Option agreement: how it works
You grant us the right to buy within a set period, usually for an option premium, while we pursue planning.
An option agreement gives us the right, but not the obligation, to buy land within an agreed period, usually once planning is secured. The landowner is usually paid an option premium on signing and keeps the land meanwhile. On option agreements we pay the landowner's reasonable legal costs, with a cap agreed in the heads of terms.
How does an option agreement work?
Heads of terms
We agree the option period, the premium, how the price will be worked out, any minimum price and the planning strategy.
Sign the option
The agreed option premium is paid and the option is usually protected by an entry at HM Land Registry. We pay your reasonable legal costs, capped as agreed.
Promotion and planning
We pay for the planning work up front, which may include promoting the land through the local plan. Any costs to be deducted from the price are agreed and capped in the heads of terms.
Exercise and completion
If planning is granted we serve notice to buy, and the sale completes at the agreed price.
Is it right for you?
What you gain
- Usually an upfront premium for granting the option
- We pay planning and promotion costs up front (agreed costs may be deducted from the price, capped in the heads of terms)
- Your reasonable legal costs paid (capped)
- The price usually reflects market value with planning, less agreed deductions
What to weigh up
- The land is tied up for the option period
- We are not obliged to buy
- Price mechanisms (discounts, deductions, minimum price) need independent legal and valuation advice
Usually suits
- Farmland and larger edge-of-settlement sites
- Strategic land needing local plan promotion
- Owners happy to wait for a better price
Every site is different. Take independent legal, valuation and tax advice before agreeing terms; we are happy to work with your advisers.
Land this route often suits
WantedResidential development land
Land that could take new homes, from a handful of plots to whole neighbourhoods.
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WantedLand without planning permission
Fields, plots and sites with no consent yet but a realistic route to one.
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WantedGarden and backland plots
Large rear gardens and land behind existing homes with a workable access.
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WantedFarmland and paddocks
Fields and paddocks next to towns and villages, with or without tenants.
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WantedGreen Belt and grey belt land
Land in England's Green Belt that may qualify as grey belt under national policy.
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WantedStrategic land
Larger sites for 50 or more homes, often promoted through the local plan.
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WantedSites with lapsed or refused planning
Land where permission ran out or an application was turned down.
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WantedAllocated and promoted land
Land allocated in a plan or put forward to a call for sites or candidate site process.
Learn moreOption agreement by area
- Bedfordshire
- Berkshire
- Bristol
- Buckinghamshire
- Cambridgeshire
- Cheshire
- Cornwall
- County Durham
- Cumbria
- Derbyshire
- Devon
- Dorset
- The East Riding of Yorkshire
- East Sussex
- Essex
- Gloucestershire
- Greater London
- Greater Manchester
- Hampshire
- Herefordshire
- Hertfordshire
- The Isle of Wight
- Kent
- Lancashire
- Leicestershire
- Lincolnshire
- Merseyside
- Norfolk
- North Yorkshire
- Northamptonshire
- Northumberland
- Nottinghamshire
- Oxfordshire
- Rutland
- Shropshire
- Somerset
- South Yorkshire
- Staffordshire
- Suffolk
- Surrey
- Tyne and Wear
- Warwickshire
- The West Midlands
- West Sussex
- West Yorkshire
- Wiltshire
- Worcestershire
- Clwyd
- Dyfed
- Gwent
- Gwynedd
- Mid Glamorgan
- Powys
- South Glamorgan
- West Glamorgan
Option agreement: questions
How long do options last?
It varies with the site and the planning route, from a few years for smaller sites to longer for strategic land. Extension terms are often included.
How is the price worked out?
Commonly as market value with planning, less an agreed discount and allowable costs, often with a minimum price. Take independent advice on the mechanism.
Do you really pay my legal costs?
On option agreements we pay the landowner's reasonable legal costs, up to a cap that we agree in the heads of terms.
What if you never exercise the option?
At the end of the option period the land is released, you normally keep the premium, and we remove our notice from your title.