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Viability Study

Sandwell Community Infrastructure Levy – Viability Assessment

Sandwell Metropolitan Borough Council

March 2014 Private and Confidential


CIL Viability Assessment March 2014

Quality Assurance Date 12 March 2014

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This report has been prepared on behalf of and for the exclusive use of Aspinall Verdi Limited’s Client and it is subject to and issued in connection with the provisions of the agreement between Aspinall Verdi Limited and Sandwell Metropolitan Borough Council. Aspinall Verdi Limited accepts no liability or responsibility whatsoever for or in respect of any use of or reliance upon this report by any third party.



Contents Executive Summary

Report 1 Introduction 4

Report Structure 4

2 CIL Policy 6

CIL Examinations 9

3 Market Overview 11

National Outlook 11 Black Country 11 Residential 13 Office Space 22 Industrial Space 27 Retail 32 Hotels 35 Conclusions 36

4 Development Typologies 37

Residential 37 Offices and Industrial 41 Retail 44 Hotels 48 Non-Residential Institutions, Assembly & Leisure 48 Summary of Development Typologies 49

5 Viability Analysis 51

Development Economics 51 Gross Development Value 52 Balance 56 Viability Modelling 57 Assumptions 58 Profit, Finance and Overhead 61

6 Appraisal Outputs 63

Residential Typologies 63 Commercial Typologies 67

7 Conclusions & Recommendations 73

Economics of Brownfield Land 73 Charging Rates on Use Basis 75 Draft Charging Schedule 77 Next Steps 79

Appendices Appendix 1 – Residential Development Appraisals

Appendix 2 – Commercial Development Appraisals



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Executive Summary ES1 This report provides a viability assessment on a range of potential development typologies to

support the possible introduction of a Community Infrastructure Levy (CIL) across Sandwell

Metropolitan Borough.

Methodology

ES2 The key elements of the study are as follows:

An analysis of the property market (including consultations with developers) across the

Borough for a range of uses in order to identify the assumptions (e.g. sales values, rents,

yields, supply and demand). We have also undertaken an assessment of land values

across Sandwell to identify whether there any significant variances by location/development

type.

A review of planning policy and development data monitoring (i.e. completions) to identify

the range of development typologies (scheme types) that are likely to come forward during

the Black Country Core Strategy (February 2011) plan period (2006 – 2026).

A bespoke CIL viability model to test the development typologies using the information

ascertained from the market analysis to assess whether the proposed development

schemes can generate a surplus for CIL having allowed for all costs and a reasonable

developer’s profit, and in respect of residential development the Council’s affordable

housing requirements.

Key Findings

ES3 The results of the viability assessment for all the development typologies show that there is a

significant challenge to viability across the Borough. Only retail and residential uses show any

development surplus for CIL.

ES4 We have devised a draft charging schedule to reflect the outcomes of the viability analysis and

take into account the need to have an ‘appropriate balance’ that allows for sufficient headroom

in the levy rates so not to impact on the viability (i.e. delivery) of the scheme even if market

conditions (values/costs) change.

ES5 Retail: As a result of the market and viability analysis it is clear that nearly all types of retail are

viable cross Sandwell, apart from unit shops (up to 280 sqm) outside the strategic centre of

West Bromwich. Supermarkets of less than 280 sqm are also marginal in terms of viability and



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therefore we have recommended a nil rate for these two typologies and a range of rates for the

other retail development typologies.

ES6 Residential: We recommend a rate of £30 psm for any residential schemes between 1-14 units

and £15 psm for all other residential developments (i.e. 15 units plus). The different rates are

supported by the viability analysis which clearly shows that residential schemes between 1-14

units are more viable than the other development typologies and therefore can afford to pay a

higher CIL rate.

ES7 Offices, Industrial and Hotels: The market values generated by these uses are currently

insufficient to cover the costs associated with these schemes and therefore are unviable, which

means that they are not able to pay a CIL.

ES8 Other Uses: With regards to leisure and education uses, as we explained in the development

typologies sections, these uses are rarely viable and therefore are unable to pay a CIL rate.

ES9 The recommended CIL rates are summarised on the table overleaf:



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Development Typology CIL Rate £ psm

Supermarkets/Superstores and Retail warehousing >280 sqm

£60

Retail Units (Strategic Centre Only)*

£50

Residential: 1-14 Units

£30

Residential: 15 Units plus

£15

Offices

Industrial

Industrial Warehousing

Retail Units Outside Strategic Centre*

Supermarkets/superstores < 280 sqm

Hotel

Leisure

Education

Residential Care Homes

£Nil

Table ES 1 - Sandwell MBC Draft CIL Charging Schedule

*Retail Units are those within Use Classes A1-A5, excluding convenience and retail warehouses.



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1 Introduction

1.1 AspinallVerdi has been commissioned by Sandwell Metropolitan Borough Council (SMBC) to

prepare a Borough wide development viability assessment to be used as evidence to support

the possible introduction of a Community Infrastructure Levy (CIL) charging schedule. This

assessment is an update of an earlier CIL viability study undertaken by AspinallVerdi in 2012

and it is based on 2014 market evidence.

1.2 This study will be important evidence to ensure that, if adopted, the CIL charging schedule is

commercially robust. The key elements of the study are as follows:

An assessment of land values across Sandwell to identify if there are any significant

variances by location/development type.

A viability assessment of CIL rates including sensitivity testing to include; various different

uses; a range of locations; different scales of development; and key policy requirements,

including affordable housing.

Recommend CIL tariffs/rates to achieve an appropriate balance between delivering

infrastructure and the impact on development viability; and to establish the evidence base

for zoning if appropriate.

Report Structure

1.3 The remainder of this report is structured as follows:

Section 2 – CIL Policy – in this section we provide a brief overview of CIL policy, the key

regulations and latest guidance (February 2014) issued by DCLG.

Section 3 - Market Overview – in this section we provide an overview of the current national

economic context and also the local property market evidence which informs the

assumptions for the CIL viability model. This also enables us to identify whether there is a

significant differential in values across the Borough to warrant different CIL charging zones.

Section 4 – Development Typologies – in this section we summarise current planning policy

and provide an overview of the proposed development within the core strategy. We

compare this to where development has taken place in the past (as well as taking into

consideration the market analysis undertaken in section 3) in order to identify the

development typologies to be tested by the CIL viability model.

Section 5 – Viability Analysis - in this section we set out our methodology and assumptions

for undertaking the modelling required to test whether there is scope to charge CIL.



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Section 6 – Appraisal Outputs – in this section we set out the findings of our viability model

and the implications for setting CIL Charges.

Section 7 – Conclusions & Recommendations – in this section we draw together the results

of the viability analysis and present a draft charging schedule for discussion.



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2 CIL Policy

2.1 CIL is a new planning charge that came into force on 6 April 2010 through the Community

Infrastructure Regulations 2010 (amended in 2011, 2012, 2013, and 2014). CIL is a levy that

enables local authorities to raise funds from developers undertaking new building within their

area to pay for infrastructure that is needed as a result of development.

2.2 Local Authorities are normally required to implement their charging schedules on the basis of

an up to date development plan. In this case, the Council’s key planning policies are enshrined

in the Black Country Core Strategy (BCCS) (Adopted February 2011), Site Allocations and

Delivery Development Plan (August 2011), West Bromwich Area Action Plan (AAP) (August

2011) and the Smethwick and Tipton AAP (2008).

2.3 We set out below a summary of the regulatory context and some recent Examiners report

recommendations. The February 2014 guidance was issued by the Secretary of State under

section 221 of the Planning Act 2008 and is therefore mandatory.

2.4 A fundamental part of the Regulations is about the judging the “appropriate balance”.

Regulation 14 requires that,

In setting rates (including differential rates) in a charging schedule, a charging authority must

strike an appropriate balance between (our emphasis) —

(a) the desirability of funding from CIL (in whole or in part) the actual and expected

estimated total cost of infrastructure required to support the development of its area,

taking into account other actual and expected sources of funding; and

(b) the potential effects (taken as a whole) of the imposition of CIL on the economic

viability of development across its area1.

2.5 This is a difficult concept to interpret, but the Secretary of State has provided additional

guidance on the appropriate balance in the February 2014 guidance which states:

The levy is expected to have a positive economic effect on development across a local

plan area. When deciding the levy rates, an appropriate balance must be struck

between additional investment to support development and the potential effect on the

viability of developments.

1 The Community Infrastructure Levy Regulations 2010 coming into force 6 April 2010 under section 222(2)(b) of the Planning Act

2008 Regulation 14



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This balance is at the centre of the charge-setting process. In meeting the regulatory

requirements (see Regulation 14(1)), charging authorities should be able to show and

explain how their proposed levy rate (or rates) will contribute towards the

implementation of their relevant plan and support development across their area. .

As set out in the National Planning Policy Framework in England (paragraphs 173 –

177), the sites and the scale of development identified in the plan should not be subject

to such a scale of obligations and policy burdens that their ability to be developed

viably is threatened.2

2.6 Therefore the appropriate balance is a balance to be struck between setting the CIL rates too

high and ‘choking-off’ development such that economic growth and development is prevented

(and CIL revenues reduced); and setting the CIL rates too low such that there is not enough

revenue funding for the Authority to deliver the required infrastructure to support the future

development. This is clearly a very fine balance.

2.7 Given the current economic climate and the reduced availability of funds to pay for much

needed infrastructure, local authorities do have to consider alternative funding mechanisms (for

example, Regional Growth Fund). CIL will be part of a ‘cocktail of funds’ and part of this

consideration of the appropriate balance is to ensure that the CIL is not set right up to the

margins of viability. This is also confirmed in the February 2014 Guidance:

Charging authorities should set a rate which does not threaten the ability to develop

viably the sites and scale of development identified in the relevant Plan. They will need

to draw on the infrastructure planning that underpins the development strategy for their

area. Charging authorities should use that evidence to strike an appropriate balance

between the desirability of funding infrastructure from the levy and the potential impact

upon the economic viability of development across their area.3 (our emphasis)

2.8 This is important, because the cost and value assumptions for the hypothetical appraisals

across the Borough in this study vary widely compared to the specific circumstances of actual

sites coming forward for development.

2.9 The legislation (section 212(4)(b))4 only requires a charging authority to use ‘appropriate

available evidence' to inform their charging schedules. The February 2014 guidance expands

on this, explaining that:

2 Department of Communities and Local Government (February 2014) Community Infrastructure Levy, paragraph 2.2, page 12.

3 Department of Communities and Local Government (February 2014) Community Infrastructure Levy Guidance, paragraph 2.2,

page 12. 4 S212(4)(b) The Planning Act 2008



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A charging authority must use ‘appropriate available evidence’ (as defined in the

Planning Act 2008 section 211 (7A)) to inform their draft charging schedule. The

Government recognises that the available date is unlikely to be fully comprehensive.

Charging authorities need to demonstrate that their proposed levy rate or rates are

informed by ‘appropriate available’ evidence and consistent with that evidence across

their area as a whole.5

2.10 This is important because the appraisals can only be ‘high-level’ and therefore the evidence

supporting CIL needs to be proportionate.

2.11 Furthermore, the Guidance requires that,

a charging authority should directly sample an appropriate range of types of sites

across its area in order to supplement existing data. This will require support from local

developers. The exercise should focus on strategic sites on which the relevant Plan

relies, and those sites where the impact of the levy on economic viability is likely to be

most significant (such as brownfield sites).6

2.12 This is what we have done by analysing values and development monitoring data across the

borough (see below) to establish and appraise the relevant typologies and then ‘sense check’

against the Core Strategy Polices.

2.13 The February 2014 CIL Guidance also refers to regulations allowing charging authorities to

apply differential rates in a flexible way, to help ensure the viability of development is not put at

risk. The guidance goes on to state:

Differential rates may be appropriate in relation to

Geographical zones within the charging authority’s boundary

Types of development; and/or

Scales of development.7

2.14 The ability for the authority to adopt different rates is important given that different uses (or

even uses within the same use class) will have different levels of viability.

5 Department of Communities and Local Government (February 2014) Community Infrastructure Levy Guidance issued by the

Secretary of State, paragraph 2:2:2:4 6 Department of Communities and Local Government (February 2014) Community Infrastructure Levy Guidance issued by the

Secretary of State, paragraph 2:2:2:4 7 Department of Communities and Local Government (February 2014) Community Infrastructure Levy Guidance issued by the

Secretary of State, paragraph 2:2:2:6



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CIL Examinations

2.15 There have been a number of recent CIL examinations in public which have a direct impact on

the approach to our viability study including specifically:

the Examiner’s report to the Mayor of London CIL (January 2012)8

the Examiner’s report to the Greater Norwich Development Partnership CIL (December

2012)9

2.16 These are discussed in more detail below.

2.17 The impact on land value of future planning policy requirements e.g. CIL was contemplated in

the Examiner’s report to the Mayor of London CIL (January 2012). Paragraph 32 of the

Examiner’s report states:

…the price paid for development land may be reduced. As with profit levels there may

be cries that this is unrealistic, but a reduction in development land value is an

inherent part of the CIL concept. It may be argued that such a reduction may be all

very well in the medium to long term but it is impossible in the short term because of

the price already paid/agreed for development land. The difficulty with that argument is

that if accepted the prospect of raising funds for infrastructure would be forever

receding into the future. In any event in some instances it may be possible for contracts

and options to be re-negotiated in the light of the changed circumstances arising from

the imposition of CIL charges. (our emphasis)

2.18 This is a very important principle for CIL viability. Whilst we have every sympathy with

landowners whose values have fallen or stagnated due to the economic climate since the credit

crunch in 2007 there does have to be recognition that without funding for essential

infrastructure development may not be able to take place at all. This brings us back to the

discussion on the appropriate balance (see pp 6-7 above).

2.19 In the Greater Norwich Development Partnership’s CIL Examiners report, paragraph 9 states:

Bearing in mind that the cost of CIL needs to largely come out of the land value, it is

necessary to establish a threshold land value i.e. the value at which a typical willing landowner

is likely to release land for development. Based on market experience in the Norwich area the

Councils’ viability work assumed that a landowner would expect to receive at least 75% of

8 Holland, K (27 January 2012) Report on the Examination of the Draft Mayoral Community Infrastructure Levy Charging

Schedule, The Planning Inspectorate, PINS/K5030/429/3 9 Holland, K (4 December 2012) Report on the Examination of the Draft Community Infrastructure Levy Charging Schedules for

Broadland District Council, Norwich City Council and South Norfolk Council, The Planning Inspectorate, PINS/G2625/429/6



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the benchmark [Market] value. Obviously what individual land owners will accept for their land

is very variable and often depends on their financial circumstances. However in the absence of

any contrary evidence it is reasonable to see a 25% reduction in benchmark values as the

maximum that should be used in calculating a threshold land value. (our emphasis)

2.20 This is important, because in the Greater Norwich examination the same Examiner has built

upon the report to the Mayor of London and has quantified the discount from benchmark market

values to the threshold land value – 25%.



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3 Market Overview

3.1 This market section gives an overview to the national economic and property markets, followed

by the Black Country and Sandwell specifically. A detailed sectoral breakdown then follows for

within the Sandwell Borough. This element of the report outlines the data necessary to

understand sectoral viability and respective value differentials across Sandwell, informing both

the development typologies for testing and the assumptions to be taken into account within the

CIL Viability Model.

National Outlook

3.2 As is well documented in the national press; UK property markets across all sectors have

witnessed a significant downturn since the financial crash/economic recession of 2007/8.

However, the residential property market is beginning to show signs of recovery following a

long period of subdued activity. The ‘Help-to-Buy’ scheme implemented by the government has

helped to recover the residential property market considerably over recent months. Despite this,

price movements vary somewhat between regions, with London and the South East still faring

well in comparison the rest of the country (Land Registry House Price Data, 2014).

3.3 As we emerge from the recessionary environment, commercial property and development is in

greater demand as confidence in the economy improves continuously. The supply of

commercial stock has recently decreased, with capital values and investment transactions

expected to rise, as well as increased in occupier demand for each sector in most parts of the

UK (RICS UK Commercial Market Survey, 2013).

Black Country

3.4 The Black Country sits within the West Midlands. As a region there are some key economic

indicators (HM Treasury, 2013) and Property Indicators which reveal the regional standing

within the UK:

The West Midlands region contributed £93.1 billion to UK economic output. This was

7.2% of the UK’s total economic output (below the mean contribution by region of

9.4%);

The average economic output per person was £16,788. This was below the UK

average of £19,977.



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The West Midlands is one of the biggest fallers from the 2010 index, dropping 126

places. It is also among the most marked regions in terms of convergence across

localities (UKCI, 2013).

House values are below UK average values (£167,534) at £116,196 (Land Registry,

2014). Of the 9 regions and London (10 localities), The West Midlands sits 5th in terms

of the regional values hierarchy and 5th in terms of the number of residential mortgage

applications submitted in August 2012.

Commercial development is showing signs of recovery (Estates Gazette Property

Market Data, 2014).

