DEVELOPMENT APPRAISALS Flashcards
1
Q
Did you refer to any guidance?
A
RICS Professional Standard, Valuation of Development Property, October 2019.
2
Q
How did you assess the site? How big was the development site? Previously developed?
A
The site was a former conservative club extending 0.70 hectares (0.174 acres).
3
Q
What would you include in your estimate for site preparation costs and how would you estimate them?
A
Demolition, remediation works, landfill tax, site clearance, levelling and fencing.
Obtain a contractors estimate for these works.
4
Q
How did you decide on your demolition costs?
A
Obtain a contractors estimate for these works.
5
Q
Talk me through your GDV?
A
I utilised the comparable method to identify transactions of newly constructed flats. I arrived at a GDV of £9,130,000.
I then utilised the investment method and identified transactional evidence of comparable commercial properties and yield evidence.
I adopted a Market Rent of £16 per sqft/£172 per sqm capitalised at a 7% net yield with a 3-month rent free period, which equates to a GDV of £586,733 before adjusting for purchaser’s costs.
6
Q
Was it a brownfield site?
A
Previously developed land that’s no longer being used.
7
Q
What was your clients affordable housing allowance?
A
40%
8
Q
How do we measure land?
A
ILMS – International Land Measurement Standard.
* Land ownership area
* Site area
* Net development area
* Plot ratio
* Site coverage
9
Q
What was the development programme of the scheme you were valuing?
A
3 Phases totalling 72 Months.
Typically the development programme or period comprises 4 stages.
*Land aquisition
*Preparation period
*Construction period
*Sales period
10
Q
How did you consider the Local Plan? How did you determine the optimal use for the development?
A
I consulted the LA Local Plan and Planning Policies and established that it was allocated for housing so could be developed for residential.
11
Q
Talk me through your costs.
A
- GDV. £6,086,985.
- Development Costs- BCIS/QS. £6,086,985.
- External Costs- estimations. £80,340.
- Contingency- 5%- deemed appropriate for the nature of this scheme.
- Professional fees- 8%- deemed appropriate for the nature of this scheme.
- Planning contributions- £48,106-CIL & £6,450- S106- confirmed by the Council.
- Sales & Marketing- 2.5% o GDV- in line with similar schemes in the area.
- Legal fees- residential- £750/unit.
- Letting fees- commercial- 10% of Market Rent.
- Land acquisition fees- SDLT + 1.75%.
- Finance- 8% debit rate, assuming 100% debt funding.
12
Q
Land purchase costs?
A
tbc.
13
Q
Any externals?
A
tbc.
14
Q
Contingency? When would you forgo a contingency?
A
5%. When you’ve already made an allowance for abnormal costs, when its a low risk environment, strict budget or timeline.
15
Q
Did you account for professional fees? What determines how much are professional fees? How complex was this project?
A
8%. (Small, bespoke scheme)
If the site demands more professional services, then adopt the upper range e.g. architect, quantity surveyor, civil/structural engineer, planning consultant, project manager.
Usually 5%-10% of build costs
16
Q
What was the development you appraised and why this development?
A
25 1 bed flats.
18 2 bed flats.
2 commercial units.
Client (LA) authority required us to carry out a viability assessment to determine if it could meet the CIL and S106 criteria.
17
Q
How did you determine your inputs?
A
Evidence based, BCIS, QS, senior colleague expertise.
18
Q
How did you arrive at 5% for contingency?
A
I used a 5% contingency because it was a brownfield site and site investigations havent been carried out.
19
Q
What is the impact of planning requirements on an appraisal?
A
Planning requirement isn’t always negative, but often if its an environmental or substainable (design standards) feature it can enhance the value also.
It can be negative when its for affordable housing and insfrastructure contribution (CIL).
20
Q
What impacts risk?
A
High risk- bespoke, uncertanty, difficult site, long term scheme.
Medium risk- established demand, popular, brownfield with site investigations.
Low risk- pre sold/pre let, joint venture, greenfield, high demand.
