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Option Agreement Planning Permission

Option agreement planning permission: A guide for property developers

If you`re a property developer, you know the importance of securing planning permission before starting any construction work on a site. In some cases, however, getting planning permission can be a daunting and expensive task, especially if you`re not sure whether the site will ultimately be suitable for development.

This is where option agreement planning permission comes in. An option agreement is a legal agreement between a landowner and a property developer that gives the developer the right to buy the land at a future date, usually after planning permission has been granted. This can be a useful way to secure a site for development without committing to buying it outright.

Here`s how option agreement planning permission works:

Step 1: Identify a suitable site

The first step is to identify a site that you`re interested in developing. You`ll need to do some initial research to determine whether the site is suitable for development and whether planning permission is likely to be granted.

Step 2: Negotiate an option agreement

If you`re interested in the site, you`ll need to negotiate an option agreement with the landowner. This will give you the right to buy the land at a future date, usually after planning permission has been granted.

The terms of the option agreement will vary depending on the specifics of the site and the negotiations between the parties. However, common terms include:

– The price of the land

– The length of the option period (i.e. the period during which you have the right to buy the land)

– The conditions that need to be met before the option can be exercised (e.g. obtaining planning permission)

– Whether the option fee is refundable if you decide not to exercise the option.

Step 3: Apply for planning permission

Once the option agreement is in place, you can apply for planning permission. This is where option agreement planning permission can be particularly useful.

If planning permission is granted, you can exercise the option and buy the land at the agreed price. If planning permission is refused, you can choose not to exercise the option and walk away from the site without any further financial commitment.

If you`re not sure whether planning permission is likely to be granted, you can include a condition in the option agreement that allows you to walk away from the site if planning permission is refused.

Step 4: Exercise the option

If planning permission is granted, you can exercise the option and buy the land at the agreed price. At this point, the option fee will usually be deducted from the purchase price.

Step 5: Develop the site

Once you`ve bought the land, you can start developing the site.

Option agreement planning permission can be a useful tool for property developers who want to secure a site for development without committing to buying it outright. By negotiating an option agreement with the landowner, you can get the right to buy the land at a future date, usually after planning permission has been granted. If planning permission is refused, you can choose not to exercise the option and walk away from the site without any further financial commitment.