3.5 A number of inter-related factors are having on impact on delivery of development within the

Black Country:

External economic influences;

Market failure within the Black Country - hence public sector interventions such as the

Black Country Business Property Investment Programme which is funded from the

European Regional Development Fund;

The region’s ‘structural vulnerabilities’ as a result of its historic and present

dependence on the manufacturing sector (and the related site contamination issues

raising development costs);

Predominance of brownfield sites, and the associated costs of development exerts a

negative influence on viability;

Low commercial rents/average house prices (further discouraging development);

Low skills levels and poor ‘quality of life aspects’ are making commercial development

options less attractive to potential investors.

Sectoral Data Sources: Overview

3.6 Information for each sector is conveyed using the following structure and sources:

Supply: Local activity is analysed utilising development monitoring data provided by the

Council. This is cross referred with current availability utilising in particular Property

Link (which lists a variety of properties advertised by agents) to understand present

supply; recent deals done (Estates Gazette); and planning policy projections.



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Demand: Future projections of demand are interpreted from Planning Policy evidence.

DCLG CIL Guidance required the existing evidence base to be utilised to the fullest to

inform assumptions. Demand is also informed by the levels of activity across Sandwell

utilising development monitoring (SMBC) and deals done (Estates Gazette Property

Data) information.

Values: Rents and any rent differentials are informed by: deals done informing average

values, quoting rents/market rents currently advertised; and via any information

gathered for the planning policy evidence base, or planning policy itself. Yields data

utilises property data at the wider level. Residential Values have been informed by

information available on databases (e.g. Zoopla) and consultation with developers and

agents.

3.7 All of the above data is supplemented by conversations with developers and agents. Although

the information is summarised in the report background evidence has been recorded

throughout and is available upon request.

Residential

3.8 This section provides an overview of the residential market to enhance our understanding of

development viability in Sandwell. We have firstly reviewed the housing market across the

borough, values of new homes, and then discuss whether the high and low value areas as

identified within the Roger Tym CIL Scoping Study (2011) are still applicable.

Sold Values

3.9 House prices in Sandwell are approximately £70,000 below the national average (£167,353),

and have fallen a long way since their peak in 2008. Sandwell has the lowest average house

prices across all dwelling types and locations within the West Midlands. The average house

value within Sandwell is £95,071; this compares with £107,801 in Walsall, and £118,715 in

Dudley, as displayed below in Figure 3.1 (Land Registry, 2014).



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Figure 3.1 – Average House Prices (Land Registry, 2014)

Regeneration Corridors

3.10 In Sandwell, the key housing locations are in West Bromwich and the housing led regeneration

corridors (9, 12, 13, and 16 as defined in the BCCS, of which none are areas of high value as

discussed below). The first stage of research has therefore been focused within these areas as

they are critical to the delivery of the Core Strategy. These sites are also where the greatest

number of site allocations for housing development occur (BCCS, 2011), where the greatest

number of deals have taken place (Property Data, 2014), and also where the greatest number

of completions have been registered to date (Development Monitoring, 2014). Areas outside of

the regeneration corridors are not expected to receive significant levels of housing development

(BCCS, 2011).

3.11 There have been a number of new developments within the regeneration corridors (9, 12, 13,

and 16) and West Bromwich (SMBC Development Monitoring Data, 2014; New Build Property

Market Data, 2013). Sandwell has a reasonably active market, with a comparable number of



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sales achieved of both new and second-hand property in relation to neighbouring locations

within the West Midlands (Land Registry, 2014). According to developers and agents, demand

is greatest for smaller properties; however demand differs within different locations. There is a

limited apartment market in the borough as there is little demand for this property type despite

its affordability, and very few new schemes include apartments (Agent/Developer Consultation).

We would suggest that due to a healthy supply of smaller affordable houses in Sandwell,

buyers are likely to favour this property type as a residence over apartments.

3.12 We have researched average sold values within the regeneration corridors for all dwelling types

(including new and second-hand homes), which will enable us to understand the level of value

differentials which may occur between locations. This data has been collected using Land

Registry, which holds the sold values for both new and second-hand homes across locations.

The average house prices in particular locations of Sandwell exhibit some variation in values

across different house types. However, one location is not consistently higher or lower across

all house types.

3.13 To confirm these findings, we have also undertaken research of the asking values of new

homes across the regeneration corridors, and how the values may differ across these locations

via Zoopla. Variables exist upon local area factors, and can vary substantially within a particular

locality. For example, in Cradley Heath (Reddal Hill Road) the asking value of a new 2 bedroom

house for sale is £130,000, which is above the average asking price of £108,000 for a 2

bedroom house in Sandwell. At another new housing scheme in Tipton (Lower Church Street),

the asking price of a 3 bedroom terrace is £179,950, which is considerably above the average

asking price in Sandwell for a 3 bedroom home of £142,000. This pattern is repeated across

and within different locations, therefore differential values cannot be attached across locations

within the regeneration corridors. As discussed above, the limited provision of apartments is

notable in new developments; during consultations developers stated there is no real demand

for apartments in Sandwell, and due to high land and build costs they are mostly unviable in the

new development schemes.

Value Differentials

3.14 Upon reviewing the average sold values across the entirety of Sandwell District, we identified

value differentials across different locations within Sandwell District.

3.15 Our research utilising Land Registry data for new properties sold in 2013 identified only three

postcode areas (two locations) which exhibit higher values across all house types; these are

postcode areas B71 4 (West Bromwich), B43 7 and B43 6 (Great Barr). We would therefore

only identify these postcode areas within West Bromwich and Great Barr as higher value areas,



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as no other locations with new build houses sold over the 2013 period exhibit higher values

across all property types. As there have been a low number of new build sale in some areas,

this high/low value area identification has been verified by cross checking the average values of

existing (second-hand) property. Although it is recognised that values for new homes often

achieve a premium, if the average values of existing properties are also high this would indicate

that the market (postcode area) is in fact one of high value.

3.16 Below we display heat maps for the identified higher value locations within West Bromwich

(B71 4) and Great Barr (B43 7 and B43 6). The heat maps show that these pockets of high

value are enclosed within surrounding low value areas, and therefore that high and low value

streets lay adjacently.

Figure 3.2 – Heat Map of B71 4 (Zoopla, 2014)



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Figure 3.3 – B43 7 and B43 6 (Zoopla, 2014)

3.17 Great Barr (B43 7 and B43 6) exhibits higher than average market values across new and

existing stock and therefore can be considered to be a high value area. However, as with all

other locations, there are differentials in values (Table 3.1). All developments cannot therefore

be assumed to be the top end of the value scale which is important when determining the CIL

rate.

Address House Type No’ Beds Price (£)

Booths Lane

Townhouse

Semi

Detached

Detached

3

3

4

5

£209,995

£189,995

£259,950 - 319,950

£359,996

Netherhall Avenue

Semi

Detached

3

5

£209,995 - £224,995

£449,995

Queslett Road

Townhouse

Detached

3

4

£189,995 - £232,995

£289,995

Table 3.1 - Value differentials (New schemes/advertised prices) in Great Barr

(Zoopla, 2014)



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3.18 No flats or apartments have been sold within these postcodes (Great Barr). There are however

some apartments advertised in the area at a similar price to the regeneration corridors,

reflecting the lack of demand for this kind of property. No value differentials have thus been

applied to apartment/flat properties in this higher value area.

3.19 West Bromwich is somewhat unusual in that its average new build values are mixed. Values

achieved for new build properties in 2012/13 are marginally above those achieved in 2009.

Furthermore, across the existing housing stock the values are subject to a wide variance (the

market is not purely high or low value), which makes it difficult to zone West Bromwich as a

high value area, with the exception of postcode area B71 4 where all property exhibits higher

values.

3.20 We have also identified a further 4 postcodes out of total 36 areas with the B district postcode

which exhibit consistently higher values across all house types for existing stock. These are:

B43 5, B62 8, B67 5 and B71 3. However, it must also be noted that these areas have

experienced no sales of new build property over the 2011-2013 period, and therefore existing

stock values have been considered in these locations. The lack of new development in these

areas reflects the policy within the Core Strategy (BCCS, 2011) to focus development within the

Regeneration Corridors; the majority of the high value areas are outside these corridors and

therefore unlikely to see much development.

3.21 The following table (Table 3.2) summaries this research.

Area/Postcodes New Build Existing Stock

Great Barr (B43 7 and B43 6)

Generally higher values exhibited for all house types

– but some variance (see Table 2.2)


West Bromwich (B71 4) Values are generally high, but inconsistent over 2011-

2013

Mixed values, not consistently high or low

B43 5, B62 8, B67 5 and B71 3

No sales recorded for new development in last three

years


Table 3.2 – High Area Summary Findings

3.22 The table below displays the average sold values for new homes in both high value (West

Bromwich and Great Barr) and low value (all other locations) across Sandwell over 2013.



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Please note there is only one comparable value for semi-detached property sales across the

high value areas, which is likely to be why the average value is lower overall.

House Type Low Value Area High Value Area

Flats £90,800 £112,300

Terraced/Townhouse £149,700 £159,400

Semi-detached £160,700 £150,000

Detached £192,800 £227,300

Table 3.3 - New Homes Average Sold Values (Land Registry, 2013)

3.23 The average new build sold prices of properties of higher value are £227,300 for detached

properties, £150,000 for semi’s and £159,400 for terraced (or townhouses). We would suggest

that the average sold value for semi-detached homes presented in the table is not

representative of the high value areas due to limited comparable data, and that the true

average value is likely to be higher for this property type (sold values over 2011-2012 in high

value areas were approx. £180,000).

3.24 As mentioned above, due to the limited new build comparables we also reviewed the average

sold values for existing (second-hand) properties across high and low value locations, as

displayed in the table below. It must be considered that second-hand homes often place

downward pressure on average values.

House Type Low Value Area High Value Area

Flats £68,800 £69,200

Terraced/Townhouse £104,200 £106,700

Semi-detached £117,100 £127,000

Detached £181,400 £207,600

Table 3.4 - All Homes Average Sold Values (Land Registry, 2013)

3.25 It is notable that there is limited differentiation in values for flats across high and low value

areas, which is likely to be due to a limited market for apartments in Sandwell. Detached homes

in high value areas hold a considerably higher average sold value.



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Value Assumptions

3.26 The following tables set out our assumptions of residential values for our CIL viability model.

These values are based upon all of our market research (in particular information from the Land

Registry and actual units on the market), and are representative of the general tone of values in

the Borough. We refer to these as ‘low value’ areas and ‘high value areas’.

3.27 Table 3.5 below sets out our value assumptions for the ‘high value areas’ within our CIL

models.

1 Bed Flat £100,000

2 Bed Flat £125,000

2 Bed House £160,000



Table 3.5 – Residential High Value Assumptions

3.28 We have also calculated value assumptions for the ‘low value areas’ within our CIL models, as

presented in Table 3.6 below.

1 Bed Flat £100,000

2 Bed Flat £120,000




Table 3.6 – Residential Low Value Assumptions

3.29 There is limited value differentiation between apartments in high and low value areas due to the

low demand for this property type in Sandwell. All other house types in the high value areas

identified exhibit constantly higher values.



21

Land Values

3.30 Land values for residential land are expected to be at the £300,000 per acre value for fully

serviced decontaminated sites. A range of values has been given from agents and developers

(£275,000 - £350,000 per acre for serviced sites). Market Evidence suggests that un-serviced

land achieves a land value of circa £225,000 per acre. As set out in paragraph 2.19 above and

based on the outcome of other CIL examinations, we have discounted the benchmark market

land value by 25% to give us a Threshold Land Value.

3.31 Based on discussion with agents/developers this lower value for un-serviced sites suggests that

a remediation allowance of £75,000 per acre is being adopted by developers. Land values are

thought to be consistent across the Borough with no particularly high or low value areas. Land

may be at the lower end of the scale for less desirable residential locations and at the higher

end of the scale for more aspirational locations. However this is not a rule applicable across the

board as location factors, access, contamination, and physical attributes and site specifics all

influence this value.

Affordable Housing

3.32 Housing associations are private, non-profit making organisations that provide low-cost social

housing for people in need of a home. Although independent, they are regulated by the state

aid commonly receive public funding. Housing associations are major providers of new housing

for rent; while many also run shared ownership schemes to help those who cannot afford to buy

a home outright. Affordable housing is exempt from Community Infrastructure Levy (CIL),

however it has implications for residential developers in terms of viability.

3.33 We consulted with several registered housing associations that provide homes across

Sandwell. All of the registered providers (RPs) we made contact with stated they provide a mix

of housing developed independently, as well as privately delivered homes, and mostly provide

between 10-15 dwellings per annum across the district. Over previous years, RPs delivered

more new build homes independently, however the deliverance of privately developed homes is

becoming more frequent due to issues of development viability in Sandwell. High build costs

and land values are affecting the delivery of housing; land values are particularly affecting

development due to the decontamination costs of the brownfield sites. The transfer values paid

for social rented properties are typically 50% (with a range provided of between 40-50%), and

60% for intermediate housing (with a range provided of 55-65%). It was discussed that high

rents affect the transfer values paid by RPs.

3.34 We have analysed three new housing schemes which are currently being delivered across

Sandwell, all of which provide different levels (percentages) of affordable housing due to



22

development viability. However, the affordable housing provided in each scheme is an equal

split of social rent and intermediate housing.


3.35 Care Homes / Residential care homes is living accommodation for older people and involves

employ staff who provide residents with personal care, such as washing and dressing.

Residents normally occupy their own single room but have access to other communal facilities.

We have reviewed the development plan monitor information and noted that no residential care

developments have been developed in the recent past, suggesting either low demand for this

use or viability issues hampering delivery. The high fixed cost of construction, inefficient net-

gross ratios and high management costs in residential care homes means that these facilities

tend to be marginal in terms of viability particular in low value areas and therefore we have not

tested this use. One Registered Provider added commentary that extra-care schemes are

costly, complex, and mostly unviable in Sandwell (Registered Provider Consultation).

Office Space

3.36 This section provides an overview of the Sandwell office market creating an understanding of

office development viability in Sandwell.

3.37 The Roger Tyms CIL Scoping Study (2011) in their initial Black Country wide review

recommended a zero CIL charge on office development stating that both office and industrial

markets are depressed, exhibiting low demand, and high vacancy within and outside the key

settlements of the Black Country.

3.38 The office market in Sandwell is under-developed due to the economic history of the area and

its close proximity to Birmingham city centre, the main office location in the West Midlands. This

proximity to a regional centre effectively makes the whole of the Sandwell Borough a secondary

market for office space. It suffers from low levels of activity in terms of completions, deals and

development. Only one large office development at the former Council Depot, West Bromwich

(Providence Place - first phase let to BT) has taken place in recent years, requiring public

sector subsidy to bring the project forward.

3.39 Discussion with agents/developers and general market research has confirmed that speculative

office developments are highly unlikely to be delivered. Development activity is occupier led

and therefore it is difficult to make distinctions in value terms across the Borough. Deals on new

development will be primarily based on the cost of the new development and returns to land

owners and developers will be low.



23

3.40 Given the weak demand and occupier led market, office development in general is not viable.

Even a modest CIL charge would serve to increase development costs, which may have the

unintended consequence of reducing demand further (i.e. occupational rents will need to be

increased to achieve viability).

3.41 The key areas of office supply in Sandwell are West Bromwich, Tipton, Oldbury and to a lesser

extent Wednesbury and Smethwick. These are the localities where the greatest numbers of

deals have taken place (Estates Gazette Property Data, 2014), that exhibit the greatest

availability (Property Link, 2014) and where the greatest number of completions have taken

place (SMBC Development Monitoring Information, 2014). Furthermore these areas fall within

the regeneration corridors and the Strategic Centre of West Bromwich, where future

development is to be concentrated in accordance with the BCCS (2011).

3.42 We reviewed the total office demand across Sandwell in the key locations (as above) between

the period January 2006 – January 2014. A total of 1,796,537 sqft of office floorspace was

transacted across 139 units. The figures below illustrate the deals done.

Figure 3.4 – Office Take-up by Units (EGi, 2014)

02468

101214161820

Un

its

Sandwell - Office Take-up by Number of Units

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 sqft +

NB: Tipton saw 27 deals for offices below 1,000 sqft



24

Figure 3.5 – Office Take-up by Sqft (EGi, 2014)

3.43 Oldbury saw the greatest number of office deals (53 units); however West Bromwich had the

greatest amount of transacted floorspace (695,855 sqft). Wednesbury had the lowest number of

deals (6 units), however Smethwick had the lowest amount of office floorspace transacted

(29,176 sqft). Offices under 2,500 sqft saw the highest take-up over the period reviewed (68

units).

3.44 We also reviewed the current supply of offices by sqft and number of units in Sandwell. There is

currently an availability of 457,530 sqft of floorspace available across 63 units. Figure 3.6 below

displays the data.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Un

its

Sandwell - Office Take-up by Sqft

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 sqft +

NB: West Bromwich had 353,592 sqft transacted in the 50,001 sqft category



25

Figure 3.6 – Office Supply (EGi, 2014)

3.45 West Bromwich has the highest availability of office in terms of both floorspace (206,092 sqft)

and units (30). Wednesbury has the lowest availability of units (4), closely followed by Tipton

(6). Tipton also has the lowest availability of total office floorspace (12,171 sqft).