21
Q
What profit did you apply? ow risky? Profit for resi? For AH? For commercial? What was your blended profit? How did you sense check this?
A
Private Flats 17.50% GDV
Private Houses 15% GDV
Affordable Houses 6% GDV
Shared ownership 6% GDV
Commercial 15% GDV
Blended Rate 15.58% GDV
22
Q
What percentage did you apply for the sensitivity analysis and what did you apply it to?
A
2.5%
Construction & Sales rate
23
Q
Was the development viable?
A
Policy compliant, no.
All private scheme, yes.
24
Q
What were your finance costs and why? 100% debt funded? At what percentage?
A
8% debit rate, assuming 100% debt funding.
25
20. How did you decide on your development period? What impact does a longer development period have? (maybe thinking about your finance costs).
Planning viability appeal schemes ruled that the longer the scheme, the higher the profit = high risk.
Not getting the return for a longer time (10yrs+ or more)
26
What software did you use to calculate the RLV?
Argus
27
What level of affordable housing was viable?
None
28
Could your appraisal provide any other output aside from the RLV?
Development value, profitabitilty, viability
29
How did you sense check your RLV?
Cross-checked it with market evidence.
For viability - if an appraisal for a scheme suggests that without any planning policy it is negative, then it would not be delivered. So why has the applicant paid millions for the site and thousands for the pre planning work..?
- Are you sure it doesnt add up..? is there a mistake in their/your appraisal..?
30
What documents did you consider for viability?
Financial Viability in Planning: Conduct and Reporting (16 requirements), 1st Ed 2019
31
What is the purpose of a viability assessment?
Appraise the financial contribution towards planning pollicy that can be delivered by a particular development whilst also delivering an appropriate profit and an appropriate land value.
Planning policy includes:
*Affordable housing
*CIL
*Highways
*S106
32
Talk me through your costs for the land in Epping Forest.
GDV £1,424,471
GDC £695,396
Professional Fees
Architect 10%
Other professionals 0.50%
Disposal Fees
Sales Agent Fee 1%
Sales Legal Fee 1%
Finance
Debit 7%
33
Why did you adopt % for external works?
In DVS, a lot of viability work is undertaken and the % adopted has been market tested.
Aware that site specific considerations are required- example, large housing development, loads of roads, green space, say 15%.
But if flitted, limited infrastructure- such as car park, say 2.5%.
34
Why did you adopt 8% finance?
This has been market tested by other viability cases completed by DVS in the locality.
35
What factors can affect the outcome of a development appraisal?
Market conditions - changes in property prices or rental yields.
Construction costs - fluctuations in material and labour costs can affect the overall development costs.
Interest rates - changes in interest rates affect the cost of borrowing.
36
How do you account for void periods?
Apply a higher risk to reflect the void or deferred the rent to reflect the void period.
37
How do you decide on quartile for build costs?
I decided on the median value.
I selected the median build costs because it provides a more robust and representative analysis of the data.
By using the median, I was able to obtain a more accurate and reliable estimate of the typical build cost.
38
Why is the profit different for market housing and affordable housing?
39
How do you verify and sense check the build costs obtained from BCIS? How might there be inaccuracies and how would you factor this into appraisals?
- Confirm costs with QS.
- Sense check against clients costs.
- Cross check with other developments.
BCIS tender into only
Sample of data can be small
Schemes of 30 dwellings or less
40
What is a developers profit, and how is it calculated?
A developers profit is the financial return that the developer expects to make from the project.
Usually around 15%-20% of GDV or development costs.
41
What are the limitations/weaknesses of the residual approach?
The number of inputs are varied, each of which can be open to debate and interpretation.
Small changes across these inputs can have a significant impact on the residual outcome.
Whilst the residual method forecasts the development of a scheme over a period, usually the appraisal inputs are assumed as of today, the assessment is limited to a point in time.
Market conditions can fluctuate significantly over short periods, which can quickly make the results of the appraisal outdated.
42
Is the comparable approach of the residual method weak?
