4. Total Development Costs

Question 1

What are the different forms of development costs?

Answer 1

Site preparation
Planning costs
Building costs
Professional fees
Contingency
Marketing costs & fees

Question 2

Describe some site preparation costs

Answer 2

Demolition, site clearance, levelling.

Obtain a contract’s cost plan for these works.

Question 3

Describe some planning costs

Answer 3

TCPA (Section 106 payments) - Affordable housing (set out in local planning policy)
Section 278 payments for highway works
CIL - Charge by most LPAs (see planning notes)
Planning application fees

Question 4

Describe some sources of building costs

Answer 4

Estimate of total building costs from:

Client information (for a development appraisal)
Quantity surveyor estimate
BCIS (usually based on GIA) - obtains updated from QS/BS sources and recent contract prices/tenders agreed

Question 5

Describe some professional fee costs

Answer 5

10% - 15% plus VAT of construction costs:

Architects (Usually the largest proportion of total fees)
Project managers
CDM Principal Designer costs

Question 6

Describe contingency

Answer 6

5% - 10% of construction costs depending on level of risk and likely movement in building costs

Question 7

Describe some marketing & fees

Answer 7

Sale fee: around 1% - 2% GDV
Letting fee: around 10% of annual rent

Other fees include cost of EPC