3.46 There is a limited supply of offices in terms of available/advertised properties revealing the

small-scale nature of the office market in Sandwell. Office supply is to be predominantly located

within the strategic centre (West Bromwich). There is an aspiration in West Bromwich for the

provision of 220,000 sqm (2.4m sqft) of office space by 2026, guided by the West Bromwich

AAP.

3.47 Within the Borough very few new office developments have taken place. Only 35 implemented

planning applications had been logged in the SMBC development monitoring report between

2006 and 2013. This equates to 5 completions per year across Sandwell. These were

generally at the lower end of the size scale with the majority of applications (22 out of 35) at

400 sqm (4,300 sqft) and below (as discussed by the development typologies assumptions).

3.48 Providence Place in West Bromwich is the largest scale development (13,115 sqm (141,000

sqft)) in the Borough for a number of years. There are however 14 extant permissions for purely

office use. It is likely that limited occupier market demand is affecting the bringing forwards of

these developments. Agent and developer conversations have confirmed that no/very limited

speculative office development is expected in the Borough for the foreseeable future.

0

5

10

15

20

25

30

35

0

50,000

100,000

150,000

200,000

250,000

Un

its

Sq

ft

Sandwell - Office Supply

Total Sqft

Total Units



26

3.49 The Employment Land Review (2008) suggests a small increase in B1a and B1b office space

developments. Less than 100,000 sqm (1,076,000 sqft) is expected to be required across the

Borough between 2011 and 2026 (equivalent to 6,666 sqm (71,700 sqft) per annum). Within the

Strategic Centre, West Bromwich, the BCCS predicts development in the order of 20,450 sqm

(220,000 sqft) by 2026 or 1,363 sqm (14,665 sqft) per annum.

3.50 Demand is thus very modest for office accommodation within Sandwell. Historically market

activity has been focussed in West Bromwich, Tipton and Oldbury (Estates Gazette Property

Data 2007-2013) although only a small number of deals have been recorded in these locations

averaging 6 deals per annum in West Bromwich, 3 deals per annum in Tipton, and

approximately 5 per annum in Oldbury. Smethwick only experiences an average of 3 deals for

offices per annum.

3.51 Across the Borough prime rents for new builds in desirable locations are in the region of £161 -

£182 psm, £15 - £17 psf for larger developments of around 1,500 sqm. For smaller offices the

figure may be slightly higher (based upon professional knowledge) at £193 - £204 psm (£18 -

£19 psf). These figures are at the higher end of the spectrum for the best quality new units in

the most desirable office locations, thus if schemes are unviable at these higher end rents, then

a scheme in a local centre at lower rents is likely to be similarly unviable.

3.52 Market research into available units and deals done in the area has not confirmed whether rent

differentials exist between locations, and there is no consensus on this issue between agents.

Variable rents occur in a two tier market that is either driven by the impetus to rent a property

that has sat empty (thus subject to empty rates) and that of a new build on a cleared site, where

the rent reflects the costs associated with the delivery of the scheme.

3.53 Rental variations do however, occur across the Borough although clear distinctions based on

locations are not evident i.e. variations also occur within settlements rather than between them.

In terms of the rental values range, all of the main areas exhibit some rents below £100 psm

(£9.30 psf), whereas only Smethwick does not achieve rents above this value. Between 2006 -

2014, the highest rents for offices were paid in West Bromwich, Estates Gazette Deals Done,

2014).

3.54 Secondary accommodation frequently incurs rental values of £100 psm (£9.30 psf) and below

(from £54 psm (£5 psf)) whereas prime accommodation sits below and around the £175 psm

(£16.30 psf) mark across the Borough (Deals Done, 2012). This is however subject to variance

and limited comparables, with some agents stating a much lower value for prime office in the

current market, at £12.50 psf.



27

3.55 This information is somewhat anecdotal in that very few new developments have come

forwards. Based on new schemes and consultation with agents/developers the figure of £175

psm (£16.25 psf) could be achieved on a well located high quality office development in any

locality across the Borough, particularly as new development may be charging rents aligned

with the cost of the development rather than market demand. Average rents data is not

available in the Employment Land Study (2008), thus data has been collected via achieved

rents (deals done), availability (quoting rents) and agent/developer consultation.

3.56 There is some range in terms of the incentives currently available, and this will also be

determined by the quality of the covenant and length of lease undertaken. Typically anything for

a private sector covenant the range is 18-24 months on a 10 year lease, to 6-12 months on a 5

year lease. These incentives however relate to existing buildings, to secure development a

longer term lease would be required and the incentive adjusted accordingly. Yield data is not

readily available at the Sandwell level. Prime yields as per the Q3 2013 CBRE Rents and

Yields Monitor for the West Midlands region were 7.96% in Q2, and 7.72% in Q3. These yields

reflect the nature of occupiers to be found across Sandwell. In general they tend to be local or

regional organisations occupying smaller premises on shorter leases.

Land Values

3.57 Land values for office use, for fully serviced and ‘ready’ sites, are generally in the region of

£300,000 per acre. A range of values has been given from agents and developers (£250,000 -

£350,000 per acre). Alternative sources of information on land values were considered, but

there is a lack of robust information at the local level. The level of knowledge held by local

agents makes this the most robust source. According to local agents land values are thought to

be consistent across the Borough with no particularly high or low value areas. The developer

and agent consultations identified that land may be at the lower end of the scale for town centre

locations and at the higher end of the scale for motorway (roadside) locations. However this is

not a rule applicable across the board as locational factors, access, contamination, and

physical attributes and site specifics all influence this value.

Industrial Space

3.58 This section provides an overview of the Sandwell industrial market creating an understanding

of industrial development viability in Sandwell.

3.59 High vacancy and low rents characterise the market resulting in limited viability and

development potential.



28

3.60 Sandwell has a longstanding industrial legacy with an excess of secondary industrial stock

(Employment Land Review, 2008). There is an aspiration to: keep this stock as local quality

employment land; update it to high quality employment land; or redevelop this stock for

residential use (BCCS, 2011). New development is thus likely to take place on existing sites.

CIL may still apply on the net additional floorspace if net additional space is delivered.

Consultations with agents suggested the market demand for industrial property improved

considerably in 2013, which in turn has driven up rents in some instances and decreased the

supply of B8 units. However, there is still high availability of B2 industrial property under 10,000

sqft (Estates Gazette, 2014).

3.61 The key areas of industrial supply in Sandwell are West Bromwich, Oldbury, Smethwick, Tipton,

and Wednesbury. Although a large swathe of industrial land/property is available across the

Sandwell Borough in various locations, these are the localities where the greatest numbers of

deals have taken place (Estates Gazette Property Data, 2014), that exhibit the greatest

availability (Property Link, 2014) and where the greatest number of completions have occurred

(SMBC Development Monitoring Information, 2014). Furthermore these areas fall within the

regeneration corridors and the Strategic Centre of West Bromwich, where future development

is to be concentrated, as identified within the Core Strategy (BCCS, 2011).

3.62 We analysed the industrial take-up in Sandwell over the key locations mentioned above. A total

of 18,383,903 sqft of industrial floorspace was transacted across 712 B2 and B8 units between

the period of January 2006 – January 2014. The figures below show the take-up by location, as

well as total number of units and sqft transacted.

Figure 3.7 – Industrial Take-up by Number of Units (EGi, 2014)

0

5

10

15

20

25

30

35

40

45

50

To

tal U

nit

s

Sandwell - Industrial Take up by Number of Units

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 - 200,000 sqft

200,001 sqft +

NB: Wednesbury had 118 units transacted in the 20,001 - 50,000 sqft category.



29

Figure 3.8 – Industrial Take-up by Sqft (EGi, 2014)

3.63 The greatest amount of industrial floorspace was transacted in Tipton (5,201,642 sqft), however

the greatest number of units transacted was in Wednesbury (198 units), and then West

Bromwich (147 units). The size category which saw the greatest number of take-up was the

20,001 – 50,000 sqft category as 179 units were transacted in total, closely followed by the

5,001 – 10,000 sqft category which saw 118 transactions.

3.64 We also reviewed the current supply of industrial property in the Sandwell district across

locations. There is a current supply of 3,591,386 sqft of B2/B8 floorspace available across 199

units. The figures below illustrate this availability.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

To

tal S

qft

Sandwell - Industrial Take up by Sqft

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 - 200,000 sqft

200,001 sqft +

NB: Oldbury had 1,873,485 sqft of floorspace transacted above 200,000 sqft. Tipton had 5,201,642 sqft of floorspace transacted above 200,000 sqft. Wednesbury had 4,701,516 sqft of floorspace transacted above 200,000 sqft.



30

Figure 3.9 – Industrial Supply by Number of Units (EGi, 2014)

Figure 3.10 – Industrial Supply by Sqft (EGi, 2014)

3.65 The greatest amount of floorspace available in total is in Tipton (1,223,332 sqft), whereas the

greatest number of units available are in West Bromwich (48 units), closely followed by Tipton

(46 units). Wednesbury has the lowest supply of units, with only 17 available. The category with

the greatest availability in Sandwell is the 2,501 – 5,000 sqft units (59 available).

0

2

4

6

8

10

12

14

16

18

Un

its

Sandwell - Industrial Supply by Number of Units

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 - 200,000 sqft

200,001 sqft +

0

50,000

100,000

150,000

200,000

250,000

300,000

Sq

ft

Sandwell - Industrial Supply by Sqft

0 - 1,000 sqft

1,001 - 2,500 sqft

2,501 - 5,000 sqft

5,001 - 10,000 sqft

10,001 - 20,000 sqft

20,001 - 50,000 sqft

50,001 - 100,000 sqft

100,001 - 200,000 sqft

200,001 sqft +

NB: Tipton has 439,162 sqft available in the 100,001 - 200,000 sqft. Wednesbury has 474,996 sqft of take-up in the same category.



31

3.66 In the past there was an excess supply of employment land in Sandwell. The BCCS identified

the need to reduce the available (predominantly secondary industrial) employment land from

1,251 hectares in 2009 to 850 hectares in 2026. This was carried forward in the Site Allocations

and Delivery DPD which allocated some of the existing local employment land for residential

use.

3.67 As noted in the earlier Black Country market section there is a high prevalence of contaminated

brownfield land. This is an issue of particular significance in Sandwell where the levels of

contamination and the desire to reduce this contaminated land are greatest. The quantum of

local quality employment land earmarked for change of use to residential development is

almost double that of its Black Country neighbours at 574 hectares. This compares to 229

hectares in Dudley, 212 hectares in Walsall and 234 hectares in Wolverhampton, up to the

2026 period (Black Country Employment Land Study, 2008).

3.68 Much of the employment land is generally of low quality (local) standard. There is an aspiration

to upgrade from 192 ha of high quality land (2009) to 466 ha (2026) (BCCS, 2011). This is to

be focussed in the regeneration corridors and West Bromwich. The industrial market thus

exhibits fairly high levels of activity in comparison with the office market due to this oversupply

of stock.

3.69 Across the Borough there have been 62 implemented industrial developments (2006-2013) split

between; 25 B2 applications, 11 mixed industrial (B2-B8), and 26 B8 use class. B2 and B2-B8

mixed units have tended to be predominantly 400 sqm (4,300 sqft) and below. Above 400 sqm

(4,300 sqft) the unit sizes are spread disparately with the largest B2 development being 3,605

sqm (38,800 sqft). Of the B8 developments the majority have been below 1,000 sqm (14 out of

25) and disparately spread from 1,000 – 10,000 sqm (10,000 – 107,600 sqft). The number of

implemented applications broadly equates to 9 per annum across the Borough.

3.70 The Employment Land Review (2008) sets out that demand for B1c/B2 space is expected to fall

by approximately 350,000 sqm (3.7m sqft) between 2011 and 2026 and for B8 use by

approximately 40,000 sqm (430,000 sqft). There is therefore depressed demand for the

provision of more industrial accommodation in Sandwell. This is greatly affected by the present

oversupply of industrial land, hence the market for secondhand industrial property is in fact

fairly active, with 3,529 industrial leasehold deals recorded (Property Data, EGi 2014). Demand

for industrial units is thus fairly buoyant, but predominantly provided for by the existing supply of

cheaper stock.

3.71 The key areas where demand is focussed are in: West Bromwich (including Hill Top and Great

Bridge), Oldbury, Smethwick, Tipton and Wednesbury. The number of deals recorded in West



32

Bromwich equates to 23 per annum, with 17 in Tipton, 19 in Oldbury, 9 in Smethwick, 13 in

Wednesbury, 3 in Rowley Regis, and 5 per annum in Cradley Heath. The agent/developer

consultation have confirmed greater demand is likely to be apparent in locations closest/with

easiest access to the motorway, as is frequently the case for industrial property.

3.72 Across the Borough prime rents are estimated to be in the region of £54 psm - £65 psm (£5-£6

psf) as per deals done data for smaller units, and £43 psm - £54 psm (£4-£5 psf) for larger

units. Agent/developer consultation confirmed that use types (B2/B8) tend to be

interchangeable thus rent differentials are based on property characteristics and size rather

than use type. Again generalisation is fraught with difficulty in that property is not homogenous,

and a large variety of factors influence the value of a unit. Consultation has indicated that there

may be rent differentials between motorway and less prominent locations although there is no

consensus, and any location differentials are not clearly reflected in the data gathered via deals

done/available properties.

3.73 Typical incentives are thought to be between 6 months’ rent free for 5 year lease, or 12-18

months for a 10 year lease. This is however highly changeable as a property with good

motorway access may not receive any incentive. Properties in less prominent locations are less

likely to be rented at all, thus incentives may be greater.

3.74 Yield data is not readily available at the Sandwell level. Prime rents and yields as per the Q3

2013 CBRE Rents and Yields Monitor for the West Midlands region were 7.32 in Q2, and 7.24

in Q3. Yields again are highly variable and are to be adjusted to local rent levels. Consultations

with Agents have confirmed that yields are driven by length of lease and the quality of the

covenant.

Land Values

3.75 Land values for industrial land are generally at the £250,000 per acre value for fully serviced

decontaminated sites. A range of values has been given from agents and developers

(£250,000 - £300,000 per acre). Land values are thought to be consistent across the Borough

with no particularly high or low value areas. Land may be at the lower end of the scale for less

prominent locations (with poor access) and at the higher end of the scale for motorway

(roadside) locations. However this is not a rule applicable across the board as again locational

factors, access, contamination, and physical attributes and site specifics all influence this value.

Retail

3.76 This section provides an overview of the retail market in Sandwell creating an understanding of

retail development viability in Sandwell.



33

3.77 In the Roger Tyms CIL Scoping Study (2011) retail is divided by convenience and comparison

retailing and location i.e. in town and out of town (retail parks). In Sandwell for the CIL charging

schedule high level estimates were given for retail floorspace development. For convenience

retailing of all sizes/locations a charge of £150 psm was recommended, comparison retailing in

town and district centres £0 psm, and comparison out of town at £125 psm.

3.78 Falling consumer demand is reducing retail rents and the viability of schemes in town and out of

town. The key retail location in Sandwell is West Bromwich followed to a much lesser extent by

town centres such as Oldbury, or local and district centres such as Smethwick (Policy CEN2

BCCS, 2011). Future retail development is to be concentrated in Strategic Centres, and other

centres within regeneration corridors (i.e. Oldbury). There is an aspiration to provide 65,000

sqm (7m sqft) (2006-2026) of additional comparison retail floorspace in West Bromwich.

3.79 Across the Borough the hierarchy of centres is reflected in the number of deals delivered in

each location. From 2006 – 2013 there have been 42 deals within the town centre of West

Bromwich, 5 deals in Oldbury, 6 in Wednesbury, 6 in Smethwick, 4 in Tipton, and 2 in Rowley

Regis. West Bromwich is the hub of retail activity, although even here the low number of

reported deals is indicative of the limited retail market across Sandwell. Across the Borough

there are very few properties advertised, many of which are secondary, lower quality units

particularly outside of West Bromwich.

3.80 Consumer demand in Sandwell is low, dictated by low average disposable income levels and

wages in the Borough.

3.81 As stated in the Roger Tyms report comparison retailing and convenience retailing perform in

different ways. Most high streets in town comparison retailing have stalled outside of London

due to weak consumer demand, constraints on development finance and poor retail occupier

performance. Many of schemes are therefore not viable. In West Bromwich in 2013, a new

retail scheme opened. This opened in July and delivered circa 18,000 sqm (194,000 sqft) of

comparison floorspace but on the back of a 13,000 sqm (140,000 sqft) Tesco, which drove the

viability of that particular scheme.

3.82 Out of town retail units generally have greater levels of viability than retail schemes in town

centres, although certain out of town schemes are struggling in terms of delivery (CIL Scoping

Study, 2011). This is clearly demonstrated within Sandwell in relation to the stalled Junction

retail park in Oldbury.

3.83 Out of town mall style development with associated parking remains strong, although there are

no schemes coming forward in Sandwell of this nature.