This is where the valuer assesses direct land sales.
A less robust approach because:
- all development sites are unique
- full details of the land sold often unknown
- does not reflect the approach a developer would take.
43
What is affordable housing?
Social rented, affordable rented, intermediate housing, shared owner housing.
Social rented - 35-40% of MV
Intermediate housing - 55% of MV
44
How did you arrive at a contingency rate?
2% - 5% of build costs
Greenfield sites - lower contingency allowance
Brownfield sites - higher contingency allowance
45
Where do you find the CIL rate?
In the local plan
46
What is the role of sensitivity analysis?
Accesses how changes in key valuables impact the over profitability of the development, eg. 5% increase in construction costs or a 10% decrease in GDV.
It helps to identify the most sensitive factors and provides insights into the risks associated with the project.
47
What are the steps to a residual calculation?
Gross Development Value minus Total Development Cost (inc. profit) = Land Value.
48
What are the steps to a development appraisal?
A calculation or series of calculations to establish the value, viability and profitability of a proposed development.
49
What is the current interest rate?
Bank of England - 5%
50
What is LIBOR?
A benchmark interest rate at which major global banks lend to one another in the international market for short term loans
51
Why did you apply that %?
I spoke to an exterior colleague, and they advised that this is the level that is being achieved for this type of property.
52
What do you mean by current value?
I meant EUV.
53
What is the NPPF?
Within NPPF talks about the requirement and demand for affordable housing and how LA can make prevision for affordable housing within their boundary.
54
What is the RICS Guidence Note, Valuation of Development Property, 2019?
*Have to cross-check with market evidence
- look at comparable land transactions
*Sensitivty Analys
- everything is assumption base, have to understand the change the inputs and how it impacts on your valuation
55
What is the RICS Professional Statement 'Financial Viability in Planning: Conduct and Reporting, 2019'?
Provides guidence for producing financial viability assessments for affordable housing.
*Executive summary
*The way to record imputs
*Steps to follow: GDV, GDC..
56
What is the difference between a residual and development appraisal?
Development Appraisal
*land value = what sort of profit will the scheme give you
Residual Method
*includes profit = know the profit, need to establish the land value
57
What method did you use for the viability assessment?
Residual Method
Tried to assertain the market value of the land assuming 20 flats would be constructed on that site.
58
What is the min. level of developers profit?
17.5% of GDV
59
How did you establish the GDV?
I utilised the comparable method to identify market transactions of newly constructed flats, near to the subject.
I also used the investment method to establish the market rent of the ground floor commercial space and capitalised it by a net initial yield.
60
What yield did you use?
In the market, the evidence available to us is net initial yield.
We deduct purchase costs from the GDV, therefore we don't use Gross - we'll be double counting.
61
You say you had regard to the planning policy requirements, what do you mean by that?
*had regard to the planning application,
We at DVS assess the sheme at the planning application stage, then it goes to negotation, then decision.
62
What if we didn't have access to BCIS, what other sources would you use?
SPONS (actual books)
*used for complex, specialised developments
63
What if you had a petral station on site, what impact would that have on the site preparation costs?
CONTAMINATION
*will have to consider to decamination costs, which will increase the GDC
64
Is CIL mandatory?
Yes
65
What are the steps to a development decision?
1. Planning Submission
2. LA appoints DVS to determine how many affordable housing units can be constructed on the development
3. DVS carries out a viability assessment of the development to establish if the development is viable with affordable housing
4. Negotiation between the LA and developer
5. LA and developer reach an agreement or go to planning appeal, if they go to planning appeal then a Planning Inspector mediates the two parties and reaches an independant decision
66
What is S106?
Lawyers prepares this document
Its a legal agreement, signed and agreed between the developer and LA
*States the number of affordable housing/social housing
*States the CIL
67
Talk me through your Financial Viability assessment in Bournemouth (DA L2).
RICS Professional Statement, Valuation of Development Property, October 2019.
