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propertylawyer
propertylawyer, Solicitor
Category: Law
Satisfied Customers: 280
Experience:  Property Solicitor with expertise in commercial and residential property transactions.
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WHAT IS THE USUAL PERCENTAGE NON REFUNDABLE DEPOSIT ON A

Customer Question

WHAT IS THE USUAL PERCENTAGE NON REFUNDABLE DEPOSIT ON A LAND DEVELOPMENT OPTION AGREEMENT.
Submitted: 8 months ago.
Category: Law
Expert:  propertylawyer replied 8 months ago.

What are the agreed terms of the deal?

Customer: replied 8 months ago.
The land in question is valued by the developer as 1.6 million and the deal is that they will purchase an option on my house and land subject to planning permission being granted. Once granted they will purchase the land at the agreed sum and we will be allowed to remain in the main house rent free for up to one 1 year while development starts on the land. That is the outline of the agreement.
Customer: replied 8 months ago.
Just looking for a ballpark figure on what I should be asking
Customer: replied 8 months ago.
Any thoughts?
Customer: replied 8 months ago.
Are you there?
Customer: replied 8 months ago.
are you still there?
Expert:  propertylawyer replied 8 months ago.

Generally, the developer pays £1 on exchange of the option. Nothing more as the developer is taking a financial risk undertaking planning applications and incurring costs. If the developer gets planning then it will exercise the option and generally pay 10% deposit. The balance is paid on completion.

What option period is the developer looking for?

You may want to negotiate a revalue of the land on exercise of the option if you think the value will rise significantly over the option period.

I have on few occasions seen the developer pay more that £1 for the option but it is rare. It depends on the bargaining power of the parties and what you can negotiate, there is no rule of thumb or ball park figure, apart from £1 option fee. The developer generally pays the land owner's legal fees.

Any questions or queries?