34

3.84 Convenience retailing continues to grow as operators seek to expand their market share in and

out of town. Convenience retailing is generally viable across a range of locations (CIL Scoping

Study, 2011).

3.85 Comparison in town: Rents are falling across the region, indicative of falling levels of consumer

demand. This is particularly prevalent in town centre comparison retailing. Shop units on the

high street have achieved rents on an overall basis between £130 - £408 psm (£12.11 - £37.91

psf). The average rent on West Bromwich high street is £239 psm (£22 psf) overall, although

shopping centre rents are much higher than this level at £860 psm (£80 psf). This is

considerably lower outwith West Bromwich where average rents are around £108 psm (£10

psf) in district and local centres. West Bromwich is the only notable comparison retail centre,

thus exhibits higher values than other locations. In particular, locations such as Smethwick

exhibit low rents and have a very small retail offer. Other than West Bromwich other

settlements/centres have no/limited prime retail offer.

3.86 Comparison out of town (Retail Warehouse): No out of town deals with values available have

been recorded post 2006 within Sandwell (property data, 2014) thus information has been

gathered via agent/developer consultation. Around £161 psm (£15 psf) is thought to be an

average value, however this was being achieved in the peak, and a lower value may be

applicable now. However, no present values/comparables are available to confirm the shift in

this value (Agent consultation).

3.87 Convenience: Rents are between £160 and £215 psm (£15 psf - £20 psf), with incentives for

convenience (foodstores) delivered through rent frees, with a 6 to 12 month rent free common.

Agent consultation has confirmed that the recent Tesco development and another development

by Sainsbury’s within Sandwell were freehold transactions rather than leasehold. Some

information is available regarding rents paid by discount retailers; which is thought to sit at

around £108 - £130 psm (£10 - £12 psf).

3.88 Yield data is not readily available at the Sandwell level. Prime rents and yields as per the Q3

2013 CBRE Rents and Yields Monitor for the West Midlands region for all shops were 6.84% in

Q2, and 6.82% in Q3, however yields in the district/local centres are around 8 to 9%. Yields for

convenience retailing (food stores of 450 sqm (4,800 sqft)) are expected to be in the region of

5.75% with larger stores at around 5%. Agent consultation has indicated that yields in West

Bromwich for a prime pitch in the town centre considerably higher than during the pre-crash

peak (7%), with major centres now at 8-12%.

3.89 To prepare our CIL appraisals we have had to incorporate an estimate of the land cost to the

developer. The figures that we have assumed in the CIL financial appraisals has been



35

informed by our market research and the completion of residual appraisals which allow us to

derive the potential land payment after taking the value of a development and subtracting all the

costs associated with that scheme.

3.90 Sensitivity analyses for each of the residual appraisals were completed in order to establish a

range of prospective land values for each proposed retail scheme. There is a broad range of

values and this is to be expected, given that each scheme will have different values and costs.

The most attractive schemes will be competed for and thus will generate the highest land

values to be paid.

3.91 In preparing the CIL financial appraisals we have generally adopted the mid-range of land

value. This is justified by the potential variation in the attractiveness and characteristics of

schemes and thus values and costs will vary. Also by taking this approach we are mindful of

not affecting the viability of future developments from occurring.

3.92 The land values that we have adopted range from £100,000 per acre for retail units outside the

strategic centre, £300,000 per acre for units within the Strategic Centre, to £570,000 per acre

for retail warehouses and foodstore land values between £450,000 per acre (280 sqm unit) to

£1.0 m per acre (5,000 sqm unit).

Hotels

3.93 The viability of new hotels is determined entirely by the trading potential of the scheme which is

dependent on the location and the existing stock of bedrooms in the vicinity. Since 2009 it is

apparent that the trading performance in several major cities may have been adversely affected

by the supply of new hotels developed during the previous cycle. Debt remains the greatest

challenge to the market which demands strict criteria of location, sector and brand /

management.

3.94 The budget / roadside hotel sector is dominated by the big chains such as Travelodge and

Premier Inn. There is some flexibility as to whether developments are freehold or leasehold,

but often hotels are developed in partnership with developers as part of a wider mixed use

commercial or retail park scheme. Rents are generally £3,000 – 3,500 per bedroom. Yields

are subject to a significant range (6-9%) with Travelodge recently being subject of a company

voluntary arrangement (CVA) to restructure its debt and its covenant has still to be property

tested.

3.95 More upmarket hotels are even more difficult to prove viable. Most upmarket hotel brands are

represented in Birmingham city centre. Most new hotels are developed using a Management

Contracting business model whereby the developer / investor takes the risk and the hotel chain



36

operates the hotel for a fee. Due to the expensive fit-out the viability is often only achieved for

the developer by the hotel bringing footfall and vitality to a wider scheme.

3.96 Other independent boutique hotels have similar challenges and their success or failure usually

depends on the strength of the management and the quality and location of the asset. These

hotels are often opened in refurbished properties which would not necessarily be captured by

CIL (if no new floorspace is developed).

Conclusions

3.97 The results of the property market analysis confirm that market generalisations are fraught with

difficulty due to the heterogeneous nature of property and the large number of variables

affecting the values, rents and yields achieved.

3.98 The marginal viability of schemes may however be considered and accounted for in the viability

testing by assuming the highest rents within the sector. If a scheme is not viable at this higher

value then it will not be viable in any less desirable locations.

3.99 The current property market across the Borough is generally one of low value.



37

4 Development Typologies

4.1 In this section of the report we identify the key core strategy policies related to the various uses

proposed across the Borough as well as analysis of development that has been undertaken in

recent years. This analysis coupled with the market analysis undertaken in Section 3 defines

the development typologies that we have tested as part of this viability study.

Residential

Planning Policy

4.2 The Council’s policy framework is set out in the BCCS. The key planning policy relevant to

residential uses is:

HOU2 Housing Density, Type and Accessibility

The density and type of new housing provided on each site will be informed by:

The need for a range of types and sizes of accommodation to meet identified sub

regional and local needs;

The level of accessibility by sustainable transport to residential services, including

any improvements to be secured through development;

The need to achieve high quality design and minimise amenity impacts, taking into

account the characteristics and mix of uses in the area where the proposal is

located.

Each authority will aim to provide an overall mix of house types over the plan period,

tailored to best meet local and sub-regional needs. Developments of 15 dwellings or more

should provide a range of house types and sizes that will meet the accommodation needs

of both existing and future residents, in line with information available from the Strategic

Housing Market assessment and Housing Needs Surveys and with reference to the

standards in Table 8. All developments will aim to achieve a minimum net density of 35

dwellings per hectare, except where higher densities would prejudice historic character

and local distinctiveness as defined in Policy ENV2.

4.3 Table 4.1 below illustrates the number of sites allocated for development within the Core

Strategy based on whether the site is in one of the five regeneration corridors, out of corridor or

the Strategic Centre. These figures are based on the sites allocated with the Sandwell Site

Allocations and Delivery Development Plan Document (August 2011) and the West Bromwich



38

Area Action Plan (August 2011). The split in terms of number of units per scheme is based on:

the core strategy; the development monitoring data provided by the Council, and typical

scheme sizes.

*The reason for considering schemes up to 14 units is that over 15 units the Council’s Affordable Housing Policy becomes effective. ** This site (Land at Friar Park Road, Wednesbury) is the single largest site in the Borough with 633 units proposed.

4.4 Table 4.2 below sets out the development densities and type splits (i.e. percentage of flats and

houses) as set out in Table 8 of the BCCS. The percentage splits in terms of unit sizes (i.e. 1

bed or 2 beds) are based on the size of the proposed scheme and market demand for those

units. However, having consider development monitoring data and reviewed the market, it is

clear that there is a very limited apartment (flat) market in Sandwell, and therefore the

percentage of apartments to be provided within Strategic Centre has been reduced and a split

based on actual market trends (review of scheme being delivered/planned) has been adopted

(i.e. 38% 2 bed, 40% 3 bed and 22% 4 bed).

Location

Density

(Units per Hectare)

1 Bed Flat

2 Bed Flat

1 Bed House

2 Bed House

3 Bed House

4+ Bed House

Out of Corridor 35 - - 20% 40% 20% 20%

In Corridor 45-60 10% 10% 30% 40% 10%

Strategic Centre 60+ 25% 25% 25% 25%

Table 4.2 – BCCS Development Densities & Mix

Number

of

Units

Regeneration Corridor (Number of Sites) Out of

Corridor Sites

Strategic Centre

8 9 12 13 16

1 1 1 1 0 0 0 0

2-14* 15 9 15 4 3 3 0

15-50 15 22 15 9 6 18 2

51-250 12 12 12 11 2 7 12

251+ 0 3 3 0 0 1** 4

Total Number of Units

1,738

2,637

2,818

1,389

578

1,969

3,365

Table 4.1 – Residential Allocations



39

4.5 With regards to Affordable Housing, the Council’s policy in the core strategy is as follows:

HOU3 Delivering Affordable Housing

The Local Authorities will aim to provide a minimum 11,000 new affordable dwellings

between 2006 and 2026, in partnership with developers and the Homes and

Communities Agency. Local Planning Authorities will seek to secure 25% affordable

housing on all sites of 15 dwellings or more where this is financially viable. The

tenure and type of affordable units sought will be determined on a site by site basis,

based on best available information regarding housing need, site surroundings and

viability considerations. On sites where 25% affordable housing is proven not to be

viable, the maximum proportion of affordable housing will be sought which will not

undermine the development’s viability, subject to achieving optimum tenure mix and

securing other planning obligations necessary for the development to gain planning

permission. Financial viability assessments conforming to an agreed methodology will

be required and, where necessary, independently appraised by the local planning

authority at the cost of the applicant. Claw back and other flexible arrangements will be

sought through planning agreements, wherever possible, to allow for changing market

conditions in future years.

4.6 In terms of tenure split for the affordable housing, we have been advised by the Council

Officers and Registered Providers to assume the following:

50% Affordable Rented at 50% discount from market value

50% Intermediate (as defined in the former PPS3) at 40% discount from market value.

4.7 The assumptions on the discount to market values are based on consultations with Registered

Providers of affordable housing. Note that the schemes that we have tested (apart from

schemes less than 14 units) all include 25% affordable housing.

Development Monitoring Information

4.8 With regards to residential development completions during the period 2006 to 2013, an

analysis of the development monitoring data suggests that the majority of development has

been small scale i.e. below 14 units, see Table 4.3 below.

4.9 From development plan monitoring data the largest residential scheme consisted of 71 units.

The majority of development has been focused in Corridors 8, 12, 13, 16 and in the Strategic

Centre.



40

Number of Units

Number of schemes

Flats Houses

1 60 192

2 – 14 154 392

15 – 50 60 46

51 – 250 4 2

250+ 0 0

Table 4.3 – Residential Completions 2006-2014

4.10 Although, a number of large scale sites have been allocated within the Core Strategy, the

reality is that the majority of the schemes are of a smaller scale. This may in part be due to

phasing undertaken by the developer of a larger site, for example, there were a number of

entries in the development monitoring data for the same scheme for a site in Cape Hill.

Development Typologies

4.11 Based on the site allocations and the development monitoring data, we have devised the

following development typologies to be tested in the CIL viability model.

Land Use

Density

1-14 Residential Dwellings 35 units per ha

50 Residential Dwellings 60 units per ha

150 Residential Dwellings 35 – 60 units per ha

350 Residential Dwellings 35 – 60 units per ha

Table 4.4 – Residential Development Typologies

4.12 Based on the core strategy the residential development over the plan period is likely to take

place across the Borough with the majority of this focused on the Strategic Centre of West

Bromwich and Corridors 8, 9 and 12. However, at this stage the above typologies have been

tested for both high and low value areas as identified in section 2 above.



41

Offices and Industrial

Planning Policy

4.13 The aspiration in the Core Strategy and Site Allocations DPD is to replace redundant industrial

land in none strategic locations (outside strategic centres and regeneration corridors) with

housing. The aim is thus for a reduction in the amount of employment land available, with

emphasis on updating obsolete stock. This aspiration and surplus of employment land makes

the efficiency of the CIL charge low, as most developments are likely take place on existing

brownfield land, (and may therefore provide little net additional floorspace). Furthermore

brownfield sites experience high abnormal costs due to the industrial legacy of the Black

Country further inhibiting impetus for development.

4.14 Industrial space is to be centred within the regeneration corridors, and offices in the Strategic

centre of West Bromwich. Development is to be concentrated in the regeneration corridors.

Corridors 8 and 12 have the greatest potential for high quality strategic employment land

(HQSE) whereas 9, 13 and 16 will have a more residential focus providing land of local

employment standard. The Strategic Centre West Bromwich is to focus on the provision of high

quality office space.

4.15 The corridors are:

Corridor 8: Hill Top - This area is identified as an area of Potential High Quality Strategic

Employment (HQSE area). Within this HQSE 33.5ha of industrial land has been identified

as being development opportunities.

Corridor 9: Dudley Port / Tividale / Brades Village - The Strategy for this corridor is to use

the available obsolete employment land to create attractive urban residential environments.

Corridor 12: Oldbury / West Bromwich / Smethwick - A significant level of various types of

employment land will be retained within this corridor, aiming to uplift it to HQSE.

Corridor 13: Jewellery Line-Rowley Regis - Employment land is local standard but provides

valuable employment. In the west are Portsersfield Industrial Estate, Corngreaves Trading

Estate and Cradley Business Park. In the North employment land stretches from Waterfall

Lane to Doulton Road. In the East on Cakemore Road.

Corridor 16: Coseley, Tipton / Princes End. The corridor is to provide high quality residential

and local standard employment land.

4.16 This distinction between HQSE and local employment land may need to be reflected in the CIL

typologies to test viability. They provide a clear divide between potentially lower and higher



42

value areas, in keeping with present SMBC policy. However, in respect of CIL we have not

identified clear differential in market values.


4.17 Offices: Since 2006 there have been 35 office (B1 use type) completions across Sandwell

Borough, totalling 5 per annum on average. The sizes range from 32 sqm (345 sqft) to 13,115

sqm (141,000 sqft). Discounting the largest development at 13,115 sqm (Providence Place),

the largest development was 4,100 sqm (44,000 sqft). 15 of these offices have been 120 sqm

(1,290 sqft) and below. The range is diverse and not concentrated at any one end of the scale

at any location. Developments over 100 sqm (1,076 sqft) have been concentrated in: West

Bromwich, Tipton, Smethwick, Wednesbury and Oldbury with no completions recorded

elsewhere.

4.18 Some office developments have however come forward as part of a mixed development

(B1/B2, B1/B2/B8, and B1/B8). There have been 66 completions over the 2006-2013 periods

the vast majority of these (58 out of 61) have been B1/B2/B8. Smaller developments (100 – 400

sqm (1,076 – 4,300 sqft), 37 developments in total) have been concentrated at: Rounds Green

Road, Oldbury; Percy Business Park, Oldbury; Tividale, Oldbury; Gold Green, West Bromwich;

Charles Street, Great Bridge. Within the 400-1,000 sqm range, mixed use development (7 in

total) has been concentrated at West Bromwich and Cradley Heath. Sites of 1,000 – 7,575 sqm

(10,760 – 81,500 sqft) (19 sites in total) have been in West Bromwich, Oldbury, Cradley

Business Park, Smethwick, Cradley Heath, Wednesbury and Great Bridge.

4.19 For the mixed use and singular office (B1) only completions the skew is towards the smaller

end of the market. It is appropriate (confirmed by market research and experience) to

differentiate between larger scale office developments and smaller. For the larger offices no

development has taken been place over 4,100 sqm (44,100 sqft), other than the BT

development, which at that size is an anomaly at almost double the average large size. We

have tested 2,000 sqm (21,500 sqft) offices as this is at the larger end of the scale that has

been delivered in the locality. For the smaller offices the most frequently occurring offices are

still at the smaller end of the scale sitting at 100 - 400 sqm (1,076 – 4,300 sqft). To encompass

the breadth of potential completions (including 400 sqm +) we have tested 400 sqm (4,300 sqft)

within our CIL viability model.

4.20 Industrial (B2 – B8) - In all there were 25 B2 developments within a size range of 106 sqm

(1,140 sqft) to 3,605 sqm (38,800 sqft), 12 of which were below 400 sqm (4,300 sqft) and

spread disparately over the larger sizes. Using the same rationale as the offices, 400 sqm



43

(4,300 sqft) has been chosen as it represents the point where frequent smaller completions turn

into larger more disparately delivered schemes. It is thus a broadly representative midpoint.

4.21 There are 11 B2-B8 developments, of which 7 are sized between 200 sqm (2,152 sqft) and

then 4,000 sqm (43,055 sqft). There have been 26 B8 development completions the majority of

which have been below 1,000 sqm (10,800 sqft) and disparately spread from 1,000 – 10,000

sqm (10,800 – 108,000 sqft). Similarly these developments have centred in West Bromwich,

Oldbury, Smethwick and Great Bridge. Again using the same rationale as above but skewing

upwards slightly due to the large differential between 1,000 – 10,000 sqm (10,760 – 107,600

sqft), 2,000 sqm (21,500 sqft) is thought to be representative across the completion spectrum.