I assisted a senior Valuer in a financial viability assessment for a proposed development involving the demolition of the existing building and construction of a mixed use development.
I first established the GDV by using the comparable and investment method.
I then considered total development costs including site preparation costs, planning costs building costs and finance (8%).
I then considered the level of profit (17.5% of GDV- residential, 15% of GDV- commercial) that would be required by a developer.
I then deducted total development costs alongside profit to find the Residual Land Value.
The outcome was that the scheme wasn't viable to support the provision of affordable housing.
68
Talk me through the inputs of the development appraisal calculation.
Assessment Date - May 2024.
Scheme - 43 flats, 26x private, 17x affordable, 2 commercial units- 3,282 sqm GIA.
Development period- 3 months pre-construction, 12 months construction, 6 months sale.
GDV- £8,265,871.
CIL/S106- CIL- £148,169 S106- £21,445
Construction Cost- £6,086,985
External Costs- £167,400
Abnormal Costs- £392,964
Professional Fees- 8%
Contingency- 3%
Finance Interest- 8% debit
Sales & Agency Fees- Private Residential- 1% GDV
Legal Fees- Private Residential £750 per unit
Letting Agent fees- Commercial 10% of MR
Letting Legal Fees- Commercial 5% of MR
Profit Target- 17.5% of GDV- Residential 15% of GDV- Commercial 6% of GDV- Affordable
Residential Land Value - minus £908,000
Benchmark Land Value £590,000
Existing Use Value £590,000
Premium - Nil
Viability Conclusion - Not Viable (-£306,204)
69
Talk me through your valuation of the Development Land in Epping Forest.
I determined the current value of the development site in Epping Forest for financial reporting purposes.
The land had planning approval to demolish the existing garages and construct a building with 7 flats.
I calculated the GDV by using the LHA rate for the area and applied a relevant yield.
I estimated the building costs for the proposed development and accounted for contingencies, professional fees, development profit, agent fees, legal fees and the cost of finance.
After calculating these costs, I determined the land value and cross-checked it against residential land comparables in the area to ensure accuracy and relevance.
70
What’s included in purchaser costs?
SDLT
Legal fees
Agent fees
71
What are the 16 requirements in RICS Professional Statement ‘Financial Viability in Planning: Conduct and Reporting’ 1st Edition 2019?
1. Objectivity and impartiality
2. Competence
3. Transparency
4. Presentation of results
5. Benchmark Land Value
6. Profit assumptions
7. Development costs
8. Market evidence
9. Sensitivity analysis
10. Professional responsibility
11. Reporting assumptions
12. Consideration of alternatives
13. Public sector contributions
14. Public disclosure
15. Third party review
16. Conflict of interest
72
How do you calculate SDLT?
Paid within 14 days of completing the property purchase
1. Up to £250,000 - 0%
2. £250,000-£925,000 - 5%
3. £925,001-£1.5M - 10%
4. Over £1.5M - 12%
73
What is affordable housing?
Covers a range of housing solutions aimed at making homes accessible for individuals and families who cannot afford market prices, whether for rent or for ownership.
1. Social rented housing
- owned and managed by LA or HA
2. Affordable rented housing (intermediate)
- offered by LA or HA, aimed at those who may not qualify for social went but still cannot afford market rent
3. Shared ownership
- allows households to buy a portion of a home (25% or 75%) and pay rent on the remaining proportion
74
When would you use a sensitivity analysis?
To assess how changes in key variables impact the overall viability of the protect.
Examples:
- market uncertainty
- high risk projects
Inputs:
Sale prices, construction costs, rental income, interest rates, build time/delays
75
Did you reflect a lower % to reflect that the site in Epping Forest had planning permission?
No, as all the developments have planning permission
76
How would you have conducted the valuation differently if the site in Epping Forest had no planning permission?
EUV
Check the planning portal
Carry out a valuation under the assumption that planning permission will be granted
77
How do we determine finance?
