What are the benefits of an option agreement?
By entering into an option agreement, the buyer is able to explore the planning potential of the site without being obligated to complete the purchase should they not be able to obtain the planning permission they require. It is also a helpful way to structure a transaction where the land over which the buyer is looking to obtain planning is owned by several different parties.
Usually, the option is exercised on the basis that planning permission has been granted, which will significantly increase the value of the land without the landowner having to incur the costs of obtaining the planning permission themselves. The price for the option may be fixed, based on a formula, or subject to market value determined by a surveyor.