Guide
Option agreement or promotion agreement: which is better for you?
An option agreement gives a developer the right to buy your land, usually at a discount to market value, once it wins planning; a promotion agreement keeps you as owner and pays the promoter a share of the open-market sale price. Promotion agreements usually suit landowners who want the price tested by competition, while options can suit those who want an upfront payment and one committed buyer.
In this guide
How an option agreement works
A developer or promoter pays you an option fee for the exclusive right to buy your land within a set period. It then pays for the planning work. If planning is granted, it can serve notice to buy at the price the agreement sets, usually market value less an agreed discount, often with a minimum price per acre. If it doesn't buy before the option ends, the land is yours again, free of the agreement, and you keep the fee. More on option agreements.
How a promotion agreement works
A promoter takes your land through planning at its own cost and risk. You keep ownership throughout. Once planning is granted, the land is marketed and sold, usually to a housebuilder, to whoever offers the best price. From the proceeds, the promoter recovers its agreed costs and takes an agreed share. You receive the rest. More on promotion agreements.
Side by side
| Option agreement | Promotion agreement | |
|---|---|---|
| Who buys the land | The developer holding the option, if it chooses to | Whoever offers the best price when it's marketed, usually a housebuilder |
| How the price is set | By valuation: market value less an agreed discount, often with a minimum | By the open market, less the promoter's costs and share |
| Money up front | Usually an option fee | Often little or nothing |
| Who pays for planning | The developer | The promoter, recovering agreed costs from the sale |
| Who decides when to sell | The developer, by choosing when to exercise | Agreed between you, usually with a minimum price you can't be made to sell below |
| Interests on price | Opposed: the buyer benefits from a lower valuation | Aligned: the promoter earns more when the land sells for more |
| Main thing to negotiate | The discount, the minimum price and how value is assessed | The promoter's share, the cap on costs and the minimum price |
A worked example
Take a 20-acre field on the edge of a village. With planning permission it is worth £8 million. One developer offers an option; one promoter offers a promotion agreement. These are illustrative numbers, not market rates, and every figure is before tax, VAT and your own costs.
| Option | Promotion | |
|---|---|---|
| Price | £8,000,000 by valuation | £8,000,000 on the open market |
| Taken off | 20% discount: £1,600,000 | Capped costs £400,000, then a 15% share: £1,140,000 |
| Paid up front | Option fee: £50,000 | Nothing |
| You receive | £6,450,000 | £6,460,000 |
On the same price, the two routes come out almost level. The difference comes from what happens to the price:
- If competition between housebuilders lifts the sale to £8.8 million, the promotion route pays £7,140,000 (£8,800,000 less £400,000, less a 15% share). The option price is set by valuation, so it doesn't benefit.
- If the option valuation comes in at £7.5 million, the option pays £6,050,000 (£7,500,000 less 20%, plus the £50,000 fee). A minimum price per acre would protect you here.
- Each percentage point of discount or share is worth roughly £80,000 on an £8 million sale, so small differences in terms matter.
What happens to your land in the meantime
Under either agreement you normally keep farming the land, and keep any income from it, until it is sold. The other party registers its interest on your title, so you can't sell or borrow against the land without its agreement, and you'll usually need its consent for new tenancies or environmental schemes. Expect visits for surveys: ecology, archaeology, ground conditions and access.
The real difference comes at the end. Under an option, the developer decides whether and when to buy, at the price the valuation produces. Under a promotion agreement, the land is offered to housebuilders and sold to the best bidder, and you can refuse a sale below the agreed minimum price.
Which suits you
An option can make sense when
- you value a sizeable option fee now over a possibly higher price later;
- the site suits one obvious buyer, such as a housebuilder already active next door;
- you want the developer to carry the build programme and sale risk as well as planning.
A promotion agreement can make sense when
- you want the price tested by competition between housebuilders;
- you want the promoter's reward tied to the price you receive;
- you're content to wait for your money until the land is sold.
Hybrid agreements
Some agreements mix the two, for example a promotion agreement that gives the promoter an option to buy part of the site. They can work well, but they are harder to compare, so ask for a worked example showing what you would receive under each route.
Whichever you choose
- A minimum price per acre you would genuinely accept.
- A firm end date, including any extensions.
- Dated planning milestones, and a right to end the agreement if they're missed.
- A cap on costs, and clarity on what counts as a cost.
- A contribution to your legal and agent fees.
- Tax and VAT advice before heads of terms are agreed.
The promoter matters as much as the paperwork. A generous agreement with a promoter that never gets planning is worth nothing. Check its record with our 12 questions, and use a specialist land agent and solicitor. Since 1 March 2026, RICS members advising on these agreements must follow the RICS professional standard Land agreements for development purposes.
Questions landowners ask
Which pays a landowner more, an option or a promotion agreement?
It depends on the discount under the option, the promoter's share and costs under the promotion agreement, and whether competition lifts the sale price. On the same price, a 20% option discount and a 15% promotion share with capped costs can leave you with almost the same amount. Ask each party for a worked example using the same price.
Do I still own my land under an option agreement?
Yes. You keep ownership until the developer exercises the option and the sale completes. Until then the option is registered against your title, so you can't sell the land free of it.
Who chooses the buyer under a promotion agreement?
Usually the promoter runs the marketing and recommends a buyer, and the agreement sets out what you must agree to. Check whether you can refuse a sale below the minimum price and whether you have a say in which offer is accepted.
Can I move from one type of agreement to the other?
Only if the current agreement ends or the other party agrees to change it. That is why the choice, and the length of the term, matter before you sign.
This guide is general information, not legal, tax or valuation advice. Every site and every agreement is different, so take advice from qualified professionals on your own situation before you sign anything.
Not sure which suits your land?
Tell us about it. We'll talk it through and suggest up to three promoters. Free for landowners.