More to with the prevailing rates in the development finance industry
Usually 8% which is determined by the Bank of England base rate, then there is a risk premium & lenders margin that’s added on to that base rate
Elements:
Banks of England
Premium
Lenders margin
78
Do we ever apply a different percentage for finance?
We have a list of schemes that we have carried out a viability assessment for and if we have applied 8% for all of them then there’s no justification to apply a different percentage
79
Do we adapt the straight line or s curve?
Construction costs are built on S curve
They increase, then reach their peak, before slowly starting to taper down
Maximum costs are incurred in the first half
Finance are fired up to construction costs
80
How does risk impact profit?
If the developers gone ahead and brought a sure in a place where no one really wants to buy houses, then they’re taking a big risk and they would want the I take a bigger chunk of the profit aa
81
Why is the profit percentage different between market housing and affordable housing?
The developer is carrying a higher level of risk because they are responsible for building and selling (17.5%)
With affordable, it’s lower risk because what happens is a developers role ends when he has built the units (6%)
82
What happens when a developer has built affordable housing?
The developer ends up transferring all the affordable units to a registered housing provider at an agreed price
83
What is a blended profit?
Market 17.5% of GDV
Affordable 6% of GDV
Commercial 15% of GDV
Argus combines all the three phases together, clubs all the profit elements together and comes up with a combined profit for the entire scheme
84
What are the two tenures of affordable housing?
Affordable rent
Shared ownership
85
What is the LHA rate?
Published by the UK government
Sets weekly rents, used as an indicator for people who claim housing benefits
86
What yield did you apply for the investment method?
4.5%
87
What is the MV% of affordable housing?
An affordable house is roughly around 55% of market value
88
When you complete the investment method for the development in Epping Forest, what deductions do you carry out on the capital value?
Management and maintenance costs = net value
89
What are the steps to BMLV?
1. Calculate residual land value
2. Benchmark Land Value
- calculate the existing use
- premium? would the landowner apply a premium on top of the existing use value? usually between 10-15% e.g. if there was a H&M on site, in prime location, doing very well
- in my example, there was no premium, because the conservative club had been lying there for a long time, there’s no demand
Calculation:
Residual land value - benchmark land value = surplus/deficit
90
What happens if there is surplus land value?
Depends on the size of the surplus
<£50,000 then no affordable housing, and recommend to contribute to the council towards affordable housing
91
What was the outcome of your viability assessment?
There was a deficit and therefore the developer was unable to contribute to the council
92
What do you mean for financial reporting basis?
Determining the EUV of assets for end of year accounts.
93
What is the difference between CIL and S106?
CIL: fixed, non negotiable, and used for broad infrastructure projects across a local authority area (used to find transport, schools, parks and community infrastructure)
S106: negotiable, site specific, directly related to mitigating the impact of a particular development (used to secure affordable housing, open spaces)
94
How is affordable housing defined by the NPPF?
Housing for sale or rent, for those whose needs are not met by the market
95
What are the SDLT rates for first time buyers?
No SDLT payable on the first £425,000 providing that the property is not worth more than £625,000.
After 31st March 2025, the nil rate threshold will reduce to £300,000, if the property is worth more then the buyer will pay 5% SDLT
96
What is meant by ransom strip?
A parcel of land which in some way restricts the development of another parcel of land.
97
What is UK VPGA6?
Local authority and central government according: existing use value (EUV) basis of value
98
What assumption do we make for finance? Why?
100% finance
99
What is benchmark land value?
The existing use value of the land, plus a premium for the landowner.
Should reflect the minimum return at which it is considered a reasonable landowner would be willing to sell their land.
100
What is the definition of EUV?
UKVPGA6.
The estimated amount for which a property should exchange for on the valuation date between a willing buyer and a willing selling in an arms length transaction, proper market, both parties have acted knowledgeably, prudently and without compulsion.
101
What was the LA CIL rate?
102
Did you apply any incentives to your investment valuation?
Applied a 3 month free period
—-
Assume that they were let the moment the scheme was completed ?
- is there someone already interested ?
Viability adviser advised indicated that they had a secured tenant in place ?
