If you’ve been involved in a long-term land deal – perhaps selling a plot for housing development or buying land that won’t be built on for years – you’ll know that option agreements are a staple of the process. They give a buyer the right to purchase land at a future date, usually once planning permission comes through.
However, what happens when those option agreements are meant to last for decades, and the law sets a time limit on how long they can run? That’s the question the High Court grappled with in Crest Nicholson Regeneration Ltd v Calvert [2026] EWHC 531 (Ch), handed down on 11 March 2026.
Facts
Back in 2002, Crest Nicholson — one of the UK’s major housebuilders — entered into an option agreement with the Calvert family to acquire farmland at Holmbush Farm, near Crawley in West Sussex, for a large residential development. One problem was that a development of this scale (ultimately around 2,500 homes) was always going to take a very long time — potentially well beyond 21 years — to secure planning permission and build out.
The law, however, imposes something called the “rule against perpetuities.” This is a longstanding legal principle designed to stop landowners from tying up property indefinitely into the future. Under the Perpetuities and Accumulations Act 1964, an option to buy land generally had to be exercised within 21 years, or it would become void.
To get around this time limit, Crest and the Calverts came up with a structure that involved three steps. First, Crest had an initial option to buy parts of the land as planning permission was granted (the “first freehold option”). Second, towards the end of the 21-year period, Crest could call for a lease over any remaining land. Third — and this is the crucial part — the lease would itself contain a further option for Crest to buy the freehold (the ‘second freehold option’). As the 1964 Act exempts options attached to a lease from the 21-year rule, this structure was intended to allow the deal to run well beyond that time limit..
In September 2023, Crest exercised the lease option. But the Calverts then changed their position. Just days before the 21st anniversary of the original agreement, their solicitors argued that the arrangement was a licence (not a lease) and that the second freehold option was therefore void for perpetuity. This was the first time the point had ever been raised, despite years of dealings between the parties.
What the Court Decided
The High Court had to decide the following three main issues:
Was the agreement a lease or a licence?
The court found that, despite being labelled and drafted as a “lease” the agreement was in substance a licence to occupy. The Calverts were to remain in occupation of the farm throughout, and Crest had no real right to possess or occupy the land — only limited rights of access for things like surveys and soil testing.
In legal terms, Crest did not have ‘exclusive possession’ — that is, the right to occupy and control the land to the exclusion of others — which is an essential requirement for a true lease. The court acknowledged that both sides genuinely intended to create a lease, but intention alone was not enough — the substance of the deal had to match.
Was the arrangement a sham or pretense?
The High Court rejected the Calverts’ argument that the lease-like language was a pretense designed to deceive. Both sides had entered the deal in good faith, with extensive legal advice, and genuinely believed the structure would work.
The fact that the structure didn’t achieve its intended legal effect was the result of a genuine mistake about the law, not a deliberate deception.
Did the newer 2009 Act save the option?
This was the decisive point — and it went in Crest’s favour. The Perpetuities and Accumulations Act 2009, which came into force on 6 April 2010, effectively abolished the rule against perpetuities for options over land.
The court held that when Crest used its lease option in September 2023, the resulting document was a new legal ‘instrument’ — meaning it took effect after the 2009 Act came into force on 6 April 2010, and so fell within the newer, more generous regime
Crucially, the option had not yet become void under the old 21-year rule at the point the lease option was exercised — Crest got its notice in just days before the deadline expired. The 2009 Act therefore applied, and the second freehold option was declared valid and enforceable.
Therefore, the second freehold option survives, and Crest can proceed to acquire the remaining land.
What Does This Mean for You?
This case has several important takeaways for anyone involved in option agreements over land, whether you’re a developer, a landowner, or an adviser.
The 2009 Act may rescue older deals
The court confirmed that even where an option was originally granted under the old perpetuity rules, if a new step in the option structure — such as exercising an option — takes effect after 6 April 2010, the 2009 Act can apply to the rights arising from that step.
This is a significant clarification. It means that some option structures entered into before 2010, which might have been thought to be at risk of failing on perpetuity grounds, may still be enforceable.
A ‘lease’ label is not enough on its own
The court’s finding that the document was actually a licence — despite being drafted to look like a lease — is a cautionary tale. If you’re structuring a deal that depends on an agreement being a true lease (for example, to take advantage of the exemption in section 9(1) of the 1964 Act), the substance of the arrangement must match the label. In particular, the grantee needs a genuine right of exclusive possession. If the landowner stays in occupation and the buyer has only limited access, that is very likely to be treated as a licence, no matter what the document says.
Timing really matters.
Crest exercised its lease option on 19 September 2023, just six days before the 21-year perpetuity period would have expired on 25 September 2023. If Crest missed that window, the second freehold option would very likely have been lost.
Anyone relying on the “wait and see” rule under the 1964 Act should be acutely aware of key dates and not leave things to the last moment.
Review your existing option agreements
If you are a party to a long-term option agreement entered into before 2010, this judgment is a prompt to review its terms. Consider whether any steps remain to be taken that could bring the arrangement within the scope of the 2009 Act, and whether the structure of the deal would withstand scrutiny if the lease-versus-licence question were ever raised.
This is a complex area of law, but the practical message is straightforward: how a deal is structured, when key steps are taken, and how the paperwork is drafted can make or break a valuable development. If you are a party to a long-term option agreement, it is well worth seeking specialist advice to ensure your position is properly protected.
