What is a Promotional Agreement?
You as a landowner legally agree to grant us a set period of time to obtain a planning consent.
We underwrite all costs and in return we gain payment at an agreed percentage, which is awarded
out of the sale proceeds of the land and so, there is a common aim to maximise the value.
What is an option Agreement?
There are predominantly two different types of Option Agreement. The first being a ‘Fixed Price’ (FPO) and the other being a ‘Percentage of Open Market Value’ (%OMV). Both Agreements provide Terra with a specific timeframe in which to try and achieve a planning approval on the land and then if successful provide us with the ‘Option’ to go ahead and purchase the land.
If it is a FPO then the Purchase Price is already agreed, however, if it is a %OMV Option then the land price is to be agreed having carried out a valuation of the achieved Planning Approval.
%OMV Option Agreements are more commonly used on larger parcels of land where the eventual / resulting scale of the planning permission is more difficult to predict and place a fixed price on prior to carrying out site due diligence.
How long will I be in an Agreement?
Typically, our agreements range between 5 – 10 years, as securing a planning approval on your land may involve a strategic approach. This may include promotion through the Local Authorities planning policy, political lobbying and significant research to demonstrate the site’s suitability for development.
Terra will be committing significant financial resource from the outset and so we need any agreement
to provide a sufficiently reasonable amount of time, in order to exhaust the possibility of gaining a planning approval and hence maximise the value.
Can I sell my Land while the Agreement is in place?
Yes, but any agreement will need to be assigned to any future purchaser / land owner.
How much will Terra take as their share of the land sale if via a Promotion Agreement?
Terra will receive an agreed percentage of the land value when it is sold, this is usually a function of the level of risk and timeframes involved. However, if the site does not achieve a planning approval, Terra do not get paid, therefore, the onus is on us to secure a consent.
Are there any costs to the Land Owner?
None, in fact we pay you to provide us the ability to work on the project and exchange the
Agreement.
How is the land sold if via a Promotion Agreement?
Once planning permission has been granted Terra will produce a Marketing Strategy to the landowner for
approval and discussion. The Marketing Strategy will include a Marketing pack, which will enable any perspective purchasers to fully evaluate the development. Terra will discuss each offer received and agree the disposal strategy, which will be based on a number of factors including, price and ability to perform, etc.
What happens if we do not obtain planning permission or receive a refusal?
In the event that planning consent is not obtained, Terra will assess the reasons for any refusal and re evaluate the strategy. We have significant experience of working with highly regarded legal advisors and barristers to successfully overturn planning refusals. If any potential to secure a planning consent remains, we will continue to endeavour to pursue a planning approval.
Alternate forms of agreement
Our preferred route is to utilise either a Promotion Agreement or Percentage of Open Market Value Option Agreement as both styles provide a flexible approach to maximising value and also removes (in the main) any renegotiation of the land price, were it to be fixed day one. However, if there are alternative methods of acquisition preferred then we would be interested to discuss these further. Our significant financial resources enable us to have a flexile approach to every aspect of the acquisition process.
