A land promotion agreement is used where a developer or land promoter agrees to apply for planning permission for a development on a landowner's property. The property is then sold on the open market once planning permission has been obtained. This method is mainly used on larger sites where the number of units will be negotiated with the local authority and planning costs are considerable.
The promoter funds the planning application at their risk. If planning permission is obtained, the property is sold. The promoter's costs are reimbursed from the gross sale receipts and in addition they receive a proportion of the net sale proceeds.
If planning permission is not obtained by a pre determined date, the agreement automatically terminates, and the promoter's costs are not reimbursed.