A promotion agreement is a method of landowners sharing the profit achieved from land development whilst minimising the risk.
To benefit from a promotion agreement you need to be a landowner with land who is likely to be granted planning permission.
A land promoter, who is similar to an estate agent will instruct an architect and submit a planning application to the local council. This can be a costly process, especially if planning is not granted with ease. However, due to the promotion agreement, you do not bear any of the costs or risks associated. Once obtained planning permission will increase the value of the land and development interest. The promoter will then find a property development company to undertake the required building work before selling the newly built properties.
How much could I make from a promotion agreement?
By entering into a promotion agreement you are entering into an agreement to sell your piece of land to a property developer for a sum of money and to give a percentage of that sum to a land promoter. Typically this sum of money is between 20% to 30% of the growth development value (GDV). For example, if on your land 8 detached house valued at £350,000 was built, the GDV would be £2,800,000. Meaning if your promotion agreement’s terms stated that you would receive 30%, then you and the land promoter would make £840,000. This would then be divided between you and the land promoter.
Promotion agreements from £5,000 to £15,000 plus VAT depending on complexity.