An option agreement can reserve a developer’s right to buy land within a defined period while planning work is undertaken. It does not mean that every site will obtain consent or be purchased.
Common elements
- The land covered by the agreement
- The length of the option period and any extension provisions
- Who controls and funds the planning application
- How the purchase price or valuation mechanism is determined
- Access rights for surveys and investigations
- Owner and developer obligations during the period
- Events that allow the option to be exercised or brought to an end
Why developers use options
Preparing a planning application can involve substantial time, professional work and uncertainty. An option can provide a defined period in which that risk is taken without requiring the landowner to fund the planning process.
What should a landowner consider?
Price mechanics, timescale, planning control, access, restrictions, tax and the effect on the retained property all matter. The document should be negotiated by an experienced solicitor acting solely for the landowner.
Are other structures possible?
Yes. Conditional contracts, promotion arrangements and direct purchases may be considered depending on the site and commercial objectives. The appropriate structure is site-specific.