreements protecting themselves from further development in an area.