Viability Appraisal or Planning for Housing - Coursework Example

Contents 1.0 Summary 1 2.0 Description 1 3.0 Revenues 1 4.0 Viability Appraisal Assumptions and justification 2 5.0 Residual land value 4 6.0 Benchmark Land Value 4 7.0 Viability Appraisal and conclusion 4 Appendices Appendices 1 Appendices 2 Cash flow Reference Please use the professional language to improve my report, cause this is UCL master report, especially red area .thank you. 1.0 Summary This report is an analysis appraisal of a housing project that would constitute 1, 2, 3 and 4 bed rom apartments, located in the East London line, an area currently occupied by a warehouse. The input and output data presented in this report represent the proposal of an analysis of the appraisal viability of the housing project, which h targets low income earners and a number of middle income earners. Divided into different parts, the report begins with an overview description of the report. It then presents the expected revenues from the housing project, the viability of the project, while the last section provides the conclusion, which summarises the main development viability appraisal. According to the findings of the report, implementing the proposal is a great idea. Because of the high demand for housing, and the accessibility of the location, implementing the project will generate high profits. 2.0 Description 2.1 The demand for accommodation in this place shows that a space of schedule of 6,040 sq. m. (all net internal areas) of saleable space is required to accommodate … residential flats. and 1010 sq.m for affordable housing , In addition to that, 745 sq. m. (8,021 sq. ft.) of commercial and 5,219 sq. m. of ‘home- office’ have also been proposed. I understand that there will be 98 home-office, including 11commercial which will provide a total of 9 spaces for the offices, 1 for the garbage and 88 for the residential flats would be constructed. 3.0 Revenues 3.1 The first step in implementing this project is seeking permission to develop the project from the authorities. This will happen through an application, explaining the reason for the project, its benefit to the people, its environmental accessibility, and the expected revenues. Additionally, it will include the expected costs and the sources of the funds. After acquiring a permit, the s106 agreement will be ready for commencement. Comprising of 30-49 one bedroom, 50-79 two bedroom, and 80-119 three bedroom flats, the project is likely to take 36 months to complete. The proposed one-bedroom flats will measure 30 square metres, while a two bedroom will measure 56 square metres. A three bedroom flat will measure 100 square metres and a 4 bedroom flat measure approximately 140 square metres. A similar project constructed in the same area currently sells at £6000. After completion of the project, payment of the flats will be spread across six quarters, with the first payment expected at the end of Q6. Projected revenues for the sale of the flats indicate that for every quarter, at least eight unites will sell, with only 2 units selling in the last quarter. This translates to 26 sales for the entire period. As the project targets both the low and medium income earners, the pricing of at least 28 will target the low-income earners. Subsequently, the design of these 28, in addition to having different finishing, will also have relatively simple finishing catering for the low costs of the units. Further, a reservation of ten of the units will cater for social renting, while nine another nine will target affordable renting pricing. The remaining nine units would take the form of intermediate (shared ownership) tenure. The basis of sale of these is on registered providers at ratios of market value of 80% and 60%respectively. The assumption is that among the tenures, three units will sale to a registered provider at the end of Quarter 2.4.5. residential     type price Broadway Market, Hackney, London E8 1bed £350,000 Welshpool Street, Hackney E8 1bed £234,995 Sylvester House, Sylvester Road, E8 1bed £320,000 Dalston Lane, Dalston E8 1bed £349,950 Dalston Lane, Dalston E8 1bed £349,950 Beck Road, London Fields, London E8 2bed £765,000 Beck Road, London Fields, London E8 2bed £765,000 Wilton Way, London E8 2bed £499,995 Gaumont Tower, Dalston Square, Hackney, 2bed £670,000 Wilde Close, Hackney, London E8 2bed £350,000 Shrubland Road, London E8 3bed £950,000 Elmbridge Walk, London Fields, London E8 3bed £499,995 Malvern Road, Hackney E8 3bed £1,200,000 Holly Street, Hackney E8 3bed £599,950 Lansdowne Drive, Hackney, London E8 3bed £1,200,000 Eleanor Road, Hackney, London E8 4bed £1,200,000 Gayhurst Road, Hackney E8 4bed £849,950 Anton Street, London E8 4bed £999,995 Eleanor Road, Hackney, London E8 4bed £1,395,000 Wilton Way, Hackney E8   4bed £1,100,000 The above information represents current market prices for flats in different regions in the country. Provided below is the estimated value for the proposed affordable housing project. Estimated value for affordable housing: bedroom   Market housing   Affordable housing 1 bed   £340,000  £280,000   2 bed       £610,000  £427,000   3 bed       £890,000  £623,000   4 bed       £1,110,000  £777,000   Total      £2,950,000  2,065,000   commercial rent     Area(s.qm) price rent sqm 5 Sidworth Street, Hackney, London E8 159.79 £34,500 216s.qm Richmond Road, London E8 172 £6,504  37.8s.qm Kingsland High St, Dalston E8  126 £3,748 186.35s.qm ( Source by :www. zoopla .co.uk) 4. 