What Is a Conditional Contract When Selling Land Subject to Planning?

In most land sales, contracts are exchanged and completion follows a few weeks later on a fixed date. Under a conditional contract, contracts are exchanged in the same way, but completion is tied to an event instead of a date. For land with development potential that event is almost always planning permission, which is why the arrangement is also called a sale subject to planning, or selling subject to planning permission.

HMRC's Capital Gains Manual gives a clear account of the legal idea underneath. A contract is conditional where there is a condition precedent, which it describes as a situation where the contract is only legally binding on the parties once that condition is fulfilled. The manual separates this from the obligations the parties have to carry out under the contract, sometimes called conditions subsequent, and notes that the difference is a question of contract law rather than tax law.

In plain words, the planning condition is the gate, and the buyer's promise to apply for planning is a task. The gate decides whether the sale happens at all. The tasks, such as submitting an application by a set date, are live from the day of exchange, and a court will enforce them, as a 2026 case later in this guide shows.

Like every contract for land in England and Wales, a conditional contract has to be in writing. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 says a contract for the sale of an interest in land can only be made in writing, incorporating all the terms the parties have expressly agreed in one document, or in each part where contracts are exchanged, signed by or on behalf of each party. A conversation, a letter of intent or a set of heads of terms is not the contract; the signed, exchanged document is.

1. Heads of terms. A short, non-binding summary of the deal: the land, the price or how it will be worked out, any deposit, the condition and the long-stop date.
2. Exchange of contracts. Both sides sign the full contract and it is exchanged. Where a deposit is agreed, it is paid now and is often held by a solicitor as stakeholder, meaning neither side can touch it until the contract says who is entitled to it.
3. Protecting the contract on the register. The buyer applies to HM Land Registry for a notice on your title, so that anyone looking at the register can see the land is under contract.
4. The planning application. The buyer prepares and submits the application within the time the contract allows, and pursues it with the council.
5. The decision. If the council grants permission, any Section 106 agreement is signed and the decision notice is issued. If it refuses, the contract says whether the buyer may, or must, appeal.
6. The challenge period. The contract usually waits for the time allowed for a legal challenge to pass with no claim brought.
7. The condition is satisfied. The contract becomes unconditional and completion follows on the date, or within the period, the contract sets.
8. Completion. Your solicitor receives the price, the land passes to the buyer by transfer, and the buyer registers its purchase.

Boyes Turner, a law firm, writes in its February 2025 note on conditional contracts that the most common obligation is one on the purchaser to submit and pursue a planning permission, and that the contract should also deal with whether the purchaser may, or is obliged to, submit a planning appeal. Those two points shape most of the time between exchange and completion.

Throughout that time you remain the owner. You keep using the land, and the contract sets out what you agree not to do in the meantime, which is covered further down this guide.

A planning permission is not a yes or no answer. It comes with a description of the development, conditions on how and when it can be built, and often a Section 106 agreement with payments and affordable homes attached. A buyer agreeing to pay for land with planning wants to know that the permission it receives is one it can build. So conditional contracts do not simply say 'subject to planning'. They define a satisfactory planning permission, and only a permission that meets the definition satisfies the condition.

Lawyers know how hard this is to write well. Boyes Turner calls what is meant by a 'satisfactory' planning permission an age-old question, and a good example of the difficulties of drafting conditions. RWK Goodman, another firm, explains in a September 2021 note that most conditional contracts turn on the grant of a satisfactory planning permission allowing the developer's intended development to go ahead, and that buyers may treat a requirement to make Section 106 and Community Infrastructure Levy payments above a certain threshold as an unacceptable condition.

The definition is often written from the buyer's point of view, because the buyer is the one taking on the cost of building. The consequence for an owner is practical rather than legal: a permission can be granted, reported in the local paper and still not satisfy the condition, and the contract then runs on towards its long-stop date. Our guide to Section 106 and CIL explains how the planning obligations and the levy are worked out.

Because a permission can be taken to the High Court after it is granted, and a quashed permission would leave the buyer owning land it cannot build on. Boyes Turner notes that a conditional contract should allow sufficient time for any judicial challenge periods to expire following the grant of a planning permission. Where the definition includes this, the condition is treated as satisfied only once the challenge window has closed with no claim.

The length of the window depends on who granted the permission, and the rules are set out in two places.

For a council decision, rule 54.5 of the Civil Procedure Rules replaces the general three-month limit for judicial review with a shorter one: for a decision made by a local planning authority under the planning acts, the claim form must be filed not later than six weeks after the grounds to make the claim first arose. The same rule says the time limits cannot be extended by agreement between the parties.

