On this page
- What is an option agreement on a garden plot?
- How is the price worked out under an option?
- When does an option suit a garden plot, and when doesn’t it?
- What goes into a garden plot option agreement?
- How does an option compare with the other ways to sell?
- What happens while the option runs?
- What if the option ends without a sale?
- How do mortgages, house sales and tax fit around an option?
- Step by step
- Questions
Who this suits
- Owners of plots where planning is uncertain and some time could change that
- Homeowners whose garden would work better combined with a neighbour’s land
- Owners of larger gardens where the number of homes is genuinely open
- Sellers who want a price linked to the permission eventually granted
- Owners in no hurry for the money who want someone else to run the planning work
What is an option agreement on a garden plot?
An option agreement gives a buyer the exclusive right, but not the obligation, to buy your garden plot within an agreed period, usually once planning permission has been granted. You keep owning the land while the option runs. We use that time to design a scheme and apply for planning, and if a permission we can work with arrives, we serve notice to buy at the price the agreement sets.
The key word is option. In a sale subject to planning, both sides are bound from exchange. An option binds you to sell if we choose to buy, but leaves the choice with us. That imbalance is what lets us take on plots where the planning picture is less clear, and it is why the terms you get in return matter so much.
Reasonable legal fees on option agreements are covered, with the cap agreed in heads of terms, so taking proper advice on the document needn’t come out of your pocket.
How is the price worked out under an option?
Most options on development land set the price by a formula rather than a single figure. A common approach is the market value of the plot with the permission actually granted, assessed when we exercise the option, less deductions agreed at the start, such as the planning costs we have spent. A minimum price usually sits underneath, so you know the floor.
Some options use a fixed price instead. That gives certainty, but you don’t gain if the permission turns out better than expected. Where value has to be assessed, the agreement says how: usually each side’s surveyor tries to agree, with an independent expert deciding if they can’t.
Whether anything is paid when the option is signed, known as an option fee, depends on the deal. Ask about it, and about how any fee is treated against the final price, because both affect what you actually receive.
When does an option suit a garden plot, and when doesn’t it?
An option tends to be the better route when there is real uncertainty that time could resolve. It suits less well when you need the money soon, when the scheme is obvious from day one, or when you want the buyer committed from the start. In those cases an outright sale or a sale subject to planning usually serves you better, and we’ll say so after the appraisal.
Situations where an option often fits include:
- The planning case depends on a policy change, such as a new site allocation or settlement boundary in a review of the council’s Local Plan.
- A better scheme needs a neighbour’s garden, or a strip of land that controls the access, and agreeing that will take time.
- The garden is large enough that the number of homes is genuinely open, so a price linked to the permission is fairer than a guess.
- The first application may need to be followed by a revised one, or by an appeal.
What goes into a garden plot option agreement?
An option agreement is a longer document than a plot sale contract, because it has to govern a period of uncertainty. These are the clauses to read most carefully:
- The option period: how long we have to seek planning and buy, and whether it can be extended, for example while an appeal is decided.
- The trigger: what counts as an acceptable permission, and how long we then have to serve notice.
- The price mechanism: the formula, the deductions, the minimum price and how disagreements over value are settled.
- Our planning obligations: for example, to submit an application within a set time, make reasonable efforts to obtain permission and keep you informed.
- Your obligations: not to sell, charge or grant rights over the plot without consent, and to allow access for surveys.
- If it lapses: removal of the entry on your title and, where agreed, handing over copies of surveys and drawings.
- Legal fees: reasonable fees for your own solicitor, covered by us up to the cap in heads of terms.
How does an option compare with the other ways to sell?
Each route shares the planning risk differently. The table sets out the main differences at a glance; the right choice depends on your plot, your timescale and how much certainty you need.
| Route | Who applies for planning | Commitment to buy | When you are paid | If planning is refused |
|---|---|---|---|---|
| Outright sale | Nobody before the sale; we apply afterwards as owner | Binding from exchange | On completion, without waiting for planning | The risk is ours, as the land is already sold |
| Sale subject to planning | We do, normally at our cost | Binding from exchange, subject to the planning condition | On completion, once permission is granted | You keep your land |
| Option agreement | We do, during the option period | We have the right to buy, not a duty | On completion, if we exercise the option | You keep your land |
| Planning promotion | We do, with nothing for you to pay upfront | Plot sold after permission, to us or on the market as agreed | From the sale proceeds, after our costs and fee | You keep your land, with no planning costs to repay |
| Applying yourself, then selling | You do, at your own cost | No buyer committed while you wait | When you find a buyer and complete | You keep your land, but the money spent on the application is gone |
What happens while the option runs?
Day to day, very little changes for you. The plot is still yours and still part of your garden. The option is noted on your title at HM Land Registry, so it can’t be sold to anyone else, and surveyors and ecologists will need occasional visits, arranged in advance.
Behind the scenes, we work through the planning stages: surveys, design, pre-application advice where the council offers it, and the application itself, judged against the council’s Local Plan and the NPPF. You should hear from us at each stage, see the drawings before they are submitted, and know straight away when a decision is issued. If the council refuses, the agreement says whether we can revise and reapply, or appeal, within the option period.
