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APC > Development Appraisal > Flashcards

Development Appraisal Flashcards

1
Q

What are the land prices for residential development in your area ?

A
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2
Q

Justify the % for fees ….

A
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3
Q

How did you work out the GDV for …. ?

A
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4
Q

Did you do sensitivity analysis for x x

A
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5
Q

What repayment model did you use for finance on development X

A
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6
Q

What advice did you give following the development appraisal?

A
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7
Q

What are NPPF (2021) for ESG

A

1- An Economic Objective
2- Social Objective
3- An Environmental Objective

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8
Q

What is the purpose of PS financial viability in Planning

A

Reporting
Process requirements
Benchmark Land Values
Legislation
Development Plan
No performance related fees
Must have sensitivity analysis

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9
Q

What is the basic development Formula

A

GDV- Cost - Profit = Residual Land Value

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10
Q

What is included the RICS GN Financial Viability in planning

A

Viability in the National planning in context
NPPF
Use of viability appraisals
Definition of site Value
How to use viability assessments to aid professional judgement
What to include in a viability assessment

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11
Q

When is the most update NPPF

A
  1. The update incorporate ESG and provide objectively assessed needs for housing
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12
Q

Why is the NPPF important when undertaking a development appraisal ?

A
  • Provides a framework for LA to set out their plans
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13
Q

What is a Local Development Order

A
  • Provides permitted development rights for specified types of development in defined locations
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14
Q

How did local the local plan support the development

A
  • Provides Land allocation
  • Housing Requires
  • Economic requirements
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15
Q

Tell me about the LLDC plan

A
  • The aim is to continue the legacy of the Olympic Games
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16
Q

Tell me about the local plan for Bradford and how it was incorporated into your development appraisal

A
  • The land was allocated for industrial
  • Checked housing requirement for the area
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17
Q

Tell me about some recent updates/ current events in development.

A
  • Leveling up and regeneration Bill
  • First Reading May 2022
  • Local Plans given more weight on making decisions
    -Set out framework for new infrastructure levy and charged based on sales value rather than space
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18
Q

Talk about the development market within your area

A

Permission housing, York city center
Planning for York central
Outskirts of York
Multi residential and flats with houses.

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19
Q

Tell me about some of the contents within the NPPF 2021

A
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20
Q

What is a General Permitted Development Order

A

A GPDO (2015) specifies class of development for which the planning permission is granted, by SoS under the sections of Town and County Planning Act 1990

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21
Q

What guidance does LA have planning for climate change ?

A

The NPPF (2021) specifies that new developments should be planned to avoid the vulnerabilities of climate change

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22
Q

What is the tender price index

A

An index relating to the level of prices likely to be quotes at any given time by contractors tendering for building work

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23
Q

What are speculative developments

A

Developments that are generally commenced prior to any agreed sales or letting

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24
Q

What is the difference between Gross Development Value and Net Development Value

A

The Gross Development Value minus the assumed sale costs

25
Q

What is the development yield

A

The rental income divided by the actual cost incurred in relishing the development. Based on current or future estimates.

26
Q

What is the AUV, BMLV, EUV

A
27
Q

How would you define development property

A

Development property is defined in IVS as:
-Construction, land for infrastructure, redevelopment,
-land allocated for development in the local plan

28
Q

What is BCIS

A

Building Cost Information Service.

-Provides cost and price data for the UK construction industry

29
Q

What do build costs include:

A

Prelims ,
Labour
Materials

30
Q

What are the externals

A

Roads and areas impacted outside of the development

31
Q

Why was CIL introduced

A

Part of the TCP 1990 as a tool for LA for moneys to go into a pot rather than being project specific

32
Q

What are included the professionals
Fees

A

Planning Fees
Surveyors
Engineers
Architects

33
Q

What is SHLAA

A

Strategic Housing Land Availability. It’s a technical assessment of sites in broad locations that are considered to have potential for housing.

It identifies that have potential for housing

Assumes how many lives homes they may accommodate

Estimates the likelihood for the sites to be developed

34
Q

What are Permitted Development Rights

A

Permitted Development Rights allow development without the need for planning permission :Applies to many common projects

35
Q

Where are the CIL regulations set out ?

A

CIL regulations 2010

36
Q

When are Financial viability Assessments used

A
  • Formulating Planning Policy
  • Reviewing Land uses
  • To inform charging schedules
  • Assessing the composition, timing and quantum of planning obligations
37
Q

What needs to be assessed in a Financial Viability Assessment?

