Selling Land To A Developer: Deal Structures Explained

When a developer is interested in your land, the offer can take several forms. The structure decides when you get paid, how much risk you carry, and how much of any uplift in value you share. Understanding the options helps you compare offers properly and choose the one that suits your circumstances.

1. Unconditional sale

The developer buys the land as it is, usually without planning permission, and completes on an agreed date.

• Pros: speed and certainty. You are paid on completion and the risk passes to the buyer.
• Cons: the price reflects the planning risk the buyer is taking, so it is usually lower than the land’s value with permission.

Best for landowners who want a clean, quick sale.

2. Conditional contract (subject to planning)

Contracts are exchanged now, but completion only happens if the buyer obtains a satisfactory planning permission within an agreed period. The buyer usually pays the planning costs.

• Pros: a higher price than an unconditional sale, and the buyer carries the planning cost.
• Cons: you wait, often a year or more, and the sale may not happen if planning is refused.

Watch the detail: the definition of “satisfactory planning”, the long-stop date, whether the buyer must appeal a refusal, and whether there is a non-refundable deposit.

3. Option agreement

The developer pays an option fee for the right, but not the obligation, to buy the land within a set period, usually at market value less an agreed discount, once planning is granted.

• Pros: you share in the uplift from planning, and the developer funds the planning process.
• Cons: the land is tied up for the option period, which can be several years on larger sites, and the final price depends on a future valuation.

Options are more common on larger and longer-term sites, such as edge-of-town land in the Home Counties, than on small London infill plots.

4. Promotion agreement

A land promoter secures planning at its own cost, then markets the land and sells it on the open market. The landowner receives the sale proceeds less the promoter’s costs and an agreed fee.

• Pros: aims to achieve full market value with planning, with the promoter motivated to maximise the price.
• Cons: long timescales, and you remain the owner, with the related responsibilities, until a sale.

5. Joint venture

The landowner contributes the land, the developer brings expertise, funding and delivery, and both share the profit from the completed homes. Our article on joint venture property development explains how these work.

• Pros: the highest potential reward, as you share in the development profit rather than only the land value.
• Cons: you take on development risk and wait until homes are built and sold. The choice of partner is critical.

How to choose

Think about three things:

• Time: do you need money soon, or can you wait?
• Risk: are you comfortable that the deal might not complete, or that values might change?
• Involvement: do you want a clean exit, or to stay involved and share in the outcome?

Whatever the structure, check the buyer’s track record, take advice from a solicitor experienced in land deals, and consider an independent surveyor to advise on value. For a wider overview, see our guide to selling development land in London.

Final thoughts

There is no single best way to sell land. The right structure is the one that matches your timescale, your appetite for risk and the potential of the site. Kisiel Group works with landowners across London and the Home Counties on outright purchases and joint ventures, and you can read more about how we buy land.