For a permission granted on appeal, section 284 of the 1990 Act lists any decision on an appeal under section 78, the ordinary planning appeal, among the decisions that can only be questioned in the way the Act allows. Section 288 then lets a person aggrieved apply to the High Court, and an application for leave must be made before the end of the period of six weeks beginning with the day after the relevant date.

Boyes Turner describes it as an ultimate deadline after which either party can terminate the agreement. RWK Goodman puts the outcome simply: if the long-stop date is reached without a satisfactory planning permission being granted, the contract comes to an end. Some contracts extend the long-stop date while an appeal or a legal challenge is decided, as the RWK Goodman note describes.

When a conditional contract ends without completing, four things follow.

• The land stays yours, with no sale and no transfer.
• The notice comes off your title. HM Land Registry cancels an agreed notice only when it is satisfied that the interest protected has come to an end, on an application on form CN1 with supporting evidence.
• The deposit, if there was one, goes where the contract says. Boyes Turner notes that the contract will allow the purchaser to withdraw without penalty if a condition is not met, and must address whether any deposit paid is refundable or forfeited.
• The buyer reports the ending. Under the contractual control rules described below, the buyer must tell HM Land Registry within 60 days when the right comes to an end, expires or is exercised, saying whether that is for all of the land or part of it.

A 2026 Case: The Deadline to Apply for Planning

The case of Whitburn Estates Ltd v Thirteen Homes Ltd [2026] EWHC 1256 (Ch), decided by the High Court, shows how seriously the courts take the tasks inside a conditional contract. Whitburn Estates owned development land at Mill Lane, Whitburn, and exchanged a conditional contract to sell it to Thirteen Homes. The buyer paid a 10% deposit, held by a firm of solicitors as stakeholder. The contract had several conditions precedent and required the buyer to submit a planning application within six months and, in the contract's words, strictly no later than nine months from exchange, which was 28 October 2022. The long-stop date was 28 January 2023.

No application was made, and the long-stop date passed without the conditions being satisfied. The buyer then served notice to end the contract, and the dispute that followed was over that notice and the deposit. The landowner won. Irwin Mitchell's account of the decision, published in September 2026, records that the words strictly no later than demonstrated an intention that compliance with the deadline was mandatory rather than aspirational, that time limits on conditions precedent are generally treated as essential unless the contract provides otherwise, and that the buyer's own notice was invalid. The landowner validly ended the contract in December 2023 and kept the deposit. The buyer's request for the court's discretion to order the deposit back, under section 49(2) of the Law of Property Act 1925, failed because that relief is available only in exceptional circumstances.

The wider lesson is about how conditional contracts are read. The deadlines inside them are real deadlines, for both sides, from the day of exchange.

Under a conditional contract, the sale follows automatically once the condition is satisfied. Under an option agreement, the owner grants the buyer the right to buy the land on terms agreed at the start, and the sale follows when the buyer serves notice exercising that right. Our guide to the four ways to sell land for development places both beside an outright sale and a promotion agreement. The tax rules recognise the same distinction. Section 28 of the Taxation of Chargeable Gains Act 1992 treats a contract that is conditional, and in particular one conditional on the exercise of an option, as made when the condition is satisfied.

How Our Option Agreement Works

Our route is an option agreement at a price agreed at the start, written into the agreement as a figure and set above what your land is worth today in its current use. We pay for and run all of the planning work, at our own cost and risk, which on a larger site can reach £300,000. Our agreements continue while any planning application or appeal is being decided. Once planning permission has been secured, we complete the purchase and you receive the agreed price, with milestones set out in the agreement. If planning is not achieved, you keep your land and owe nothing.

Our solicitors register the option on your title, and we contribute to the fees of your own solicitor and land agent, so it costs you nothing to get it done properly. Our guide to option agreements explains the agreement in full, and our comparison of option, promotion and outright sale sets the routes side by side.

Under a conditional contract the price takes one of two forms: a sum stated in the contract at exchange, or a method for calculating it once permission is granted. Boyes Turner frames the choice as whether a fixed price is appropriate, or a price based on a proportion of the market value following the grant of planning permission.

• A fixed price. The figure is in the contract from the day of exchange. When the condition is satisfied, that is the sum paid on completion.
• A price set at the time. The contract sets out how the price will be worked out once permission is granted, usually by reference to the market value of the land with that permission. The figure is not known until the end, and the contract lays down how that valuation is to be carried out.

Whether a deposit is paid at all is a matter for each contract. Boyes Turner lists it among the points to settle: whether a deposit is to be paid on exchange of the conditional contract. Where one is paid, it is often held by a solicitor as stakeholder until the contract decides who is entitled to it. The Whitburn contract above is an example, with a deposit of 10% of the price. The contract settles who keeps it if the sale never happens.