A
  • EUV
  • Premium / Tones / Benchmarks
  • AUV (If Applicable)
  • Appraise the RLV ( policy compliant)
  • Consider comparable transactions
38
Q

How is the EUV calculated in development Appraisal

A
  • Ignores future prospect of development
  • Accounts for permitted development change of use within the same planning class (No additional Redevelopment
  • Normal data sources utilized
  • Considers repair v refurbishment
39
Q

How is the premium calculated in BMLV calculations

A
  • BMLV from other FVA
  • Adjust premiums for sunk costs
  • Consider policy compliant transactions
40
Q

What is BMLV

A
  • Not Market Value
  • not a price paid in the market but minimum return at which a reasonable owner would sell
  • Market evidence adjusted to reflect policy compliance
41
Q

What is AUV

A
  • Value of the site for uses other than existing use
  • Must comply with up to date policies
  • Refurbishment or development
42
Q

What are the benefits of viability assessments?

A
  • Limit gaming in the system
  • Surveyors have to give a genuine view
  • Non Surveyors will find LPA insisting on FVA moving forward
  • Anticipate request for RB FVA
43
Q

Talk about the PS : Financial Viability in Planning Conduct and Reporting

A

13 points in total what to include in FVA

  • No Contingent Fee Structure
  • Transparency of information
  • BMLV & Supporting evidence
  • Confirmation of instructions
  • Sensitivity analysis
  • Non Technical Summary
  • Inputs and other contributions
  • Justification of evidence and differences in opinion
44
Q

What is included in the GN Assessing viability in Planning under NPPF 2019

A
  • Aligns with NPPF & PPG
  • Proportionate Assessments of viability for accounting purposes
  • Methods of valuing EUV, Premium , AUV
  • Application of RB and related guidance
45
Q

What are details of Stokes v Cambridge

A

-Value of Land owned by Stokes
- To a 33% uplift in value
- Acquiring authority owned nearby land with development potential
- Had alternative access

46
Q

What other Ransom strip case Law is there

A
  • Ozanne v Hertfordshire Council 50% on the basis of 1 potential access.
  • Snook v Somerset County Council
    50% as the land was owned by several parties
47
Q

What were the Stratford land Values

A

AW: £22.18m/ha
Eastern: £61.2- £48.9m /ha
IQL: £37.9m/Ha

48
Q

Talk me through the development appraisal of AW ?

A
  • 330 Apartments
  • 0.412 ha
    -50% Affordable housing
  • Gross sale £58m
  • Construction £295 psft
  • Professional 10%
  • Marketing, Letting , Legal 0.5%
  • Abnormals - £2.2m
    -CIL Borough 73.9 psm , Mayoral £60psm
    Profit 20% GDV , 6% affordable blended 17%
49
Q

What comparables did you use for Twickenham

A
  • Brewery Wharf between £912 psf & £757 psf
  • Twickenham gate £714 psf & £853 psf
50
Q

Talk me through Twickenham development

A

GDV - £20m——19m
Construction (psqf) £274— £375
Total cost £11.7 ——— £13.5
Profit £3.3 —— £2.1
Residual £5m ——— £1
Blended profit on GDV 16% —— 11%

51
Q

What were the agreed S106 for Twickenham?

A
  • Carbon Offset——90,630
  • Monitory Contribution —— £3,612
  • 1 Year free car club membership
  • CIL on net sales area £800k
52
Q

Talk me through the Twickenham Development Appraisal

A
  • Calculated Full Market Value of apartments using: Using Comparable between £912 psf to £714 psf
  • Affordable agreed 10 units, at 60% of GDV - £20m

Cost £15.2m

  • Construction £225 psf
  • External 5% of construction
  • Contingency 10% - Based on next to rail and potential Abnormals
  • Professional 10% based on next to rail Line
  • S106 - Agreed , Carbon offset,
  • Sales and Marketing 3%, Affordable 1%
  • Legal 0.5% of GDV

Residual Land £4.2m

53
Q

Talk me through the Anthems Way Appraisal

A
54
Q

What is the difference between CIL and S106

A
  • S106 is site specific and agrees with the LA
  • General and is a fixed amount /m2 and LA decide rates and what it’s charged on
55
Q

Can you tell me some types of debt financing and the differences

A
  • Debt Financing : Primary Debt and is amortized down with repayments
  • Equity Financing: An Equity Investor will receive equity or a % of the growth profit.
  • Mezzanine: A hybrid of debt and Equity
  • Bridging Loan: Short term loan used cover short term cash flow
56
Q

What schedule of IFRS does development appraisal fall under

A

IAS 40

57
Q

Can you please explain the process you used to established BMLV for Bradford

A
  • Regard to the RICS GN assessing viability in planning
  • EUV at £1 marketed for 18months
  • AUV at £775,000
  • Premium: A report for BMLV commissioned to Bradford , applied £200,000 / acre
  • Residual Land Value
  • Comparable evidence & transactions
58
Q

Can you tell discuss the inputs for Bradford

A
  • MH £6m @ £17.5% profit
  • Affordable (20%) £600k @ 8% profit
  • Construction and External blended
  • Professional Fees 8%
    -Contingency 3%
  • Blended profit 16.6%

APC (13 decks)

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