Finance for land promoters taking strategic sites through planning

Under a promotion agreement, a promoter does not usually buy the land outright. Instead the landowner agrees to let the promoter take the site through planning at the promoter's cost and risk. When consent is achieved the land is sold, and the promoter takes an agreed share of the proceeds, typically a percentage of the enhanced value, with the balance going to the landowner.

It differs from an option, where the promoter has the right to buy at a set price or discount. Under a promotion agreement, promoter and owner are on the same side, both wanting the highest consented value at sale.

The reason finance is needed is timing. The promoter carries real costs for years, planning consultants, technical studies, legal work, sometimes option fees, long before any money comes back at sale. Funding bridges that period so a promoter can run more sites, or larger sites, without tying up all its own capital in work-in-progress. This is unregulated commercial lending outside the FCA's regulated-mortgage perimeter, arranged for companies pursuing strategic land as a business. Nothing here is financial, legal, planning or tax advice.

Promotion finance is there to fund the work-in-progress of taking land through planning, the outlay that sits between committing to a site and selling it with consent.

Typically that includes:

• Option or agreement fees payable to the landowner to secure the site.
• Planning costs: planning consultants, application fees, and representations through the local plan or an application.
• Technical and professional work: transport, ecology, drainage, heritage, masterplanning and legal advice.
• Promotion and holding costs across what can be a multi-year period.

Because a promotion play produces no income until the site sells, interest is usually rolled up rather than serviced monthly, so the promoter is not funding interest out of pocket during the hold. Facilities generally range from £100k to £25m depending on the scale of the site and the programme, over terms of up to around 36 months, sometimes structured to be extended or refinanced as the planning process runs its course. We size the facility to the actual cost programme and the expected timeline, so there is enough headroom to see the planning work through without repeatedly returning to the market.

Security depends on the promoter's interest in the land, and this is where these deals need care. A lender will look for the strongest charge the structure allows.

Broadly, security can take the form of:

• A charge over the land itself, where the promoter owns it or has a registrable interest.
• A charge over the option or promotion interest, the contractual right the promoter holds, where the promoter does not own the land outright.
• Support from the borrowing company by way of a debenture, and often personal guarantees from the principals.

A charge over an option or promotion interest is more specialist than a simple charge over land, because its value depends on the agreement and on planning succeeding. Lenders comfortable in this space understand that, but they will scrutinise the agreement terms closely: the promoter's share, the minimum land value protections, the length of the agreement, and what happens on sale. The cleaner and better drafted the underlying agreement, the easier it is to place. We work with the documents you have and present the security position clearly, so a lender can see exactly what it is lending against and how it gets repaid.

The exit for promotion finance is the sale of the consented land to a housebuilder. Once permission is secured, the site is marketed, a buyer is found, and the sale completes, usually well above the land's value before consent because the planning gain has been realised.

The proceeds are then split according to the promotion agreement. The promoter takes its agreed share of the enhanced value, commonly a percentage of the net sale proceeds after agreed costs, with the balance going to the landowner. The finance is repaid from the promoter's share, or from the sale proceeds directly, before the promoter takes its profit.

As an illustration, a promoter might secure consent that lifts a site's value substantially, sell to a housebuilder, and receive an agreed percentage of the proceeds, from which the rolled-up facility is redeemed and the promoter keeps the remainder. This is a hypothetical illustration only and not a promise of any particular value or outcome. The important point for a lender is the order of repayment: it wants clear sight of how and when it is repaid from the sale, ahead of the promoter's profit share, which is why the sale mechanics in the agreement matter so much to how the facility is structured and priced.

Promotion is inherently long and uncertain, because it depends on the local plan and planning process, which a promoter influences but does not control.

The main factors to weigh are:

• Timescale: taking strategic land through allocation and consent can run for years, and local plan cycles slip. The facility term and rolled-up interest must allow for that.
• Planning outcome: a site may not be allocated, or an application may be refused or scaled back, which changes or removes the uplift the whole plan relies on.
• Value at sale: the eventual consented value, and therefore the promoter's share, is not fixed until the site sells in the market of the day.
• Agreement terms: minimum values, longstop dates and share definitions all shape what is actually recovered.

Because interest usually rolls up over a long hold, the sum to redeem grows meaningfully with time, so the exit value has to comfortably cover it. We help structure the term and facility with realistic headroom for a slow plan process, and we are candid where a case looks stretched. A promotion play can be very rewarding, but it is a considered, long-horizon commitment, not a quick trade. Nothing here is financial, legal, planning or tax advice.

To get a useful view we need to understand both the site and the agreement behind it, because in promotion deals the contract is as important as the land.

Helpful to share:

• The site and its planning status: allocation, application stage, and your planning strategy and consultants.
• A summary of the promotion or option agreement: your share, key protections, and the longstop or term.
• The cost programme you need to fund and over what period.
• Your expected exit: likely consented value and route to a housebuilder sale.
• The borrowing entity and its track record in strategic land.

We will give an indicative view on how much can be raised and on likely terms within the bands set out here, flag anything a lender will want tightened in the agreement, then place the case with specialist strategic land lenders. We arrange the finance and place it with specialist lenders; we do not lend ourselves. These are indicative bands, not a guaranteed quote, and terms depend on the site, the agreement and the exit. Nothing here is financial, legal, planning or tax advice.