It's a no-brainer for Reading.
The lad's probably on about £750 a week. By ensuring they retain him under contract they can probably expect to get about £200-300k if someone buys him.
If it went to the compensation tribunal they would probably get about 20-30% of that given that he has only been there for one year and hasn't played higher than League One.
So for a manaegeable expenditure of around £40-50k over a season, which as people have said can be largely recouped through a loan deal easily, they have given themselves the prospect of making an extra £200k or so on any transfer.