We have also been informed by Planning Officers, that a number of larger B8 units are

expected to be delivered in the future and therefore we have also tested units of circa 5,000

sqm (53,800 sqft).

Development Typologies

4.22 From this information on completions it is possible to identify key areas in which development

has taken place and where activity has been recorded. Furthermore the Site Allocations DPD

and Core Strategy identify the future spatial aspirations for development, these are noted as

Strategic centres (West Bromwich) or regeneration corridors. This spatial planning policy fits

with where the development has taken place and where deals have been recorded. Utilising

these information sources we can identify the key locations for office and industrial

development.

Office key locations – West Bromwich, Tipton, Smethwick, Wednesbury, Oldbury and Great

Barr

Industrial key locations – West Bromwich, Oldbury, Smethwick, Cradley Heath, Rowley

Regis, Tipton and Great Bridge.

4.23 The development typologies in Table 4.5 below have been based upon the most frequently

occurring sizes gleaned from the development completions monitoring report.



44

Land Use

Offices: 400 sqm

Offices: 2,000 sqm

Industrial (B2): 400 sqm

Industrial Warehousing (B8): 2,000 sqm

Industrial Warehousing (B8): 5,000 sqm

Table 4.5 – Office & Industrial Development Typologies

Retail

Planning Policy

4.24 The Core Strategy envisages a “network of vibrant and attractive town, district and local centres

across the Black Country, each offering an appropriate choice of facilities.” Within the Strategic

Centres development up to 345,000 sqm is anticipated. In policy CEN1 West Bromwich is

identified as the key Strategic Centre, which will provide the higher order functions. Other

centres are defined as Town Centres and District & Local Centres to form a hierarchy. Policy

CEN7 controls out of centre development with a presumption in favour of development in

centres.

Strategic Centre Town Centres District/Local Centres

West Bromwich Oldbury

Cape Hill

Blackheath

Cradley Heath

Great Bridge

Wednesbury

Bearwood

Smethwick High Street – District Centre

Carter’s Green

Langley

Smethwick High Street (Lower)

Stones Cross

Hamstead

Rood End

Queens Head – Bristnall

Owen Street

Scott Arms

Tipton

Quinton

Princes End

Old Hill



45

Lion Farm

West Cross

Whiteheath

Table 4.6 – Sandwell Hierarchy of Centres

4.25 Policy CN3 identifies up to 45,000 sqm of new floorspace up to 2021 and then a further 20,000

sqm up to 2026. It is noted that any convenience retail development over 500 sqm will be

subject to a retail impact assessment.

4.26 Under policy CEN4 – regeneration of town centres states that the appropriate development

considered to be (up to) 650 sqm convenience and 500 sqm comparison. CEN5 covers smaller

District and Local centres and here appropriate development is considered to comprise up to

500 sqm net for convenience retail and 200 sqm comparison or leisure.


4.27 The graphs below have been generated from development monitoring data provided by the

Council from 2006 onwards. Figure 4.1 indicates the amount of completions in a year by use.

The predominance of A1 Retail is plain to see and it is the leading use by floorspace every

year.

Figure 4.1– Development Completions by Year and Use (Sqm)

4.28 Figure 4.2 shows the average development size in square meters in each year by the A use

classes.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Sq

m

Gross Development Completions by Year and Use (Sqm)

A1 Retail

A2 Financial

A3 Restaurants and Cafes

A5 Hot Food Takeaway

NB: 21,549.4 sqft of A1 Retail floorspace was developed in

2007/08



46

Figure 4.2 – Development Completions by Use and Year (Sqm Average)

4.29 On this basis the emphasis is slightly different with A2 financial being significant early in the

range and A1 remaining the leading category with average applications sizes being in the order

of 500 sqm. The scale of A3 and A5 applications have grown more recently, however they as

with A2 financial all fall below the 500 sqm level.

4.30 Figure 4.3 illustrates the average size for all of the completions over the period 2006 – 2013.

Figure 4.3 – Development Completions Overall Average Size by Use (Sqm)

0

500

1000

1500

2000

2500

Avera

ge S

qm

Gross Development Completions by Year and Use (Sqm Average)

A1 Retail

A2 Financial

A3 Restaurants and Cafes


610

126

231

208 A1 Retail

A2 Financial

A3 Restaurants andCafes




47

Development Typology

4.31 With the exception of A1 retail, which has been skewed by the large completion in 2007/8, the

majority of completions are below 500 sqm confirming the Core Strategy position of generally

expecting applications up to 500 sqm. With convenience retailing there are and will continue to

be exceptions and therefore this will need to be reflected in the typologies.

4.32 In selecting the typologies one has to also reflect the nature of the locations where

development may take place. In Sandwell these are generally urbanised Town and District

Centres where the potential of constructing larger units is restrictive due to the need for land

assembly and other similar constraints.

4.33 With regards to defining different types of retail units, we have referred to recent definitions that

have been accepted by the Planning Inspectorate (PINS) in respect of other CIL charging

schedules:

Retail units are those within Use Classes A1-A5 extending to 280 sqm, but excluding

convenience (food) and retail warehouses.

Retail Warehouses are large stores specialising in the sale of household goods (such

as carpets, furniture and electrical goods), DIY items and other range of goods,

catering for mainly car-borne customers.

Superstores/supermarkets are shopping destinations in their own right where weekly

food shopping needs are met and which can also include non-food floorspace as part

of the overall mix of the unit.

4.34 The typologies tested therefore comprise:

Land Use

Retail unit (A1 to A5*) extending to 280 sqm

Retail Unit (A1 to A5*) extending to 280 sqm – Strategic Centre

Retail warehouse of 1,500 sqm

Supermarket of 280 sqm

Supermarket of 1,500 sqm

Supermarket of 5,000 sqm

Table 4.7 – Retail Development Typologies

*Excluding convenience and retail warehouses.



48

4.35 This scale of development is the most likely to be proposed for development in Sandwell, due

to the nature and scale of the market.

Hotels

Planning Policy

4.36 The Core Strategy policy CEN3 Growth in Strategic Centres sets out an aspiration to grow the

tourism economy within the Black Country. The development of Hotel and other cultural and

leisure facilities are anticipated to come forwards with the Strategic Centre of West Bromwich.

Policy EMP6 is also relevant and makes clear that “…facilities which support the visitor

economy and the business tourism sector will also be encouraged and promoted…”


4.37 Examination of the Development Monitoring information shows that there have only been 3

schemes completed. Of these one was an extension, another a small development of 30

rooms combined with a showroom and the third a new standalone development located close

to the M5 off Wolverhampton Road. This latter development extends to 3,707 sqm.


4.38 Taking into consideration current planning policy and discussions we have had with Planning

Officers. We understand that there are a number potential hotel developments in the pipeline

which could come forward during the plan period and therefore we have tested a 100 bed Hotel

at the viability stage. However, it is also important to note that operators examine carefully

market potential in terms of room rates (income) and occupancy factors. It is highly likely that

across Sandwell such development will be marginal in viability terms, especially when sites are

likely to be brownfield and as such will be costly to develop.

Non-Residential Institutions, Assembly & Leisure

Planning Policy

4.39 The Core Strategy policy CEN3 Growth in Strategic Centres sets out an aspiration to grow the

tourism economy within the Black Country. Specifically the development of a cinema is

anticipated to come forwards within the Strategic Centre of West Bromwich (together with

Walsall and Wolverhampton).



49


4.40 The Development Monitoring information shows that Class D1 and D2 developments have

generally been civic developments and not commercial leisure. For instance the Class D1

developments of which there are three comprise a school, birthing centre and place of worship.


4.41 The New Square (Tesco) development in West Bromwich Town Centre opened in 2013 and

includes a 6 screen cinema operated by Reel Cinemas. The likelihood of there being further

demand for another cinema in the Sandwell area is likely to be minimal. Furthermore it is highly

likely that the development of a cinema would need to be cross subsidised by other higher

value use development which would be A1 or A3 development and the fact that you normally

have to pay the operator a premium to come into a scheme. A CIL would therefore not be

appropriate and this would affect the prospect and viability of delivering a cinema. Other D1 and

D2 uses are generally non-commercial and funded by the public or community therefore do not

generate surpluses from which a CIL can be realised.

Summary of Development Typologies

4.42 To summarise the development typologies we have tested as part of our CIL viability analysis

are as follows:

Residential

Land Use

Scheme 1 1-14 Residential Dwellings (High & Low Value Areas)

Scheme 2 50 Residential Dwellings (High & Low Value Areas)



Table 4.8 – Residential Development Typologies



50

Commercial

Land Use

Scheme 5 Office (B1)s: 400 sqm

Scheme 6 Offices (B1): 2,000 sqm

Scheme 7 Industrial (B2): 400 sqm

Scheme 8 Industrial Warehousing (B8): 2,000 sqm

Scheme 9 Industrial Warehousing (B8): 5,000 sqm

Scheme 10 Retail unit (A1 to A5*) extending to 280 sqm

Scheme 11 Retail Unit (A1 to A5*) extending to 280 sqm – Strategic Centre

Scheme 12 Retail warehouse of 1,500 sqm

Scheme 13 Supermarket of 280 sqm

Scheme 14 Supermarket of 1,500 sqm

Scheme 15 Supermarket of 5,000 sqm

Scheme 16 Hotel (C1): 100 Beds

Table 4.9 – Commercial Development Typologies




51

5 Viability Analysis

5.1 In this section of the report we set out our methodology to establish the viability of the various

development typologies described above. We have appraised each of the development

typologies having regard to open market land values and normal levels of developers profit to

establish whether there is any development surplus which could form CIL.

5.2 This section should be read in conjunction with our excel viability models contained at Appendix

1 and 2.

Development Economics

5.3 The property market and policy review above underpins the development typologies and the

basis of the economic viability analysis.

5.4 The general principle is that the CIL will be levied on the increase in land value resulting from

the grant of planning permission. However, there are fundamental differences between the

land economics for every development scheme is different. Therefore in order to derive the

potential CIL and understand the ‘appropriate balance’ it is important to understand the micro

economic principles which underpin the viability analysis.

5.5 The viability model is a residual appraisal model as recommended in the report by the Local

Housing Delivery Group, Viability Testing Local Plans (the Harman report).10

Figure 5.1 below,

illustrates the principles of a viability appraisal.

10

Local Housing Delivery Group, Local Government Association / Home Builders Federation / NHBC (20 June 2012) Viability

Testing Local Plans, Advice for planning practitioners, Edition 1 (the ‘Harman’ report)



52

Figure 5.1 – Elements Required for a Viability Assessment (Harman)11

Gross Development Value

5.6 Figure 5.2 below, illustrates some of the items that might make up the gross development value

of any particular scheme. The valuation approach will depend upon whether the scheme is

residential (e.g. comparable approach) or commercial (e.g. investment approach: rent £ per

annum capitalised at the appropriate yield %).

Figure 5.2 – Gross Development Value

11

Local Housing Delivery Group, Local Government Association / Home Builders Federation / NHBC (20 June 2012) Viability

Testing Local Plans, Advice for planning practitioners, Edition 1 (the ‘Harman’ report) page 25



53

5.7 In order to keep the generic models manageable we have valued residential development

typologies by reference to benchmark house values for each unit type e.g. 2 bed, 3 bed, 4 bed

houses and 1 bed, 2 bed apartment types.

5.8 In terms of average unit sizes, we have reviewed the Council’s Supplementary Planning

Residential Design Guidance - Appendix 3 (2004) and also compared these against a number

of schemes currently being promoted by developers across the Borough. The differential

between the design standards and what is being delivered is minimal and therefore we have

adopted the Council’s design standards for the purposes of our viability model.

Type

SMBC Standards

Sqft

Scheme 1

Sqft

Scheme 2

Sqft

Scheme 3

Sqft

Scheme 4

Sqft

1 Bed Flat 538 - 606 - -

2 Bed Flat 700 624 660 652 -

2 Bed House 700 766 694 730 699

3 Bed House 860 915 900 1,109 946

4 Bed House 1,076 1,076 1,163 1,298 1,110

Table 5.1 –Average Unit Sizes

5.9 In terms of commercial property, we have used an investment approach to valuation based on

the estimated rental value (per sq ft) for the use type and capitalised by the appropriate yield

taking into account investment purchasers’ costs. The yield for any particular property will

depend upon the location of the property; the specification; use; and crucially the covenant

strength of the tenant. For this exercise we have had regard to market yield benchmarks and

discussions with property agents.

5.10 It is important to be cognisant of all income streams e.g. temporary income and ground rents,

but only to the extent that this is relevant on generic schemes. The residential scheme we have

tested are generally housing led (as opposed to apartments) so we have excluded ground

rents. We have also ignored other temporary income as this is site specific.

5.11 Figure 5.3 below illustrates the typical direct expenditure (i.e. excluding land and profit) on a

scheme. This includes all aspects of pre-construction; construction; and post construction

(marketing and sales) costs.



54

Figure 5.3 – Direct Expenditure

5.12 Construction cost information has been derived from the BCIS (Building Cost Information

Service) and has been weighted to reflect the Sandwell market.

5.13 From the market research and discussions with agents and developers a significant risk to

property development in the Sandwell District is the extent of any decontamination, remediation

and site clearance costs required in order to redevelop brownfield sites (which make up the

majority of the development sites in the District). These site clearance costs can be significant

sum, but are also subject to significant variation. Within the viability models we have included a

benchmark sum of £75,000 per acres for decontamination, remediation and site clearance

costs (including demolition) in the absence of site specific information.

Threshold Land Values

5.14 The land values adopted are based on market land values as far as we have been able to

ascertain from a range of sources including: VOA, reported deals, agents and developer

consultations. These land values reflect the ‘prices paid’ for land and sites in the Sandwell

Borough for various potential uses. The land values assumptions exclude the cost of

decontamination and/or site clearance which is included as a separate cost item in the viability

models (see above).

5.15 A very important aspect when considering CIL is an appreciation of how the property market for

land works in practice. Developers have to secure sites and premises in a competitive

environment and therefore have to equal or exceed the landowners’ aspirations as to value for

the landowner to sell. From the developers’ perspective, this price has to be agreed often

many years before commencement of the development. The developer has to subsume all the

risk of: ground conditions; obtaining planning permission; funding the development; finding

purchasers; increases in constructions costs; and changes to the economy and market demand



55

etc. The ‘profit’ on the appraisal is not actual profit until the development is realised. The

appraised profit is a “gamble that all of the above costs and risks can be managed and

delivered on budget”. This is a significant amount of work for the developer to manage; but this

is the role of the developer and to do so the developer is entitled to a ‘normal’ developers’ profit

(see below).

5.16 To mitigate some of these risks developers and landowners often agree to share some of these

risk by entering into arrangements such as ‘subject to planning’ land purchases’ and / or

overage agreements whereby the developer shares any ‘super-profit’ over the normal

benchmark.

5.17 From the landowners’ perspective, they will have a preconceived concept of the value or worth

of their site. This could be fairly straight-forward to value, for example, in the case of greenfield

agricultural land which is subject to per hectare benchmarks. However, in the case of

brownfield sites (which accounts for the majority of land in Sandwell), the ‘existing use’ value

could be a lot more subjective depending upon the previous use of the property; the condition

of the premises; and/or any income from temporary lets, car parking and advertising hoardings

etc. Also, whilst (say) a former manufacturing building could have been state-of-the-art when it

was first purchased by the landowner, in a redevelopment context it might now be the subject of

depreciation and obsolescence which the landowner finds difficult to reconcile. Accordingly,

the existing use value is much more subjective in a brownfield context.

5.18 Furthermore, where there is a possibility of development the landowner will often have regard

to ‘hope value’. Hope value is the element of open market value of a property in excess of the

existing use value, reflecting the prospect of some more valuable future use or development. It

takes account of the uncertain nature or extent of such prospects, including the time which

would elapse before one could expect planning permission to be obtained or any relevant

constraints overcome, so as to enable the more valuable use to be implemented12

. Therefore

in a rising market landowners may often have high aspirations of value beyond that which the

developer can justify in terms of risk and in a falling market the land owner my simply ‘do

nothing’ and not sell in the prospect of a better market returning in the future. The actual

amount paid in any particular transaction is the purchase price and this crystallises the value for

the landowner.

5.19 Hence land ‘value’ and ‘price’ are two very different concepts which need to be understood fully

when formulating planning policy and CIL. The incidence of any tax/CIL to a certain extent

depends on this relationship and the individual circumstances. For example, a farmer with a

long-term greenfield site might have limited ‘value’ aspirations for agricultural land – but huge

12

Estates Gazette Glossary of Property Terms



56

‘price’ aspirations for residential development. Whereas an existing factory owner has a much

higher value in terms of ‘sunk’ costs and investment into the existing use and the tipping point

between this and redevelopment is much more marginal.

Threshold Land Value Assumptions

5.20 In order to ensure our viability analysis is robust we have sought to model brownfield scenarios

within our development typologies (see Table 4.8 and 4.9).

