A development appraisal tests whether a project makes enough profit for the risk. It starts with the gross development value (GDV), what the finished homes will sell for, and takes away every cost.
This calculator works out total costs, profit, profit on cost, profit on GDV, and the residual land value: the most you could pay for the site and still hit your target profit.
| GDV | 4 houses at £300,000 = £1,200,000 |
|---|---|
| Total costs including land | £1,000,000 |
| Profit | £200,000 |
| Profit on cost | £200,000 ÷ £1,000,000 = 20% |
| Profit on GDV | £200,000 ÷ £1,200,000 = 16.7% |
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Gross development value: what the finished project is worth, usually the total sale prices of the units. Every other figure in the appraisal is measured against it.
It depends on the project and the lender. Figures of around 15% to 20% on GDV, or 20% to 25% on cost, are often quoted, with more expected on riskier schemes.
GDV minus all costs and your target profit. What is left is the most you could pay for the land. It is a useful check before making an offer on a site.
Education, not advice. Rules change and depend on your circumstances. Check GOV.UK and speak to a qualified adviser before you act.