A deposit on exchange does not mean the land has been sold. Until the condition is satisfied and completion takes place, you own the land, and the buyer's interest is a contract protected on your title. For the broader decision between selling the land as it stands and selling subject to planning, see our guide on whether to sell land with or without planning permission.

A conditional contract gives the buyer an interest in your land, and the buyer protects it by applying for a notice on the register of your title. HM Land Registry's practice guide on notices uses exactly this kind of entry as its example of an agreed notice: a contract for sale, with its date and the name of the person it favours.

The guide explains the two kinds. An agreed notice is entered by, or with the consent of, the registered owner, or where the applicant shows the registrar that the claim is valid. A unilateral notice may be entered without the consent of the relevant proprietor, and the owner can apply to cancel it at any time without giving reasons, after which the beneficiary has 15 working days to object. The guide adds that there is no difference in priority between the two. Either way, anyone who searches your title sees that the land is under contract.

The Contractual Control Rules From 6 April 2027

The Provision of Information (Contractual Control) (Registered Land) Regulations 2026, made under the Levelling-up and Regeneration Act 2023, apply from 6 April 2027. They catch conditional contracts in terms. Regulation 3(2)(b) lists a right to enforce an obligation on the proprietor of a qualifying estate to make a sale, where the obligation is contingent upon satisfaction of specified contractual conditions. Options and rights of pre-emption are listed alongside it.

• The duty falls on the buyer, not the owner. Regulation 4(1) says the grantee, defined as the person entitled to enforce the right, must provide the information to HM Land Registry within 60 days of the contract being made, assigned, or varied in writing in a way that changes the information reported.
• Contracts made before the rules start are covered too. A right granted after the regulations were made on 8 June 2026 and before 6 April 2027 has to be reported before 6 October 2027.
• What is reported. The names of both parties, the type of right, the date of the contract, when the right can be exercised or the conditions it depends on, the period of control and any extension or termination rights, the title number and the address of the land. Where the owner is an individual, the buyer also reports the owner's date and place of birth.
• What is published. HM Land Registry must publish the information as a dataset as soon as possible after 6 April 2028 and update it at least monthly. Regulation 9(6) says the owner's date and place of birth must not be published.
• What is exempt. Rights with a total period of control of less than 18 months, rights held only for purposes that do not involve building homes or a building of 100 square metres or more, rights that are part of security for a loan, and Section 106 agreements relating only to infrastructure, amenities or services.
• What happens if the buyer does not report. HM Land Registry may refuse to enter or update the notice protecting the contract if the information has not been given.

For an owner, the practical effect is small: there is nothing to file. A conditional contract over your land, along with the main details, will in time be visible in a public dataset, and the buyer may ask for your date and place of birth so that it can meet its own duty.

For Capital Gains Tax, the sale happens when the condition is satisfied. Section 28(1) of the Taxation of Chargeable Gains Act 1992 sets the general rule that the time of disposal is the time the contract is made, not the time the land is transferred. Section 28(2) then provides that if the contract is conditional, the time at which the disposal and acquisition is made is the time when the condition is satisfied. HMRC's manual repeats the point: the time of disposal is the time the contract is made or, if the contract is conditional, the time when the conditions are satisfied.

So the tax year of a conditional sale is set neither by the date of exchange nor by the date the money arrives. It is set by the date the condition is met, and that date depends on the wording of the condition.

The rates, reliefs and reporting deadlines that follow are in our guide to tax when selling land for development.

Stamp Duty Land Tax, for the Buyer

Stamp duty land tax is the buyer's tax, not the seller's. Section 44 of the Finance Act 2003 says that entering into the contract is not itself a land transaction. The tax point is normally completion. It comes earlier only if the contract is substantially performed first, which section 44(5) defines as the buyer taking possession of the whole, or substantially the whole, of the land, or a substantial amount of the price being paid. HMRC's Stamp Duty Land Tax Manual reads a substantial amount as 90% or more of the total. A deposit on exchange falls far short of that, which is one reason a conditional contract can run for years before the buyer has any stamp duty to pay.

RWK Goodman notes that the seller is typically barred from objecting to the planning application or submitting a competing application. Boyes Turner adds that the seller is often prevented from submitting any planning application for the property or adjoining land. Both follow from the same logic: once the land is under contract, there is one planning strategy for it, and it belongs to the buyer.

On the owner's side, the Section 106 signature is the step that most often surprises people, because the owner signs even though it is the buyer who will build; the Section 106 guide linked above explains why. Our guide on what happens if planning is refused covers the appeal routes and timescales that apply when a decision goes the wrong way.