5.21 The land values adopted are based on market land values (subject to a discount of 25% as set

out in paragraphs 2.19 and 2.20) as far as we have been able to ascertain from a range of

sources including: actual S106 viability appraisals, reported deals, agents and developer

consultations. These land values reflect the ‘prices paid’ for land and sites in the borough for

various potential uses. The land values assumptions exclude the cost of decontamination

and/or site clearance which is included as a separate cost item in the viability models.

Use £ per acre Use £ per acre

Residential £168,750 Retail Units £100,000

Offices £225,000 Retail Units – Strategic Centre £300,000

Industrial £188,000 Supermarkets < 280 sqm £450,000

Hotel £100,000 Supermarkets 1,500 sqm £700,000

Retail Warehouse £570,000 Supermarket 5,000 sq m £1,000,000

Table 5.2 – Threshold Land Value assumptions

Balance

5.22 In order to determine whether the CIL is affordable (viable) one must compare the appraised

residual land value with the threshold land value.

5.23 Figure 5.1 clearly shows when a scheme is viable and not viable. A scheme is viable if the total

of all the costs of development including land acquisition, planning obligations and profit are

less than the GDV of the scheme. Conversely, if the GDV is less than the total costs of

development (including land, S106s and profit) the scheme will be unviable.

5.24 If the balance is positive then the policy is viable. If the balance is negative then the policy is

not viable and the CIL rates should be reviewed.



57

5.25 This approach is summarised in figure 5.4 below.

Gross Development Value (net of affordable housing)

less Policy Requirements (e.g. CSH, CIL)

less Profit, Finance and Overhead

less Development Costs

= Residual Land Value (gross)

less Site Acquisition Costs / Finance on Land

= Residual Land Value (net)

less Threshold Land Value

= if positive, policy is viable,

if negative, policy is not viable

Figure 5.4 – CIL Viability Summary

Viability Modelling

5.26 Using the information from the evidence base we have developed a series of viability models to

appraise the hypothetical development typologies identified above (Tables 4.8 and 4.9). This is

based on a simple residual appraisal model which tests the ‘margin’ for CIL beyond actual land

values and ‘normal’ developers profit. This is to ensure that CIL can be accommodated without

the development scenario becoming unviable.

5.27 Any ‘super’ development surplus beyond ‘normal’ profit and appropriate land values represents

an amount of £ for CIL.

5.28 In order to advise on any development surplus for CIL we have benchmarked land values from

the market research. We have calculated the site area required for each development typology

based upon the development densities typical of each typology as set out in the Core strategy

or as recommended by Sandwell MBC.

5.29 In the event that there is a deficit in the appraisal taking into account market land values and

normal developer’s profit, this shows that there is no capacity to levy CIL for that particular



58

typology. Where there is a development surplus after market land values and normal profit, this

is an amount that can potentially be captured as CIL.

5.30 Where this is the case, the CIL rate per square meter could be up to the appraised surplus

divided by the amount of appraised floorspace to give a rate that the typology can afford to pay,

however, the actual rate will need to take into account the maximum infrastructure funding gap

and the appropriate balance test i.e. to have sufficient headroom to accommodate changes in

the market.

5.31 Finally, once the model has been run for the different development typologies we have carried

out a sensitivity analysis on the value (+/- 10%) and construction cost assumptions (+/- 15%) to

understand the potential implications of changes in the market on any surplus for CIL. This is

important as CIL should not be set at the limits of viability given that markets and economic

circumstances change.

Assumptions

5.32 The viability model has been populated with the following value and cost assumptions based

upon our market research.

Residential Values

5.33 Table 5.3 below sets out our baseline residential value assumptions from section 3 above:

Dwelling Type £ Price – For New Build Property

Low Value High Value

1 Bed Flat £100,000 £100,000

1 Bed Flat £125,000 £125,000

2 Bed House £150,000 £160,000

3 Bed House £160,000 £195,000

4 Bed House £190,000 £225,000

Table 5.3 – Residential Value Assumptions

S106/S278 Costs & Affordable Housing

5.34 Given that CIL is to replace (pooled S106) once adopted (or after April 2015 when it will be no

longer possible to use pooled S106s). Existing ‘tariff’ based S106s’ for infrastructure provision



59

(e.g. for education provision or green space etc.) will no longer be legitimate particularly if the

infrastructure (e.g. schools) is defined in the Section 123 List. However, other S106s/S278

costs may continue after CIL is adopted, these are likely to include on site infrastructure works

associated with a development scheme. We have allowed for a S106/S278 figure of £1,000

per residential unit and between £25 psm to £75 psm on the commercial depending on the

typology, for example, S106/S278 costs are likely to be higher for a 5,000 sqm supermarket

than a 400 sqm office development.

5.35 Affordable housing is currently exempt from CIL and therefore has to be delivered by S106.

Affordable housing policies have therefore been taken into consideration in the viability

modelling. In accordance with Policy HOU3 we have allowed for affordable housing with our

appraisals based upon:

25% affordable housing, of which:

o 50% is Social Rented at a 50% discount to market values, and

o 50% is Intermediate tenure based on a 40% discount to market values.

Commercial Values

5.36 Table 5.4 below sets out our commercial valuation assumptions from Section 2 above:

Use Rent Yield Incentives

B1 Offices £175 psm (£16.25 psf) 7.75% 18 months rent free

B2 Industrial £60 psm (£5.57 psf) 7.25% 12 months rent free

B8 Warehouse £48 psm (£4.50 psf) 7 – 7.25% 12 months rent free

Retail Units £161 - £204 psm

(£15 – £19 psf)

8% - 8.5% 12-18 months rent free

Retail Warehouse £161 psm (£15 psf) 7% 12 months rent free

Food Store £161 – £215 psm

(£15 – £20 psf)

5..25 – 5.75% 12 months rent free

Hotel £3,500 per bed 7.0% 12 months rent free

Table 5.4 – Commercial Value Assumptions



60

Construction Costs

5.37 Table 5.5 below sets out our baseline construction cost assumptions from BCIS (see paragraph

5.12 above):

Use BCIS £ per sqm / £ per sq ft

Houses £852 psm / £79.00 psf

Apartments £982 psm / £91.00 psf

B1 Offices £1,184 psm / £110 psf

B2 Industrial £609 psm / £57 psf

B8 Warehouse £422 / £39 psf

Retail £725 / £68 psf

Retail Warehouse £575 psm / £53 psf

Food Store £1011 - £1,191 psm / £94 – 1111 psf

Hotel £37,000 per bed

Table 5.5 – Construction Cost Assumptions

Generic Cost Assumptions

5.38 Table 5.6 below sets out our baseline other cost assumptions.

Item Assumption

Stamp Duty Land Tax (SDLT) % rates from HMRC website

Acquisition Agent Fees 1%

Acquisition Legal Fees 0.5%

Statutory Planning Fees From Planning Portal online calculator

Demolition and Site Clearance including decontamination and remediation

£75,000 per acre

External Works including utilities 10% allowance



61

Contingency 5%

Professional Fees 8-12%

Sale Agents 1%

Sale Legals 0.5%

Letting Agents 15%

Letting Legals 5%

Marketing & Promotion 1-3%

Table 5.6 – Other Appraisal Cost Assumptions

Profit, Finance and Overhead

5.39 These are the indirect costs of development.

5.40 The cost of finance for any particular development depends upon the source of the funding

(e.g. bank finance, corporate finance, shareholder equity etc) and the perceived risk of the

project. We have incorporated finance costs in our appraisals based on Table 5.7:

Finance Fees 2% (of the total project cost) finance fees

Interest on development costs 7% interest calculated on a cashflow basis

Interest on land 7% interest for 1 year

Table 5.7 – Finance Assumptions

5.41 Developers profit and overhead again vary from sector-to-sector, scheme-to-scheme and

developer-to-developer.

5.42 There are different measures of profit for example - % on cost, % on GDV, IRR (Internal Rate of

Return), ROCE (Return on Capital Employed) etc. Similarly, developers will have different

requirements for the treatment of overheads. So for example a PLC house-builder who is

funded by shareholder capital may prefer to analyse schemes on a ROCE or IRR measure net

of overheads whereas a local builder may take a simpler approach of % on value (and account

for their overheads and time out of gross profit).



62

5.43 The RICS Guidance on Financial Viability in Planning13

describes the different types of

developer and the requirements for profit in more detail. It notes that commercial developers

tend to seek a return on cost, usually expressed as a percentage of the total development cost

and the residential sector seeks a return on the GDV, commonly referred to as the sales

margin14

.

5.44 For the purposes of our appraisals we have adopted the following assumptions (Table 5.8):

Private for Sale Residential Profit 20% Sales Margin on GDV

Affordable Housing Profit 6% on Transfer Values

Commercial Profit 20% Profit on Cost

Table 5.8 – Profit Assumptions

13

RICS Professional Guidance England (August 2012) Financial viability in planning, 1st edition guidance note GN 94/2012

Appendix E 14

RICS Professional Guidance England (August 2012) Financial viability in planning, 1st edition guidance note GN 94/2012

paragraph E.3.2.8.1



63

6 Appraisal Outputs

6.1 We have modelled a range of residential and commercial typologies (please see tables 4.8 and

4.9) and the results of the appraisals and the sensitivities are shown in the tables below. The

baseline scenario is shown in the centre of the matrix (100% values and 100% costs) and in the

top left hand cell. This figure is the amount available from which a CIL Levy will be paid or not,

depending on where the figure is a positive (i.e. surplus) or negative (i.e. a deficit). Normal

developers profit and market land value are included in the model. The figures in the table

represent the surplus/deficit for CIL.

6.2 We have also undertaken a sensitivity analysis to test the implications of increased

development values on the ability to generate a surplus i.e. demonstrating the potential impact

that improvements in market conditions (i.e. values) could have in terms of the amount of

surplus that can be generated from a scheme.

6.3 The sensitivity on gross development values is shown across the columns ranging from 90%

(i.e. a 10% drop in values) to 115% (i.e. a 15% increase in values). This is a manifold approach

to values whereby any combination of changes to rents and yields are reflected in the GDV

sensitivity.

6.4 The sensitivity on costs relates to construction costs rate psf and is shown down the rows. This

is in steps of 5% ranging from 90% (i.e. a 10% drop in costs) to 115% (i.e. a 15% increase in

costs). Again, we need to demonstrate the impact that changes in cost could have on the

surplus available for CIL.

Residential Typologies

6.5 We set out in the tables below the results of our viability model and sensitivity analysis for the

residential development typologies.

Residential Corridors (Low Value Areas)

6.6 We set out in the tables below (Tables 6.1 – 6.4) the results of our viability model and sensitivity

analysis for the residential areas which are not high value.



64

Table 6.1 – Scheme 1: 1–14 Residential Dwellings (Low Value) Results

Table 6.2 – Scheme 2: 50 Residential Dwellings (Low Value) Results

Table 6.3 – Scheme 3: 150 Residential Dwelling (Low Value) Results

149,130 90% 95% 100% 105% 110%

90% 132,413 323,886 523,681 723,476 923,271

95% (61,333) 140,771 332,149 531,944 731,739

100% (251,187) (52,975) 149,130 340,412 540,207

105% (443,791) (242,733) (44,617) 157,488 348,675

110% (649,270) (435,146) (234,279) (36,258) 165,846

115% (870,694) (639,717) (426,501) (225,825) (27,900)

463,195 90% 95% 100% 105% 110%

90% 460,387 999,453 1,538,519 2,077,585 2,616,652

95% (49,496) 461,791 1,000,857 1,539,923 2,078,989

100% (592,358) (48,059) 463,195 1,002,261 1,541,327

105% (1,144,453) (590,904) (46,622) 464,599 1,003,665

110% (1,770,847) (1,142,933) (589,450) (45,185) 466,003

115% (2,407,134) (1,769,186) (1,141,412) (587,996) (43,747)



65

Table 6.4 – Scheme 4: 350 Residential Dwelling (Low Value) Results

6.7 All the schemes within the low value areas show a positive return (see Table 6.5 below); this is

primarily due to the fact that the sales values are at a sufficient level to generate a surplus

whilst achieving the Council’s 25% affordable housing requirements and also a developer’s

profit of 20% profit on GDV on the private element and 6% profit on GDV on the affordable

housing.

6.8 Scheme 2, 1-14 Residential Units shows a relatively high surplus compared to the other

scheme (i.e. the 50 unit scheme), this is due to the fact that we have assumed that only houses

will be built and there is no requirement for affordable housing with this number of units.

6.9 With regards to the sensitivity analysis, a decrease in values by 5% or 5% increase in costs

result in all of the schemes becoming marginal. If the values increase by 5% then there is a

significant improvement in the surplus available for CIL. Although, it is also important to note

that with an increase in values, you are also likely to see an increase in build costs as result for

an increased demand for materials/labour; however, even under this scenario (i.e. values up

5% and costs up 5%) the schemes generate a surplus.

1,214,486 90% 95% 100% 105% 110%

90% 1,263,572 2,550,669 3,837,766 5,124,863 6,411,960

95% (48,068) 1,239,029 2,526,126 3,813,223 5,100,320

100% (1,334,319) (72,611) 1,214,486 2,501,583 3,788,680

105% (2,715,180) (1,359,443) (97,154) 1,189,943 2,477,040

110% (4,267,417) (2,744,225) (1,384,566) (121,697) 1,165,400

115% (5,819,653) (4,296,461) (2,773,270) (1,409,690) (146,240)

Scheme


Surplus/Deficit

1 1-14 Residential Dwellings £132,013

2 50 Residential Dwellings £149,130


4 350 Residential Dwellings £1,214,486

Table 6.5: Residential Development Results – Low Value Area



66

Residential – High Value Areas


residential typologies in the perceived high value areas.

Table 6.6 – Scheme 1: 1–14 Residential Dwellings (High Value) Results

Table 6.7 – Scheme 2: 50 Residential Dwellings (High Value) Results

Table 6.8– Scheme 3: 150 Residential Dwelling (High Value) Results

344,194 90% 95% 100% 105% 110%

90% 275,235 368,054 460,873 553,692 646,511

95% 216,895 309,714 402,533 495,352 588,171

100% 162,910 251,375 344,194 437,013 529,832

105% 103,903 197,783 285,854 378,673 471,492

110% 44,897 138,777 227,515 320,334 413,153

115% (9,402) 79,771 173,651 261,995 354,814

752,188 90% 95% 100% 105% 110%

90% 670,741 906,264 1,097,023 1,327,100 1,557,177

95% 475,942 711,465 906,727 1,136,804 1,366,881

100% 281,143 516,665 752,188 946,509 1,176,586

105% 86,344 321,866 557,389 792,911 986,291

110% (100,527) 127,067 362,589 598,112 833,635

115% (297,579) (59,333) 167,790 403,313 638,835

1,897,947 90% 95% 100% 105% 110%

90% 1,744,438 2,358,076 2,971,714 3,585,352 4,198,990

95% 1,207,555 1,821,192 2,434,830 3,048,468 3,662,106

100% 670,671 1,284,309 1,897,947 2,511,584 3,125,222

105% 133,787 747,425 1,361,063 1,974,701 2,588,338

110% (373,160) 210,541 824,179 1,437,817 2,051,455

115% (914,136) (294,589) 287,295 900,933 1,514,571



67

Table 6.9 – Scheme 4: 350 Residential Dwelling (High Value) Results

6.11 In the high value areas, as with the low value areas all of the schemes show a surplus, see

Table 6.10 below. The higher sales value in the high value areas clearly improves the viability

of the schemes and their ability to pay a CIL charge.

6.12 With regards to the sensitivity analysis, even of the values were to fall by 5% or if the costs

increased by 5% then all schemes are still showing a significant surplus.

6.13 It is also important to note that the impact of sales values falling by 5% would result in the

amount of surplus being available for CIL being reduced on average by approximately 30% and

therefore even small changes in values and costs could have a significant impact on the

viability of the schemes and their ability to pay a CIL charge. It is important to note that when

setting the CIL charges, there needs to be sufficient margins to accommodate changes in the

scheme (i.e. values/costs) without making the schemes unviable.

