|Option Agreement||Promotion Agreement|
|Typically entered into with a housebuilder looking to buy land as cheaply as possible.|
Land value arrived at by negotiation between the parties with no exposure to the market.
|Interests of landowner and promoter are aligned: both are looking to secure the best possible price as the proceeds of sale are split between the parties on a pre-agreed basis.
|Single buyer identified at outset and price is negotiated upon receipt of planning. |
Limited to one party: can therefore depress value.
|Planning is secured and site openly marketed with the benefit of that planning. A competitive bidding situation can drive up value.|
|Housebuilder can choose to walk away if market conditions or priorities change, as not obliged to buy.||Promoter paid upon sale of land and is therefore fully committed to the process, however long it may take.|