0 Viability Appraisal Assumptions and justification Summary         Revenue         Residenial sales       Less costs       Acquisition costs       Demolition       Construction for commertial area   constructure for home- office area   External work       Contingency       professional fees       finance costs       Marketing fees       Planning obligation       Developer profit       Residual land value       3.1 Site preparation: Preliminaries, demolition, utilities, engineering works and other site preparation costs are estimated at £1,000,000.This is expected to be completed by the end of the second quarter and spread equally over the first two quarters. According toHackney-CIL-Viability,2013 assumption. 3.2 Costs of construction are estimated to be around £1,475 per square metre. It is expected that the construction of residential flats will commence after six months of project launch. costs of construction are expected to be spread equally over Quarter3 to 11Construction costs are estimated to be the same for Market and affordable Housing.(Bcis,2014) According to hackney CIL viability study that mentioned £1,475 for residential build costs. Therefore, the estimated construction cost for this site is £2,039,333. 3.3 External work: Tasks such as construction of car park, roads, paving, landscaping are expected to cost about £229425 and these costs will be spread equally over Quarters2-11 according information obtained from BNPPRE assumption.( Hackney CIL viability study,2013) 3.4 Professional fees: 10 % of the total construction costs including landscaping, demolition, paving, car parks and site preparation will be reserved for professional fees. The professional fees would be payable as soon as there are costs that have been incurred as stated by the Hackney-CIL-Viability, 2013 assumption. 3.5 Contingency: In this project, a contingency allowance of industry norm 5% of the costs, which cover professional fees, construction, and landscaping fees and preliminary fees, ought to be incorporated into the budget for this project on the presumption that it would be done on a quarterly basis. From BNPPRE assumption. ( Hackney CIL viability study,2013) 3.6 Planning obligations: Other additional planning obligations are pegged at £8-000 per (market) dwelling and this amount will be paid upon completion of the project Mayoral CIL: As it is expected, all developmental projects receiving planning consent since 1 April 2012 should pay Mayoral CIL. Hackney falls within Zone 2; therefore, the project will require a CIL of ￡35 per square metre levy. The Mayoral CIL takes precedence over Borough requirements, which also include affordable housing. Every council, while setting its own CIL, should also include the Mayoral CIL rates. 3.7 Acquisition costs : Site acquisition costs including SDLT and agent’s fees (..)are estimated at 5.8% of land acquisition price.(Gov.uk,2014) 3.8 The developer is expected to get a profit of 16% of Gross Development Value of all Market housing units and about 6% of the value of the Affordable Housing scheme. Profit will be realised after the completion of the project. According to the BNPPRE’S report. 3.9 : The developer has a facility that enables him to borrow from a major bank at 8% interest per annum. 3.10 : Market housing : A market fees of one percent of the price will be charged for market housing. 5.0 Residual land value For this project, the residual value of land is an estimated value of £10,545,659. 6.0 Benchmark Land Value The benchmarking value of land for this project was approximately £8.01 million Location is an important element to consider before setting up a development project, especially housing. Accessibility, especially the road networks is an important factor to consider. This particular project, located at the East London line, which is a highly accessible place, will attract many clients. The location falls within Flat 301, Kings Wharf, and 301 Kingsland Road, E8 4DS. In addition to the project comprising mostly housing apartments, it can also hold offices for mixed use. The area is about 585.0 Sq. Ft, covering a total area of about 1,725 Sq. Ft, 160.5 Sq. M. The first floor holds offices, assessable via a lift or a staircase, around a courtyard. The idea of having a mixed-use project is not unique in the region, as there are other projects with similar features in the area. The success of these projects is what prompted our consideration of a mixed-use project. Retail prices for these units as we approximate range from £267,000.00. According to warehouse land value divide 7.0 Viability Appraisal and conclusion Based on the above appraisal inputs I am of the opinion that the scheme can is viable and a good idea, worthy of consideration. Currently, a warehouse stands in the area. After acquiring the area, and completion of the development project, as this report indicates, there is a high possibility of generating profits. 31.1% of the project will is budgeted for affordable rent, while the budgeting of the remaining 69.6% is sale purposes. However, of the 69.6%, 30.4% will be on shared ownership and habitable room. In conclusion, my appraisal at shows a residual land value for this scheme of £10,545,650, which is higher than the benchmark land value. Appendix: Bibliograph： BNP Paribas Real Estate Development Control Toolkit Model- review of 2011 Version London Borough of Hackney 2013 community infrastructure levy: viability study Preliminary draft charging schedule , community infrastructure levy, Hackney ,2013 London Borough of Hackney, affordable housing viability study.2010.BNP PARIBAS. Viability Proof of Evidence of Jacob Kut, 2012, LONDON BOROUGH OF TOWER HAMLETS Read More