Commercial Typologies


commercial development typologies:

4,783,858 90% 95% 100% 105% 110%

90% 4,474,812 5,919,790 7,364,767 8,809,744 10,254,721

95% 3,184,358 4,629,335 6,074,312 7,519,289 8,964,266

100% 1,893,903 3,338,881 4,783,858 6,228,835 7,673,812

105% 603,449 2,048,426 3,493,403 4,938,380 6,383,358

110% (687,005) 757,972 2,202,949 3,647,926 5,092,903

115% (1,947,502) (532,483) 912,494 2,357,471 3,802,449

Scheme


Surplus/Deficit





Table 6.10: Residential Development Value Results – High Value



68

Table 6.11 – Scheme 5 : Offices 400 sq m Results

Table 6.12 – Scheme 6: Offices 2,000 sq m Results

Table 6.13 – Scheme 7 – Industrial 400 sq m Results

(231,819) 90% 95% 100% 105% 110%

90% (218,045) (186,980) (155,915) (124,850) (93,785)

95% (255,997) (224,932) (193,867) (162,802) (131,737)

100% (293,949) (262,884) (231,819) (200,754) (169,689)

105% (331,902) (300,836) (269,771) (238,706) (207,641)

110% (369,854) (338,789) (307,723) (276,658) (245,593)

115% (407,806) (376,741) (345,676) (314,610) (283,545)

(1,063,529) 90% 95% 100% 105% 110%

90% (991,848) (836,539) (681,230) (525,921) (370,612)

95% (1,182,998) (1,027,688) (872,379) (717,070) (561,761)

100% (1,374,147) (1,218,838) (1,063,529) (908,219) (752,910)

105% (1,565,296) (1,409,987) (1,254,678) (1,099,369) (944,060)

110% (1,756,446) (1,601,136) (1,445,827) (1,290,518) (1,135,209)

115% (1,947,595) (1,792,286) (1,636,976) (1,481,667) (1,326,358)

(228,776) 90% 95% 100% 105% 110%

90% (217,553) (203,501) (189,448) (175,395) (161,343)

95% (237,217) (223,165) (209,112) (195,059) (181,007)

100% (256,881) (242,828) (228,776) (214,723) (200,670)

105% (276,545) (262,492) (248,440) (234,387) (220,334)

110% (296,209) (282,156) (268,103) (254,051) (239,998)

115% (315,873) (301,820) (287,767) (273,715) (259,662)



69

Table 6.14 – Scheme 8 – Industrial Warehousing 2,000 sq m Results

Table 6.15 – Scheme 9: Industrial Warehousing 5,000 sq m Results

Table 6.16 – Scheme 10: Retail Units 280 sq m (District Centres) Results

(673,819) 90% 95% 100% 105% 110%

90% (651,092) (594,326) (537,560) (480,795) (424,029)

95% (719,221) (662,455) (605,690) (548,924) (492,158)

100% (787,350) (730,585) (673,819) (617,053) (560,288)

105% (855,479) (798,714) (741,948) (685,182) (628,417)

110% (923,609) (866,843) (810,077) (753,312) (696,546)

115% (991,738) (934,972) (878,207) (821,441) (764,675)

(1,623,648) 90% 95% 100% 105% 110%

90% (1,566,830) (1,424,916) (1,283,002) (1,141,088) (999,174)

95% (1,737,154) (1,595,239) (1,453,325) (1,311,411) (1,169,497)

100% (1,907,477) (1,765,563) (1,623,648) (1,481,734) (1,339,820)

105% (2,077,800) (1,935,886) (1,793,971) (1,652,057) (1,510,143)

110% (2,248,123) (2,106,209) (1,964,295) (1,822,380) (1,680,466)

115% (2,418,446) (2,276,532) (2,134,618) (1,992,704) (1,850,789)

(39,833) 90% 95% 100% 105% 110%

90% (42,724) (24,892) (7,060) 9,262 25,401

95% (59,111) (41,278) (23,446) (5,614) 10,571

100% (75,497) (57,665) (39,833) (22,000) (4,259)

105% (91,884) (74,052) (56,219) (38,387) (20,554)

110% (108,270) (90,438) (72,606) (54,773) (36,941)

115% (124,657) (106,825) (88,992) (71,160) (53,328)



70

Table 6.17 – Scheme 11: Retail Units 280 sq m (Strategic Centre) Results

Table 6.18 – Scheme 12: Retail Warehouse 1,500 sq m Results

Table 6.19 - Scheme 13: Foodstore 280 sq m Results

46,735 90% 95% 100% 105% 110%

90% 34,618 55,506 76,395 97,284 118,172

95% 19,788 40,677 61,565 82,454 103,343

100% 4,958 25,847 46,735 67,624 88,513

105% (9,872) 11,017 31,906 52,794 73,683

110% (25,680) (3,813) 17,076 37,964 58,853

115% (42,067) (18,986) 2,246 23,135 44,023

312,180 90% 95% 100% 105% 110%

90% 176,106 305,063 434,019 562,975 691,932

95% 115,187 244,143 373,099 502,056 631,012

100% 54,267 183,223 312,180 441,136 570,092

105% (6,653) 122,303 251,260 380,216 509,172

110% (67,573) 61,384 190,340 319,296 448,253

115% (128,492) 464 129,420 258,377 387,333

9,620 90% 95% 100% 105% 110%

90% (10,893) 19,834 50,561 81,289 112,016

95% (31,364) (637) 30,090 60,818 91,545

100% (51,835) (21,108) 9,620 40,347 71,074

105% (72,306) (41,579) (10,851) 19,876 50,603

110% (92,777) (62,050) (31,322) (595) 30,132

115% (113,463) (82,521) (51,793) (21,066) 9,661



71

Table 6.20 – Scheme 14: Foodstore 1,500 sq m Results

Table 6.21 – Scheme 15: Foodstore 5,000 sq m Results

Table 6.22 – Scheme 16: Hotel 100 Beds Results

299,490 90% 95% 100% 105% 110%

90% 146,846 352,773 558,700 764,627 970,553

95% 17,241 223,168 429,095 635,022 840,949

100% (112,363) 93,564 299,490 505,417 711,344

105% (241,968) (36,041) 169,886 375,813 581,739

110% (371,572) (165,646) 40,281 246,208 452,135

115% (496,315) (295,250) (89,323) 116,603 322,530

1,122,534 90% 95% 100% 105% 110%

90% 437,417 1,215,792 1,994,166 2,772,541 3,550,915

95% 1,601 779,975 1,558,350 2,336,724 3,115,099

100% (434,215) 344,159 1,122,534 1,900,908 2,679,283

105% (870,031) (91,657) 686,718 1,465,092 2,243,467

110% (1,305,847) (527,473) 250,902 1,029,276 1,807,651

115% (1,741,663) (963,289) (184,914) 593,460 1,371,835

(1,859,991) 90% 95% 100% 105% 110%

90% (1,688,609) (1,475,629) (1,262,650) (1,049,670) (836,690)

95% (1,987,280) (1,774,300) (1,561,320) (1,348,341) (1,135,361)

100% (2,285,951) (2,072,971) (1,859,991) (1,647,011) (1,434,032)

105% (2,584,621) (2,371,642) (2,158,662) (1,945,682) (1,732,702)

110% (2,883,292) (2,670,312) (2,457,333) (2,244,353) (2,031,373)

115% (3,181,963) (2,968,983) (2,756,003) (2,543,024) (2,330,044)



72

6.15 As set out in the market analysis office, industrial and hotel developments are not viable and

therefore do not generate a surplus even after testing for 10% improvement in values as part of

the sensitivity analysis. Thus suggesting that CIL is not feasible for these uses.

6.16 With regards to retail, we have tested retail units up to 280 sq m in the Strategic Centre of

West Bromwich and within the local/district centres. Clearly, West Bromwich is the main (and

strongest) centre within the Borough and therefore achieves higher rents and keener yields

compared to the local/district centres. This has been reflected in the viability model and hence

why a surplus is generated in the strategic centre, whereas retail units of 280 sqm are unviable

in all other locations.

6.17 As expected, retail warehouses and supermarket developments (apart from supermarkets

below 280 sqm) generate a surplus given the rents that are achieved and the fact that foodstore

operators are seen as good covenant strength and therefore investors are still keen to acquire

these types of development. This is reflected in the strong investment yields which are driving

viability. Clearly, as the market improves these uses will generate greater surpluses.

6.18 The 280 sqm supermarket unit is only marginally viable; this is due to the lower rents and yields

associated with this type of unit i.e. a unit of this size if likely to be occupied by an independent

retailer who will have a weaker covenant, unable to pay high rents compared to major

supermarket operators, and therefore a less secure investment (i.e. weaker yield).



73

7 Conclusions & Recommendations

7.1 The principle of CIL is to attempt to ‘capture’ some of the development surplus over and above

normal developers profit and market land values. Developers have a minimum amount of profit

they can accept to stay in business and landowners have a minimum sale price (sometimes

dictated by the price they paid for the site). Hence there is much more scope for the incidence

of any tax to be pushed down to the landowner in the greenfield context - or where land has

been in a single ownership for a considerable period of time.

7.2 CIL will contribute an additional direct cost to the scheme and therefore consideration needs to

be given to the incidence of the tax. For example, if direct costs go up, this will need to be

borne by the landowners or the developer. Where there is a significant difference between the

existing use value and the development value of the site (e.g. greenfield windfall sites) the

incidence of the tax is more likely to be passed back to the landowner. However, where risks

and margins are much tighter (e.g. in a brownfield regeneration context such as Sandwell),

there is less scope to pass the CIL to the landowner but the developer must maintain their

margin due to the significant risks involved particularly in relation to securing funding. The

result is most likely to be a deferment of development until the market improves or some other

public sector intervention take place to ‘unlock’ the scheme.

Economics of Brownfield Land

7.3 The appraisal analysis highlights some qualitative aspects of the general approach to CIL which

is relevant when considering the ‘appropriate balance’.

7.4 Fundamentally, CIL is a form of ‘tax’ on development as a contribution to infrastructure. By

definition, any differential rate of tax/CIL, this will have a distorting effect on the pattern of land

uses. The question as to how this will distort the market will depend upon how the CIL is

applied.

7.5 Also, consideration must be given to the ‘incidence’ of the tax i.e. who ultimately is responsible

for paying it i.e. the developer out of profit, or the landowner out of price (or a bit from each).

7.6 This is particularly relevant in the context of brownfield sites. Any CIL on brownfield

redevelopment sites will impact on the timing and rate of redevelopment. This will have a direct

effect on economic development, jobs and growth.

7.7 In the brownfield context redevelopment takes place at a point in time when buildings are

economically obsolete (as opposed to physically obsolete). Over time the existing use value of

buildings falls as the operating costs increase, depreciation kicks in and the rent falls (by



74

comparison with modern equivalent buildings). In contrast the value of the next best alternative

use of the site increases over time due to development pressure in the urban context

(assuming there is general economic growth in the economy). Physical obsolescence occurs

when the decreasing existing use value crosses the rising alternative use value.

7.8 However, this is not the trigger for redevelopment. Redevelopment requires costs to be

incurred on site demolition, clearance, remediation, and new build construction costs. These

costs have to be deducted from the alternative use value ‘curve’. The effect is to extend the

time period to achieve the point where redevelopment is viable.

7.9 This is absolutely fundamental for the viability and redevelopment of brownfield sites. Any

Tariff, Tax or Obligation which increases the costs of redevelopment will depress the net

alternative use value and simply extend the timescale to when the alternative use value

exceeds the existing use value to precipitate redevelopment.

7.10 Contrast this with the situation for development on greenfield land. Greenfield sites are

constrained by the planning designation. Once a site is ‘released’ for development there is

significant step up in development value – which makes the development economics much

more accommodating. There is much more scope to capture development gain, without

postponing the timing of development – albeit we are mindful that there are very few

Greenfield/major urban extension sites in Sandwell.

7.11 This difference between the development ‘gain’ in the context of a greenfield windfall site and

the slow-burn redevelopment of brownfield sites is absolutely fundamental to the success of

any regime to capture development ‘gain’ or ‘value’. It is also key to the ‘incidence’ of the tax

i.e. whether the developer or the land owner carries the burden of the tax.

7.12 It is important to remember that whilst CIL came out of the 2007 Housing Green Paper, it has

its roots in the Barker review following PGS. PGS failed because of the valuation issues across

all forms of development including brownfield, commercial and residential. Similarly previous

attempts to tax betterment in 1947 ‘Development Charge’, 1967 ‘Betterment Levy’ and the 1973

‘Development Gains Tax’ have all ended in repeal.

7.13 This historical context and land economics is fundamental for the success of the CIL in

Sandwell.

7.14 The market is very fragile for all types of development and particularly redevelopment of

brownfield land. Residential development on greenfield windfall sites will remain viable, almost

regardless of the market, because of the substantial uplift in value from agricultural land use.

However, Sandwell does not have this luxury as the majority of the proposed development is



75

planned to take place within the existing Regeneration Corridors or Strategic Centre i.e.

primarily brownfield locations. These sites have the potential to deliver substantial numbers of

housing in the urban areas and are sustainable in all respects.

7.15 Sandwell should have a supply of development sites for housing, employment and other uses.

However, given the outputs of the viability assessment we have suggested CIL rates so as not

to stymie redevelopment.

Charging Rates on Use Basis

7.16 The objective is to ensure that the Council’s CIL Charging Schedule is sufficiently robust and

sound in viability terms and that the charges set are not so onerous that it makes development

across the Borough unviable - striking an appropriate balance in order to ensure that schemes

that are viable do not become unviable because of CIL.

7.17 To calculate the maximum CIL rate we have divided the surplus (if any) shown in tables 6.1 –

6.9 and 6.11 – 6.22 by the amount of floorspace proposed under each development typology to

arrive at a rate per sqm.

7.18 In table 7.1 below we set out the maximum CIL that could be payable under each development

typology, however, to allow for changes in the market, build costs or unforeseen circumstances

and to give sufficient ‘headroom’ in the CIL rate we have suggested that the CIL rate should be

30% of the maximum. The reason for such a big discount is demonstrated by the sensitivity

analysis we have undertaken, for example, a 5% reduction in residential values alone results in

the surplus available for CIL being reduced by approximately 30% and hence the needed to

allow for sufficient ‘headroom’ to accommodate changes in costs/values so as not make

schemes unviable and stop development.

7.19 In respect of the residential elements only, the private residential floorspace has been used to

calculate the CIL rate per sqm. Although the residential market has seen improvement in recent

years we have discounted the maximum rate by 70% to reflect the need to ensure that

schemes do not become unviable as a result of CIL. Furthermore the ground

conditions/contamination of majority of the brownfield land across the borough will continue

have an impact on scheme viability. The discount we have suggested allows for a significant

margin which can accommodate potential changes in values in values/costs without impacting

on scheme viability.

7.20 With regards to Scheme 2 (14 residential units or below) in both low and high value areas, this

typology is showing a significant surplus primarily due to the fact that a scheme of this size

benefits from some economies of scale and also the fact that the number of units proposed is



76

below the threshold at which the Council’s affordable housing requirements come into effect. In

accordance with the latest CIL Guidance (February 2014) we have therefore considered setting

differential rate based on the scale of development proposed (i.e. number of units being

developed); we discuss this in further detail below.

7.21 On commercial elements, the maximum rate per sqm has also been reduced by 70% to provide

a CIL rate which again allows for a significant margin which can accommodate potential

changes in values/costs without impacting on scheme viability and reflects the difficulties

associated with developing on brownfield land, the majority of which needs remediation.

Scheme

Typology

Maximum

£ psm

CIL Rate

£ psm @ 30%

Residential

1 14 residential Dwellings:

Low value Areas

High Value Areas

£112

£292

£34

£88

2 50 residential Dwellings

Low Value Areas

High Value Areas

£51

£255

£15

£77

3 150 Residential Dwellings

Low Value Areas

High Value Areas

£55

£223

£17

£67

4 350 Residential Dwellings (In/out Corridors)

Low Value Areas

High Value Areas

£61

£241

£18

£72

Commercial

Scheme

Typology

Maximum

£ psm

CIL Rate

£ psm @ 30%

5 Office (B1): 2,000 sq m £0 £0

6 Industrial (B2): 400 sq m £0 £0

7 Industrial Warehousing (B8): 2,000 sq m £0 £0

8 Industrial Warehousing (B8): 5,000 sq m £0 £0

9 Retail Units (A1 to A5*) 280 sq m (Local/District Centres)*

£0 £0

10 Retail Units (A1 to A5*) 280 sq m (Strategic Centre)*

£167 £50



77

11 Retail Warehouse: 1,500 sq m £208 £62

12 Supermarket: 280 sqm £34 £10

13 Supermarket: 1,500 sq m £197 £60

14 Supermarket: 5,000 sq m £225 £68

15 Hotel: 100 beds £0 £0

Table 7.1 – Summary of Potential CIL Levy


Draft Charging Schedule

7.22 Having run the development appraisal model for hypothetical schemes for all the typologies the

results show that there is a significant challenge to viability across the Borough. Only retail and

residential uses show any development surplus for CIL. With regards to retail, generally these

schemes often take a significant number of years to come to fruition; have complex and

expensive land assembly issues and require substantial developers profit to maintain the

commitment to delivery.

7.23 We have devised a draft charging schedule to reflect the outcomes of the viability analysis and

take into account the need to have an ‘appropriate balance’ that allows for sufficient headroom

in the levy rates so not to impact on the viability (i.e. delivery) of the scheme even if market

conditions (values/costs) change significantly. We have also taken into consideration the need

to keep the CIL Charging Schedule relatively simple and straightforward. Please refer to table

7.2 below.

7.24 Retail: As a result of the market and viability analysis it is clear that nearly all types of retail are

viable cross Sandwell, apart from unit shops (up to 280 sqm) outside the strategic centre of

West Bromwich, which are unviable. Supermarkets of less than 280 sqm are also marginal in

terms of viability and therefore we have recommended a nil rate for these two typologies and a

range of rates for the other retail development typologies.

7.25 Residential: We recommend a rate of £30 psm for any residential schemes between 1-14 units

and £15 psm for all other residential developments (i.e. 15 units plus). The different rates are

supported by the viability analysis which clearly shows that residential schemes between 1-14

units are more viable than the other development typologies and therefore can afford to pay a

higher CIL rate.

