Development Appraisals - Subs

Question 1

Difference between a Development Appraisal and Residual Valuation?

Answer 1

DA - calculation to establish the site value / profitability / viability of a site using CLIENTS INPUTS

RV - calculation to establish the site value of a development using MARKET INPUTS at the date of valuation

Question 2

What is the Stamp Duty for Commercial and Residential?

Answer 2

Commercial:

£0 - £150,000 0%
£150,001 - £250,000 2%
> £250,001 5%

Residential

£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,000 - £1,500,000 10%
> £1,500,000 12%

Question 3

How do you make up GDV?

Answer 3

Total Residential sales + investment value of Commercial

Question 4

Where do you get these inputs from?

Answer 4

Residential - Rightmove & Land Reg & Local Agents

Commercial - CoStar, Local Agents

Question 5

How do you check if they are suitable or correct?

Answer 5

I make sure I verify the information.

I compare them with other transactions in the area

Question 6

What is your view on affordable housing

Answer 6

In theory I think its good, in practice it can sometimes create exclusion. I am aware of what used to be known as ‘poor doors’

Question 7

Are you aware of golden brick payments?

Answer 7

Payments from a Housing Association to a Developer for affordable housing

Question 8

What did you advise the client on potential purchasers?

Answer 8

I advised the client that the development would be attractive to both regional house builders as well as housing associations due to the presence of affordable housing.

30% of 100 units

Question 9

For loan security purposes - did you have sight of the terms of the loan?

Answer 9

Yes.

• 60% LVR
• Re-financing
• term of 5 years

Cannot recall them

Question 10

Have you ever adhered to a Serviced Agreement?

Answer 10

Yes.

Includes things such as lender action points etc.

Question 11

What are the minimum standards for reporting for loan security purposes?

Answer 11

VPGA 2

• Conflicts of Interests
• Two methods of val
• Suitable for loan security purposes

Question 12

What does Loan Security purposes mean?

Purley

Answer 12

• Value of the loan can be secured against the value of the site.

-

Question 13

What was a threat?

Purley

Answer 13

• There were a number of similar schemes being developed in the area.
• Economic and political uncertainty.

Question 14

What was an opportunity?

Purley

Answer 14

Downsizers

Question 15

What is Help to Buy?

Purley

Answer 15

A scheme for new build homes which allows buyers to raise a small amount of equity in exchange for a loan.

Not just for first time buyers.

Question 16

You advised them on a sensitivity analysis, how else did you advise them?

Purley

Answer 16

Type of purchasers which would want the apartments

First time buyers, downsizers.

Question 17

What did you advise your client on the marketability of the proposed development?

Answer 17

How quickly they would sell? Time periods? Marketing? Boards etc.

Question 18

How did you advise your client that it would be suitable for loan security?

Purley

Answer 18

For this, it was a residential development so I advised that the flats would seek demand from first time buyers and downsizers due to the popularity of the area and close transport links to London.

Strengths - planning permission, no affordable housing, compliant with equality act.

And that after selling all the flats that would cover the loan.

Also that there weren’t any material factors that would be detrimental to the loan.