Insights

Many landowners are approached by promoters, developers or agents. A land promotion arrangement is a long-term partnership, often running for several years.  The choice of partner can have a greater impact on outcome than the structure itself. The challenge is not identifying interest, but selecting the right partner on appropriate terms.

 

This note sets out the key factors landowners should consider when selecting a land promotion partner

  

Start with the principle

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Outcomes depend on:

• the quality of the promoter

• alignment of interests between parties

• the structure of the agreement

 

The objective is not simply to “appoint a promoter”, but to:

• maximise value

• manage risk

• retain appropriate control

• and work with a party you trust

 

The first decision: promoter vs developer

 

Some parties will seek to acquire the land (developer). Others will seek to promote the land and share in the uplift on sale (promoter). These routes involve different incentives and different outcomes. You can read our guide “Should I sell or promote?” which may clarify this further.

 

Key selection criteria for a land promoter

 

In practice, most landowners are choosing between multiple credible parties offering broadly similar terms. The following are the key factors to assess when selecting a promoter:

 

A. Track record and relevant experience

• Relevance experience is critical. This should include:

  • similar sites

  • similar planning contexts

• Evidence should be provided of:

  • sites successfully taken through planning

  • delivery to sale

• Experience in one area does not always translate to another.

 

B. Planning strategy and judgement

• The promoter should be able to give you clear articulation of:

  • how the site will be promoted

  • what risks exist

  • the overall context in your local authority

• There should be realism around:

  • timescales

  • probability of success

• Be mindful of over-optimistic positioning on timescales, quantum of development or land values.

 

C. Financial capacity and commitment

• Promoters typically fund:

  • planning costs

  • technical work

  • legal fees

• These can total considerable amounts of money with the promoter carrying cost and risk upfront so key considerations should be whether they have:

  • the financial strength to sustain long-term promotion

  • willingness to invest appropriately

• It is important to:

  • check financial strength of the prospective promoter

  • understand their budget expectations

  • note which legal entities are the counterparties to your contract and whether your contract can be assigned without your consent

  • ensure that the landowner has legal rights to use the planning reports in the event that the promotion agreement terminates

 

D. Alignment of interests

• The structure of the promotion agreement should ensure that both parties benefit from maximising value. 

• Promotion agreements typically align incentives through:

  • share of sale proceeds

  • timing of receipt

• The key question is: does the promoter benefit from the same outcome as the landowner, or a different oner?

• Caution: misalignment can lead to;

  • Underinvesting in planning

  • Poor strategic decisions

  • Conflict at key decision points

 

E. Approach to the sale process

• Its important to ensure agreement on how the site will be marketed once it has planning consent. Consider:

  • open market exposure

  • use of agents

  • a competitive process

  • a minimum sales price

• Poorly handled sales can erode value significantly.

 

F. Transparency and reporting

• Landowners should expect transparency and regular reporting to ensure trust and control are maintained. Promoters should be offering:

  • landowner input into strategy

  • regular updates

  • visibility on costs

• Agreements should define:

  • milestones

  • reporting requirements

  • decision points

 

G. Terms of the agreement

• Key commercial points include:

  • promotion period

  • cost recovery and caps

  • minimum sale price

  • termination rights

  • premium (upfront payment)

  • promoters fee (percentage paid to promoter at sale)

• These can materially affect risk, timing and the ultimate return.

 

Common pitfalls

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• Common pitfalls include

  • Selecting on headline promoters fee or premium rather than net outcome

  • Over-reliance on a valuation based on an optimistic “headline” scheme

  • Entering long agreements without clear milestones

  • Assuming planning success is likely or predictable

  • Forcing commercial terms that are too heavily weighted in favour a landowner and inadvertently creating misalignment of interests – it is important to ensure the promoter is also motivated

 

Practical approach

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• Tips on how to approach the selection process:

  • Speak to more than one promoter

  • Compare strategy, not just terms

  • Take independent commercial advice early

  • Ensure all offers are assessed on a like-for-like basis

  • Get tax and legal affairs in order early to avoid delays or sub-optimal structuring

 

Conclusion

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Choosing a promoter is a commercial decision not purely a legal or technical one. The focus should be on outcomes, alignment, quality of advice, execution capability and trust.

  

• In practice, the most important factors tend to be:

  • quality of planning strategy

  • financial capacity to deliver over the long term

  • alignment of incentives

  • judgement and realism

• Headline commercial terms are often secondary to these factors

 

 We typically advise landowners on:

• assessing promoters

• comparing offers

• structuring agreements

 

If helpful, we can provide an independent view on the options available to you.

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