Option agreements explained for landowners
An option agreement gives a buyer the right, but not the obligation, to buy your land within a set period, usually once it has planning permission. You get an option fee when you sign and, if the option is exercised, a purchase price normally based on market value with permission, less agreed deductions.
Updated October 2026. General information, not legal or tax advice.
What do I get paid, and when?
An option fee is paid when the agreement is signed. It's usually yours to keep whatever happens. The main purchase price is paid if and when the buyer exercises the option, typically after permission is granted.
How is the purchase price calculated?
Most options set the price as a percentage of the land's market value with planning permission, after deducting certain costs. The percentage, the list of deductions and how market value is agreed are all negotiable, so read them carefully with your adviser.
What is a minimum price?
A minimum price is a floor below which the purchase price can't fall, protecting you if the market drops or the deductions turn out larger than expected.
How long do options last?
Terms vary with the site. Land that needs to be allocated in a local plan may need several years, sometimes with the right to extend if planning is progressing. Shorter terms are possible where the planning route is quicker.
What should I check before signing?
- The length of the term and any extension rights.
- What counts as an acceptable planning permission.
- Exactly which costs can be deducted from the price, and whether they're capped.
- Your obligations in the meantime, and what you can still do with the land.
- Whether the buyer contributes to your legal and agent fees.
- Who decides market value and how disputes are resolved.
Is an option the same as a promotion agreement?
No. Under an option, the buyer has the right to buy your land. Under a promotion agreement, a promoter gets permission and then sells the land on the open market, taking a share. We offer options and conditional contracts, not promotion agreements.
This guide is general information for landowners in England and Wales. It isn't legal, tax or financial advice. Take advice from a solicitor, surveyor or accountant about your own situation.