103
What was the context of your viability assessment?
Instructed by our client to provide a viability assessment considering the appropriateness and reasonableness of a development, having regard to appropriate S106 contributions
104
What is the purpose of benchmark land value?
105
What are the 5 steps of benchmark land value?
106
What is the difference in BMLV between a viability assessment and MV?
Market value - consider alternative scheme, best reflection of what would achieve the best value. “Best and highest use”
Viability - don’t have the ability to change the scheme. Assessing what has been applied for in the planning documents.
107
Who is in charge of BCIS?
RICS
108
Is BCIS rebased around the country?
Yes, to reflect differences in costs, depending on location
109
Why do we assume 100% finance? Is it common?
The way ARGUS calculates it!
No, not common that a bank will lend 100%, more likely to be around 50%.
100% = all risk! Unlikely.
110
Why do we adopt a slightly lower finance rate of 8%?
We are aware that an individual may borrow 70% at 10% for the whole period.
They will pay the same interest overall, at 100% at 8% for the whole period.
The way we calculate is different, but the figures are the same by adopting a slightly lower rate.
In normal world, they would reflect 5% risk, but we only reflect 3% on Argus.
111
Why did you adopt 17.5% for a flat scheme?
Seems low.
Higher profit margin for flats, need to build them all to completion before you can sell them off.
Flat prices are more fees-able for individuals in this scenario, they were in high demand.
112
What is the typical profit margin?
15-20%
A couple of years ago we were adopting a higher range due to Brexit & Covid.
We are now moving the lower range due to build costs being so significant. Developers aren’t able to achieve the level of profit that they were able to achieve.
Need to be realistic to hypothetical developer.
113
Why did you adopt a 15% profit for the commercial units?
Forms a small part of the build in this scenario.
Usually 10-15%. Towards the upper end.
Link in with risk possession with yield, when looking at overall GDV and how realistic it would be for someone to take over the units immediately.
114
What did you adopt for external works?
5% because established access, fully tarmac after demolishment, not a huge requirement for infrastructure or gardens.
If I was looking at a larger scale development, loads of roads, pavements, driveways, services, hedges, then I would adapt 15-20%.
Calculated from build costs, so if build costs are high, might adopt a lower percentage, so 2.5% might relate to £100k, whereas 5% relates to £300k which seems excessive.
115
How did you determine appropriate build costs for your scheme in Epping Forest?
Lower range on BCIS
116
How did you factor in for the existing garages in Epping Forest? Demolish costs?
117
What was the instruction for the development land in Epping Forest? What you mean by finance reporting purposes?
The client requested the value of the land reflecting the planning permission.
Asset held within their interest and they want to understand the value of that.
Under the parameters of the instruction I was asked by the client to provide the value of the land reflecting its existing planning allocation.
- operational and non operational assets ?
118
How did your examples differ?
Viability - trying to decide whether or not the applicant can provide S106 or on site contribution
EUV - determine existing land value
119
Why did you adopt 5% contingency?
This is towards the midpoint of the range
Typically, because we didn’t have full information about the scheme and any associated risk, adopted midpoint figure
Reflected that there was garage in situation, and maybe some degree of asbestos or contamination
Where not 100% certain if the demolition costs provided by the client, fully reflected any associated contaminated costs
120
Would you adopt a contingency if all information was known?
Yes, costs and value fluctuate. There will always be a risk.
Will carry out an assessment before the actual development, so there will likely be movement in the market.
ROBUST APPROACH- costs of materials are increasing, people are going to have to reflect risk in their approach!
121
What was the different outputs for your development examples?
Epping Forest - EUV
Bournemouth - Viability
122
Did you make any assumptions for your development appraisal? What were they?
- the proposed development is complete on the date of the assessment
- the BCP local plan is up to date
- the applicants abnormal costs are to be relied upon to determine the viability of the scheme
123
Did you make any assumptions for your development appraisal? What were they?
124
Who establishes the HLA rate?
VOA
125
What was the outcome of the development appraisal?
