Dev App Hook

Question 1

What effect could the fact that it had or did not have PD have on your appraisal?

Answer 1

Construction costs less
No demolition costs
Quicker planning
Timescales
No s.106
No Affordable
Might reduce profit on cost for a PD scheme (17.5% as opposed to 20%)

Question 2

What formed the basis of your assumption on new build schemes

Answer 2

We had architectural input in terms of high level block planning to assess prospective number of units

Advice on spatial block planning

Then advised on prospective unit mix from a market perspective and the strategic housing market assessment for example and planning policy

Question 3

How did you factor in low transaction volumes in your appraisal/advice?

Answer 3

• On the park there were 2 other units that had been converted under PD and not sold well
• Immediate comparable evidence poor
• Sales periods elongated so assumptions were elongated
• Because of the existing stock on the market it was likely that discounts on sales
• From that perspective we were clear that there was not much demand for PD stock

Question 4

Are you aware of any recent changes to Permitted Development rights?

Answer 4

Updates to the 1987 Use Classes Order.

The core changes include the removal of Classes A, part of B and all of D with new Use Classes introduced in their place.

Class E (Commercial, business and service) encompassing A1, A2, A3 part of D1 and D2

Class F (Local Community/Learning and non-residential institutions)

Question 5

What is permitted development?

Answer 5

Where you can perform certain types of work without needing to apply for planning permission.

Question 6

What is prior approval?

Answer 6

Allows the Local Planning Authority to consider:

• the proposals,
• their likely impacts in regard to certain factors (e.g. transport and highways)
• how these may be mitigated.

Question 7

What would be included in your build cost?

Answer 7

• Construction cost
• Fixtures
• Fittings
• Demolition
• Remediation

Question 8

You take guidance from the International Valuation Standards 2017 410. What does this document outline?

Answer 8

Section within the IVS covering development property.

Covers:
Basis of value

Approaches

• Market (comparable analysis)
• Income (using cash flows)
• Cost (establishing costs for residual)

Question 9

What is the Financial Viability in Planning document?

Answer 9

Professional Statement 2018

14 mandatory requirements that members must carry out when undertaking financial viability assessments. E.g.:

1. Act objectively and impartially
2. Undertake conflict checks
3. Provide transparent information
4. Justification of evidence and difference of opinion
5. Sensitivity analysis

Question 10

What condition was the existing office block in?

Answer 10

• Vacant office
• Grade B
• Built late 1980’s

Question 11

What impact did timescales have on the appraisal itself?

Answer 11

Elongated the holding period

Higher finance costs as a result

Question 12

Give me an example of a specific piece of guidance you’ve taken from IVS 2017 410 Development Property

Answer 12

Development properties defined as:

‘interests where redevelopment is required to achieve the highest and best use’

Question 13

Why didn’t you advise a new build apartment scheme?

Answer 13

• PD office conversion was a natural option to appraise
• HOWEVER
• Comparable research showed poor level of apartment transactions
• PD represented a low risk approach as opposed to a new build apartment scheme with higher construction costs
• In area with low apartment transactions it was unviable (not close to train station, amenities, etc.)

Question 14

How did you report fees on a consultancy instruction such as this?

Answer 14

Size

• consider the value of what is being consulted on as this relates to PII cover
• larger assets would take up more time to gather information on

Value
- larger assets (e.g. £40m) will have higher reliance on for secured lending purposes

Clients requirements

Timing
- How quick they need it turned around

Question 15

What are included/excluded from BCIS costs?

Answer 15

Included
- only relates to the house structure itself and its foundations along with the prelims in relation to that structure

Excluded
- garden, forecourt, pathways, fencing and garage within the plot. It further does not cover the estate road and footpath with its service runs and street furniture adjacent to the plot

(10-15% for these external costs)

Question 16

Thoughts on PD?

Answer 16

Opportunity to reinvigorate assets

Requires careful thought to ensure units are delivered to an acceptable standard

Question 17

Do you know what is assessed for a Prior Approval application?

Answer 17

• Design
• Flood risk
• Transport

Question 18

What are the main fundamental differences between a new build and a PD scheme?

Answer 18

PD

• Refurb (no additional sq ft)
• No AH
• Smaller units (can be higher £psf)

Question 19

Did you adopt the same £psf rate for PD and New Build?

Answer 19

No

They are incomparable types and therefore I would consider relevant transactions for each type

Question 20

Why would you use Profit on Cost vs Profit on GDV?

Answer 20

Appreciate that both can be used. Comes down to developer preference and comes down to how they measure their risk associated with their appraisal

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