What is a development appraisal?

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What is a development appraisal?

What is a development appraisal?

The RICS define a development appraisal as “an objective financial viability test of the ability of a development project to meet its costs including the cost of planning obligations, whilst ensuring an appropriate site value for the landowner and a market risk adjusted return to the developer in delivering the project”.

From a valuation point of view it is an objective test of financial liability. Valuers use a residual method of valuing which recognises that the value of the scheme is a function of many different elements. A well informed valuer will seek to check the valuation against any market evidence where available. A valuer can assess the level of return generated from the proposed project and also establish the residual site value by inputting pre-determined levels of returns.

From a planning point of view it involves research into the constraints and opportunities evolving from the location, legal and planning aspects of potential sites as well as their physical characteristics. This can be a complex process but in terms of planning, the document provides a basic guide to the types of information the council needs in order to evaluate the economic viability of a development.

For developers the document may set out whether the proposed development will impact on, or be impacted by the Local Plan, planning history, environmental constraints and effects on the local community and local businesses.

Where a planning obligation reduces the site value to the landowner and return to the developer below an appropriate level, land will not be released and or development will not take place so a development appraisal is of pivotal importance.

When is a development appraisal useful?

  • To establish the level of affordable housing
  • To assess the level and nature of planning obligation contributions
  • Reviewing land uses

For more information contact Denise Ford Registered Valuer or Pieter De Villiers Planner on 01634 294 994 or at info@michaelparkes.co.uk

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