126
What was the outcome of the development appraisal?
127
What factors did you reflect in BCIS?
Location
Date
128
What are the basis of value?
BLV - existing use value (allows for premium and costs)
EUV - (first component of BLV, the value of the land in its existing use)
AUV - value of land for use other than its existing use
129
What are the basis of value?
BLV - existing use value (allows for premium and costs)
EUV - (first component of BLV, the value of the land in its existing use)
AUV - value of land for use other than its existing use
130
What is the NPPF?
Provides planning practice guidance and best practice for viability assessments
131
How do you cross check the residual land value?
LAND TRANSACTIONS
PRICE PER HECTARE
COMPARABLE PLANNING EVIDENCE
AFFORDABLE HOUSING WILL EFFECT VALUE
PRICE PER UNIT BASIS
PRICE PER HEAD ROOM BASIS
132
Why do we conduct a sensitivity analysis?
DEVELOPMENT APPRAISAL IS BASED ON HYPOTHETICAL ASSUMPTIONS
WHAT COULD BE THE IMPACT OF LAND VALUE IF KEY INPUTS ARE CHANGED
133
Is viability assessment RB?
No
134
Is the RICS Financial Viability Guidance mandatory?
Yes, it’s a professional statement
The executive summary comes from this document
135
Is there a difference between development appraisal and residual?
Both are financial appraisals
Development appraisals also have a role in residual valuations of development sites but it should be remembered that the two may serve different purposes
136
HOW DID YOU ESTABLISH THAT IT WAS NOT VIABLE?
COMPARED THE RESIDUAL LAND VALUE WITH THE BENCHMARK LAND VALUE
137
What do you mean by planning policy? What’s included?
Guidance for affordable housing and CIL provisions
138
Is S106 just affordable housing?
No, also includes costs of infrastructure
139
How would you apply CIL?
Applied to the net additional area
Proposed Area - Existing built up area
140
Is CIL applied to affordable housing area?
No
141
Why did you apply 8% for finance?
BEEN AGREED FOR AFFORDABILITY ASSESSMENT AGAINST SOUTH EAST
142
What are abnormal costs?
Not part of a standard development, have a look at abnormal, provided by the applicant- double check by QS
143
For your second example? What type of social housing was it?
AFFORDABLE RENT - AGREED WITH CLIENT
144
Did you adjust your yield to reflect that it was social housing?
Yield is based on affordable units
Use LHA rate and cap at relevant yield
Then deduct for management costs etc
145
What is the difference between S106 and CIL?
CIL IS MANDATORY WHERAS S106 IS SUBJECTIVE
affordable housing is mandatory unless determined they can’t provide
- viability report must be provided by developer
- Every scheme won’t have the same S106 agreement
146
What legislation established the S106?
The Town and Country Planning Act 1990
147
What are the different approaches to BLV?
AUV (doesn't have premium)
EUV (has premium)
148
If the development was not viable, can the client get planning permission?
No
149
What are the limitations to Argus?
Can't really see whats happened, difficult to detect errors
150
Why did you use BCIS? What’s better, QS or BCIS?
Resource, doesn’t cost to use
QS is better as its site specific
151
What market % do you apply for difference housing?
70% share
55% intermediate
30-45% social
152
What market % do you apply for difference housing?
70% share
55% intermediate
30-45% social
153
What is the RICS Guidance for affordable housing?
RICS Valuatuon of land for affordable housing 2016
154
Did you apply abnormal costs? How did you confirm these?
Demolition & Site clearance
underground bins
155
What does LHA stand for?
Local housing allowance
156
Why do you compare your residual land value? Where does it state this?
In the RICS Valuation of Development Property
Known as Twin Track approach
157
What contingency did you apply for the viability assessment? Why?
3% due to high abnormal costs within the scheme
158
What are the stages to a BMLV?
1. EUV, 2. AUV, 3. PREMIUM, 4. RLV, 5. CROSS-CHECK EUV PLUS TO EVIDENCE
