News & Blogs

22 Apr

“This is how we do it – What is a PPA”

Matthew Turnbull is Planning & Development Manager at Keyland Developments

Having spent 10 years in planning consultancy, I had heard of Planning Promotion Agreements (PPA’s) but in my new role as Planning & Development Manager I’ve become fully involved in them and can de-mystify the increasingly popular development agreements.

In short, a PPA is a way for landowners to obtain the expertise and financial support they need to secure planning permission and maximise the value of the land they own.  Often a landowner has little knowledge of the planning system and/or simply hasn’t the funds available to promote their land effectively.

A PPA is a legally binding contract between the landowner and their partner; a land promoter such as Keyland. They can be applied to any type of site but are typically used where securing planning permission is not straightforward and may take several years to achieve through the Council’s local plan preparation process and then by the submission of a complex planning application.

When undertaking a PPA project, Keyland will commit to providing the funding and expertise necessary to secure planning permission. Our input is entirely at our own risk since the landowner isn’t expected to provide any of the funding needed to progress through the site’s promotion or submission of a planning application. In return, the landowner will commit to selling the site once planning permission is secured, with Keyland taking a share of the sale price for the site.

Each agreement is be tailored to the landowner’s individual circumstances, but will include; the length of time in which Keyland has to successfully secure planning permission; an obligation on Keyland to work diligently; a limit to the costs incurred by Keyland to only those that are reasonable, and the share of the eventual sales price which Keyland will receive.

There are numerous benefits to this approach for landowners. We align our interests with those of the landowners and because our return is a share of the selling price, our motivation is the same as the landowner’s; to maximise the value of the land.

Keyland funds the whole process, it doesn’t cost the landowner anything and we even cover the legal costs for entering into the agreement in the first place. This means that, if for some reason the promotion is ultimately unsuccessful, the landowner isn’t ever out of pocket.

The price of the site is determined via a competitive bidding process. Once planning permission is secured, a data room is established to give all interested parties the information they need to submit a robust financial offer. Marketing sites in this way helps to secure the best possible value for the landowner.

By undertaking a PPA, the landowner doesn’t have any of the hassle involved in realising the development potential of their land. We develop the planning strategy, appoint and manage a consultant team, liaise with the Council and negotiate the eventual sale of the site upon securing planning permission being open and transparent throughout the process.

Another key benefit is that the landowner retains use of the land while we are working to try to secure planning permission and can carry on using it for whatever they were using it for before. They will be asked not to do anything that would increase the costs of development, or to sell it without letting the us know, but otherwise the use of the land is unfettered.

So, what are the alternatives to a PPA?

The main alternative to a Promotion Agreement is an Option Agreement – often used by developers to secure control of a site. Option Agreements give developers a fixed amount of time in which to secure planning permission and buy the site, often for a percentage of ‘market value’.  It’s important to note that, in contrast with a PPA, the value of the site is estimated rather than being true market value determined by a robust marketing exercise.

We understand that the process of selling land isn’t always easy, so work hard to give peace of mind to our landowners at every step of the way. Our aim is to give confidence that the process is in the very best hands and hope that by demystifying the PPA process we can allow landowners to understand how they can unlock the potential in their land.