Development Appraisals Flashcards
What is a Monte Carlo simulation?
A technique to analyse risk
How is a development property defined in the International Valuation Standards?
Interests where redevelopment is required to achieve the highest and best use, or where improvements are either being contemplated or are in progress at the valuation date
How do you calculate GDV
Total income from a scheme - including PD, AH and Commercial sales
How do you calculate Gross Profit?
GDV - development costs
What RICS guidance related to FVAs?
RICS Guidance Note ‘Assessing Viability in planning under the NPPF 2019 for England 1st Edition March 2021
What systems do you use? Talk me through them
We use an internal excel spreadsheet called a ‘Stack Appraisal’.
Explain what the Golden Brick means in relation to VAT
Golden Brick refers to the point at which construction of a dwelling reaches above foundation level and becomes zero rated for VAT purposes.
Where a building is being sold to an HA, Golden Brick allows the developer to recoer VAT and the HA to avoid paying VAT.
Explain how the Residential Property Developer Tax works
The RPDT forms part of a building safety package. It was announced in Feb 21 by the Secretary of State. It aims to obtain contribution from the UK’s largest residential property developers towards the Government’s cost of dealing with defective cladding in the UK’s high-rise housing stock discovered following Grenfell.
Tell me how you calculated CIL
I reviewed the latest Mayoral and Borough Community Infrastructure Levy charging schedules applying the rate to the amount of floorspace. I then applied the required RICS CIL indexation.
Why did you reduce the sales values or Doon Street?
One of the main comparable developments I was using to obtain accurate assumptions was a 50-storey tower facing the Thames.
As the site was set-back from the river and would not consist of the same building height, I took the view to reduce the sales revenue.
I checked this with the internal Saes team who reviewed and agreed with my assumptions.
Tell me about an example when you provided reasoned advice for an acquisition opportunity
I reviewed the viability of purchasing a Site on Doon Street in Southwark. The planning policy identified Doon Street as a location for tall buildings. At the time the assumed build costs were very high and the gross profit did not meet my Client’s required levels.