Once an acceptable permission is in place, we serve notice to exercise the option, the price is fixed under the formula, and completion follows within the agreed time. The plot then moves onto its own title, as on any sale of part.
In Wales Behind the scenes, we work through the planning stages: surveys, design, pre-application advice where the council offers it, and the application itself, judged against the council’s Local Development Plan (LDP) and PPW. You should hear from us at each stage, see the drawings before they are submitted, and know straight away when a decision is issued. If the council refuses, the agreement says whether we can revise and reapply, or appeal, within the option period.
What if the option ends without a sale?
If the option period runs out, or we decide not to buy, the land stays yours and the entry on your title is removed. You are then free to sell, keep or develop the plot as you wish.
If a planning permission was granted before the option ended, it generally stays with the land rather than with whoever applied, unless the permission itself says otherwise. That can leave you holding a plot with planning, although every permission has to be started within a time limit or it lapses.
It is worth agreeing in advance whether reports, surveys and drawings will be handed over if the option ends, because they can save a future buyer time and money.
How do mortgages, house sales and tax fit around an option?
If your house is mortgaged, check whether your lender must agree before you grant an option over part of the garden, as many mortgage conditions restrict granting rights over the property without consent. At completion, the lender must release the plot from its charge, as on any sale of part.
Selling your house while the option runs is possible, but the option stays attached to the land it covers. If the plot is still on the same title as the house, your buyer’s solicitor will see the option and need to understand it, so tell us early and the two can be dealt with together.
On tax, the grant of an option is generally treated as a disposal in its own right for Capital Gains Tax, and if the option is later exercised, the grant and the sale are generally treated as one transaction. How Private Residence Relief applies can depend on whether you still live in the house when the sale completes. Take advice from a tax adviser before you sign.
Step by step
Free plot appraisal
We look at your title, the access, the planning history and the policies that apply, then tell you honestly whether an option, an outright sale or a conditional contract fits your plot best. It costs you nothing.
Heads of terms
We set out the option period, the price formula and minimum price, any option fee, our planning obligations and the cap on your reasonable legal fees, which we cover. Nothing is binding at this stage.
Sign the option
Your solicitor and ours agree the option agreement and the plan of the plot. Once it is signed, the option is noted on your title, and you carry on living in your house and using the garden as normal.
Planning work
We commission surveys, design the scheme and apply for planning, keeping you updated and showing you the drawings before submission. The council decides; if it refuses, the agreement sets out whether we revise, reapply or appeal.
Exercise or lapse
If an acceptable permission is granted, we serve notice, the price is fixed by the formula and the sale completes in the agreed time. If not, the option lapses, the entry comes off your title and the land stays yours.
Things to weigh up
- We have the right to buy, not a duty, so a sale isn’t certain even after a long wait.
- Your plot is tied up for the option period and can’t be sold to anyone else meanwhile.
- With a market value formula, the final price isn’t known until the option is exercised.
- Deductions agreed at the start, such as planning costs, reduce what you receive, so check them closely.
- Options have their own Capital Gains Tax treatment, so take advice from a tax adviser before signing.
Questions about option agreement
Is an option agreement the same as selling my garden?
No. Signing an option doesn’t sell anything. It gives us the exclusive right to buy your plot within an agreed period, usually once planning is granted. Until we exercise that right and complete, you own the land. If we never exercise it, there is no sale, and the plot stays yours, free of the option.
Do I get paid anything when the option is signed?
That depends on the deal. Some options include an upfront option fee and others don’t, and where there is one, the agreement says whether it counts towards the final price. We set this out in heads of terms, so before instructing a solicitor you know what, if anything, you receive at signing and what comes on completion.
How long does an option on a garden plot last?
The length is agreed at the start. It should allow for surveys, an application and possibly a revised scheme or an appeal, but be no longer than the plot genuinely needs. Options over large farmland sites can run for many years; on a single garden the period is usually much shorter. Any extensions should be tied to specific events, such as an appeal.
Who pays my solicitor’s fees on an option agreement?
We cover reasonable legal fees for your solicitor on an option agreement, up to a cap agreed in heads of terms. Choose a solicitor who handles development land, because options contain clauses that a typical house-sale conveyancer may not see often. Agree the cap before they start work, so their fees stay within it.
What if you get planning but decide not to buy?
Then the option lapses when its period ends, or sooner if we release it, and the land stays yours. A permission generally stays with the land rather than with the person who applied, so you could be left with a plot that has planning. Permissions must be started within a time limit, though, so check the decision notice.
Can I end the option early if I change my mind?
Generally not on your own, because the point of the agreement is that we can rely on it while we invest in planning. It will say when it can end: at the close of the option period, if we release it, or if either side breaks its terms. If your plans might change, raise it before you sign.
How is an option different from planning promotion?
Under an option, only we can buy the plot, at the price the agreement sets. Under planning promotion, we seek planning at our cost and, if it is granted, the plot is then sold, to us or on the open market as agreed, with our costs and fee taken from the proceeds and nothing for you to pay upfront. Promotion is more usual on larger or combined sites.
Can I still use my garden while the option runs?
Yes. The land is yours until completion, so you use it as normal. The agreement will ask you not to build on it, fell trees, sell it or grant rights over it without consent, and to allow access for surveys. If you plan anything significant in that part of the garden, check with us first.