Deferred Payments & Option Agreements: Your Secret Weapon

Posted by Magnet Capital on 26th August 2025 -

If you’re a property developer, you’ll know the pain. You’ve spotted “the one” – a site with serious potential, but the timing couldn’t be worse. Your cash is tied up in another project, the bank is taking its time, and the thought of stumping up the full purchase price right now makes your wallet weep.

Before you give up and watch someone else snap it up, let’s talk about two property developer lifesavers: Deferred Payments and Option Agreements.

Deferred Payments: The “Pay Later” Button

With a deferred payment, you agree to buy the site but arrange with the seller to pay all or part of the price at a later date. This approach can give you flexibility arranging structured funding, the time to sell another property or free up capital, and/or the ability to crack on with planning or early works without the immediate financial hit. It is even possible to defer to the point of practical completion and use the sales proceeds towards payment.

Basically, it’s about giving your cashflow a break so you can focus on getting the development project moving.

 

Option Agreements: Holding the Keys Without Owning the Car (Yet)

An option agreement gives you the right (but not the obligation) to buy a property at a set price within a certain time frame. It’s a bit like putting a site “on reserve” – no one else can swoop in, but you don’t have to commit until you’re ready.

Property developers love them because they lock in today’s price while you work up your plans, secure the site without a big upfront outlay, and gives you time to gain planning permission and add value before purchase- without the big gamble, reducing your risk.

How can Magnet Capital help? 

If you’re eyeing up a site but feeling the financial squeeze, call us on 020 8075 3255 or fill in our online form. We’ll help you figure out whether a deferred payment, an option agreement, or another structure is the right move. We’ll also make sure the terms are crystal clear, because how it’s structured can affect your funding, and put you in the strongest position to get building.