7.26 Although, we have tested both high and low value areas, it is important to note that the majority

of the planned development is actually proposed within the low value areas (see paragraphs

3.10 and 4.9); coupled with the fact that the high value areas are actually quite small (as shown



78

on the heat maps in Figures 3.2 and 3.3), we have recommended that no differentiation is

made between high and low value areas and a single charging zone is adopted for the whole

borough; thus keeping the Charging Schedule simple and straightforward.

7.27 Offices, Industrial and Hotels: The market values generated by these uses are currently

insufficient to cover the costs associated with these schemes and therefore are unviable, which

means that they are not able to pay a CIL.

7.28 Other Uses: With regards to leisure and education uses, as we explained in the development

typologies sections, these uses are rarely viable and therefore are unable to pay a CIL rate.

Development Typology CIL Rate £ psm

Supermarkets/Superstores >280 sqm and Retail Warehouses

£60

Retail Units (A1 to A5*) (Strategic Centre Only)

£50

Residential: 1- 14 Units

£30

Residential: 15 units plus

£15

Offices

Industrial

Industrial Warehousing

Retail Units (A1 to A5*) Outside Strategic Centre

Supermarkets/superstores < 280 sqm

Hotel

Leisure

Education


£Nil

Table 7.2. - Sandwell MBC Draft CIL Charging Schedule




79

Next Steps

7.29 Before proceeding with a CIL Charging Schedule the Council needs to consider whether

sufficient CIL will be collected to generate a surplus over and above the cost of implementing

and monitoring the CIL Charging schedule. The Council needs to take a view as the level of

floorspace that is realistically likely to come forward over the Core Strategy period and multiply

these figures by the CIL rates in Table 7.2 above to see whether there is sufficient surplus to

cover the administration costs on an annual basis and make pursing a CIL worthwhile at this

stage.

7.30 CIL regulations require that local authorities spend the CIL’s revenue on the infrastructure

needed to support the development of their area and therefore it is important that the Council

clearly identifies the required infrastructure and the associated funding gap. The Council cannot

collect more CIL revenue than is required to fund the infrastructure and therefore the potential

revenue that could be generated needs to be tested against the infrastructure funding gap, and

in the unlikely event, that excess revenue is generated then the rates will need to be amended

accordingly. It is also important to note that in addition to the CIL, it is still possible to secure

S106 monies from schemes, if the proposed S106 items relate to the scheme and not to a

wider infrastructure requirement (on the S123 List).

7.31 As we have set above Sandwell is substantially a brownfield area with minimal greenfield

development opportunities, and therefore the ability for schemes to subsume these additional

costs may be difficult. The Council needs to carefully consider the implications of CIL on the

development pipeline and the impact on jobs and growth in the Borough.



80

Appendix 1 – Residential Development Appraisals



81

Appendix 2 – Commercial Development Appraisals

140226 Sandwell CIL Residential Viability Models v2.4

Residential control panel

Net sales (NIA)

Floor areas - (sqm)

2 bed houses 65.0

3 bed houses 80.0

4 bed houses 100.0

5 bed houses 0.0

2 bed bungalows 0.0

1 bed apartment 50.0

2 bed apartment 65.0

Open Market values (£) - Low Value (£ psm) High Value(£ psm)

2 bed houses 2,308 2,462

3 bed houses 2,000 2,438

4 bed houses 1,900 2,250

5 bed houses 0 0

2 bed bungalows 0 0

1 bed apartment 2,000 2,000


Affordable Housing Low Value -

RP Transfer Values (£):

2 bed houses 75,010 80,015 90,012 96,018

3 bed houses 80,000 97,500 96,000 117,000

4 bed houses 95,000 112,500 114,000 135,000

5 bed houses 0 0 0 0

2 bed bungalows 0 0 0 0

1 bed apartment 50,000 50,000 60,000 60,000

2 bed apartment 59,995 62,498 71,994 74,997

CIL psm

Site Specific S106/278 1,000 per dwelling

Construction Costs -

Demolition and Site Clearance (allowance) 75,000 per acre

Houses Build Costs (BCIS) 852.00 psm

Bungalow Build Costs (BCIS) 0.00 psm

Apartment Build Costs (BCIS) 982.00 psm

Extra over for CSH 0.00 psm

Developers Profit -

On private for sale 20.00%

On affordable housing pre-sale 6.00%

Social Rented 50% of MV

Low Value High Value

Intermediate 60% of MV

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14 Residential Dwellings

SCHEME DETAILS

Net sales (NIA) Net to Gross % Gross (GIA)

Floor areas - (sqm) (sqft) % (sqm) (sqft)

2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853

Unit mix - # units mix% total floor area (GIA sqm)

2 bed houses 3 21% 195.0

3 bed houses 6 43% 480.0

4 bed houses 5 36% 500.0

1 bed apartment 0 0% 0.0


14 100% 1,175.0

Open Market values (£) - £ psm £

2 bed houses 2,308 150,020

3 bed houses 2,000 160,000

4 bed houses 1,900 190,000



Affordable Housing -

Policy requirement % 0%

Policy Tenure split 50% Social Rented 50% Affd Rent/Int. 100%

RP Transfer Values (£): 80% % of MV

2 bed houses 75,010 Social Rented 90,012 Affd Rent/Int.



5 bed houses 0 Social Rented 0 Affd Rent/Int.

2 bed bungalows 0 Social Rented 0 Affd Rent/Int.

1 bed apartment 50,000 Social Rented 60,000 Affd Rent/Int.


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GROSS DEVELOPMENT VALUE

Private for Sale GDV -

2 bed houses 3 @ 150,020 450,060

3 bed houses 6 @ 160,000 960,000

4 bed houses 5 @ 190,000 950,000

5 bed houses 0 @ 0 -

2 bed bungalows 0 @ 0 -

1 bed apartment 0 @ 100,000 -


14 (rounded) 2,360,060

Social Rented GDV -

2 bed houses 0 @ 75,010 -

3 bed houses 0 @ 80,000 -

4 bed houses 0 @ 95,000 -





0 (rounded) -

Intermediate GDV -

2 bed houses 0 @ 90,012 -

3 bed houses 0 @ 96,000 -

4 bed houses 0 @ 114,000 -





0 (rounded) -

14.00 (total)

GDV 2,360,060

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DEVELOPMENT COSTS

Initial Payments -

Planning Application Professional Fees and reports (allowance) (20,000)

Statutory Planning Fees (5,390)

CIL 0.00 psm (on private for sale) -

Site Specific S106/278 1,000 per dwelling (14,000)


Demolition and Site Clearance (allowance) 0.99 acres @ 75,000 per acre (74,130)

Houses Build Costs (BCIS) 1,175.0 sqm @ 852 psm (1,001,100)

Bungalow Build Costs (BCIS) 0.0 sqm @ 0 psm -

Apartment Build Costs (BCIS) 0.0 sqm @ 982 psm -

Extra over for CSH 1,175.0 sqm @ 0 psm -

External works inc. utilities reinforcement (allowance) 1,001,100 @ 10% (100,110)

Contingency 1,175,340 @ 5% (58,767)

Professional Fees 1,234,107 @ 8% (98,729)

Disposal Costs -

Sale Agents Costs 2,360,060 GDV @ 1.00% (23,601)

Sale Legal Costs 2,360,060 GDV @ 0.50% (11,800)

Marketing and Promotion 2,360,060 GDV @ 3.00% (70,802)

Finance Costs -

Finance Fees 1,478,428 @ 2.00% (29,569)

Interest on Development Costs 7.00% APR 0.565% pcm (42,417)

Developers Profit -

On private for sale 2,360,060 @ 20.00% (472,012)

On affordable housing pre-sale 0 @ 6.00% -

(blended) 20.00%

TOTAL COSTS (2,022,426)

RESIDUAL LAND VALUE

Residual Land Value (gross) 337,634

SDLT 337,634 @ (10,129)

Acquisition Agent fees 337,634 @ 1.0% (3,376)

Acquisition Legal fees 337,634 @ 0.5% (1,688)

Interest on Land 337,634 @ 7.0% (23,634)

Residual Land Value (net) 21,343 per plot (check) 298,806

TRESHOLD LAND VALUE

Residential density per ha 35 units per hectare

Site Area 0.40 ha 0.99 acres

Threshold Land Value 168,750 £ per acre 416,981 £ per ha

Threshold Land Value 11,914 per plot (check) 166,793

BALANCE

Surplus/(Deficit) 132,013

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SENSITIVITY ANALYSIS

CIL £/psm

Surplus/(Deficit) 132,013 0 5 10 15 20

5% 108,475 103,084 97,693 92,302 86,911

10% 84,936 79,829 74,722 69,615 64,508

Affordable Housing % 15% 61,398 56,574 56,690 51,757 46,825

20% 42,484 37,842 33,199 28,557 23,915

25% 18,413 14,061 9,709 5,357 1,005

30% (5,657) (9,719) (13,781) (17,843) (21,905)

Green = viable for given level of affordable housing and CIL

Red = not viable for given level of affordable housing and CIL

Values

Surplus/(Deficit) 132,013 90% 95% 100% 105% 110%

90% 90,250 169,806 249,362 323,317 401,974

95% 36,058 111,131 190,688 270,244 343,963

Construction costs 100% (23,942) 57,412 132,013 211,570 285,952

105% (83,027) (2,588) 73,339 152,895 232,452

110% (143,690) (61,437) 18,765 94,221 173,777

115% (207,843) (122,101) (41,235) 40,119 115,103

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable

Affordable Housing Commuted Sum

Full GDV (no AH) 2,360,060

AH discount from GDV 0

AH contribution £/dwelling 0 £ / dwelling (total scheme)

AH contribution £ psm 0.00 £ psm (total scheme)

NOTES

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SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 19 38% 1,235.0

3 bed houses 20 40% 1,600.0

4 bed houses 11 22% 1,100.0

1 bed apartment 0% 0.0


50 100% 3,935.0


2 bed houses 2,308 150,020

3 bed houses 2,000 160,000

4 bed houses 1,900 190,000













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2 bed houses 14 @ 150,020 2,137,785

3 bed houses 15 @ 160,000 2,400,000

4 bed houses 8 @ 190,000 1,567,500





38 (rounded) 6,105,285

Social Rented GDV -

2 bed houses 2 @ 75,010 178,149

3 bed houses 3 @ 80,000 200,000

4 bed houses 1 @ 95,000 130,625





6 (rounded) 508,774

Intermediate GDV -

2 bed houses 2 @ 90,012 213,779

3 bed houses 3 @ 96,000 240,000

4 bed houses 1 @ 114,000 156,750





6 (rounded) 610,529

50.00 (total)

GDV 7,224,587

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DEVELOPMENT COSTS

Initial Payments -












Contingency 3,952,632 @ 5% (197,632)


Disposal Costs -




Finance Costs -

Finance Fees 4,887,395 @ 2.00% (97,748)


Developers Profit -

On private for sale 6,105,285 @ 20.00% (1,221,057)

On affordable housing pre-sale 1,119,302 @ 6.00% (67,158)

(blended) 17.83%


RESIDUAL LAND VALUE


SDLT 851,219 @ (34,049)



Interest on Land 851,219 @ 7.0% (59,585)


TRESHOLD LAND VALUE





BALANCE


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CIL £/psm

Surplus/(Deficit) 149,130 0 5 10 15 20

5% 453,030 435,384 417,738 400,093 382,447

10% 374,927 358,210 341,493 324,776 308,059


20% 228,136 213,104 198,073 183,042 168,010

25% 149,130 135,038 120,946 106,854 92,762

30% 70,124 56,971 43,819 30,666 17,514



Values

Surplus/(Deficit) 149,130 90% 95% 100% 105% 110%

90% 132,413 323,886 523,681 723,476 923,271

95% (61,333) 140,771 332,149 531,944 731,739

Construction costs 100% (251,187) (52,975) 149,130 340,412 540,207

105% (443,791) (242,733) (44,617) 157,488 348,675

110% (649,270) (435,146) (234,279) (36,258) 165,846

115% (870,694) (639,717) (426,501) (225,825) (27,900)

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable



AH discount from GDV 915,793

AH contribution £/dwelling 18,316 £ / dwelling (total scheme)


NOTES

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150 Residential Dwelling

SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 45 30% 2,925.0

3 bed houses 60 40% 4,800.0

4 bed houses 15 10% 1,500.0


2 bed apartment 15 10% 1,189.0

150 100% 11,328.7


2 bed houses 2,308 150,020

3 bed houses 2,000 160,000

4 bed houses 1,900 190,000













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2 bed houses 34 @ 150,020 5,063,175

3 bed houses 45 @ 160,000 7,200,000

4 bed houses 11 @ 190,000 2,137,500



1 bed apartment 11 @ 100,000 1,125,000

2 bed apartment 11 @ 119,990 1,349,888

113 (rounded) 16,875,563

Social Rented GDV -

2 bed houses 6 @ 75,010 421,931

3 bed houses 8 @ 80,000 600,000

4 bed houses 2 @ 95,000 178,125



1 bed apartment 2 @ 50,000 93,750

2 bed apartment 2 @ 59,995 112,491

19 (rounded) 1,406,297

Intermediate GDV -

2 bed houses 6 @ 90,012 506,318

3 bed houses 8 @ 96,000 720,000

4 bed houses 2 @ 114,000 213,750



1 bed apartment 2 @ 60,000 112,500

2 bed apartment 2 @ 71,994 134,989

19 (rounded) 1,687,556

150.00 (total)

GDV 19,969,416

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DEVELOPMENT COSTS

Initial Payments -









Apartment Build Costs (BCIS) 2,103.7 sqm @ 982 psm (2,065,793)



Contingency 11,474,017 @ 5% (573,701)


Disposal Costs -




Finance Costs -

Finance Fees 14,016,954 @ 2.00% (280,339)


Developers Profit -



(blended) 17.83%


RESIDUAL LAND VALUE

Residual Land Value (gross) 2,028,566

SDLT 2,028,566 @ (142,000)

Acquisition Agent fees 2,028,566 @ 1.0% (20,286)

Acquisition Legal fees 2,028,566 @ 0.5% (10,143)

Interest on Land 2,028,566 @ 7.0% (142,000)

Residual Land Value (net) 11,428 per plot (check) 1,714,138

TRESHOLD LAND VALUE




Threshold Land Value 8,340 per plot (check) 1,250,944

BALANCE


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CIL £/psm

Surplus/(Deficit) 463,195 0 5 10 15 20

5% 1,368,742 1,319,948 1,271,154 1,222,360 1,173,566

10% 1,142,355 1,096,130 1,049,904 1,003,678 957,452


20% 689,582 648,492 607,402 566,312 525,223

25% 463,195 464,333 424,899 385,466 346,033

30% 272,021 235,216 198,412 161,607 124,803



Values

Surplus/(Deficit) 463,195 90% 95% 100% 105% 110%

90% 460,387 999,453 1,538,519 2,077,585 2,616,652

95% (49,496) 461,791 1,000,857 1,539,923 2,078,989

Construction costs 100% (592,358) (48,059) 463,195 1,002,261 1,541,327

105% (1,144,453) (590,904) (46,622) 464,599 1,003,665

110% (1,770,847) (1,142,933) (589,450) (45,185) 466,003

115% (2,407,134) (1,769,186) (1,141,412) (587,996) (43,747)

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable



AH discount from GDV 2,531,334



NOTES

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SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 104 30% 6,760.0

3 bed houses 140 40% 11,200.0

4 bed houses 36 10% 3,600.0



350 100% 26,468.5


2 bed houses 2,308 150,020

3 bed houses 2,000 160,000

4 bed houses 1,900 190,000













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2 bed houses 78 @ 150,020 11,701,560

3 bed houses 105 @ 160,000 16,800,000

4 bed houses 27 @ 190,000 5,130,000



1 bed apartment 26 @ 100,000 2,625,000

2 bed apartment 26 @ 119,990 3,149,738

263 (rounded) 39,406,298

Social Rented GDV -

2 bed houses 13 @ 75,010 975,130

3 bed houses 18 @ 80,000 1,400,000

4 bed houses 5 @ 95,000 427,500



1 bed apartment 4 @ 50,000 218,750

2 bed apartment 4 @ 59,995 262,478

44 (rounded) 3,283,858

Intermediate GDV -

2 bed houses 13 @ 90,012 1,170,156

3 bed houses 18 @ 96,000 1,680,000

4 bed houses 5 @ 114,000 513,000



1 bed apartment 4 @ 60,000 262,500

2 bed apartment 4 @ 71,994 314,974

44 (rounded) 3,940,630

350.00 (total)

GDV 46,630,785

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DEVELOPMENT COSTS

Initial Payments -






Demolition and Site Clearance (allowance) 14.41 acres @ 75,000 per acre (1,081,063)





External works inc. utilities reinforcement (allowance) 23,189,303 @ 10% (2,318,930)

Contingency 26,589,296 @ 5% (1,329,465)

Professional Fees 27,918,761 @ 10% (2,791,876)

Disposal Costs -



Marketing and Promotion 39,406,298 GDV @ 3.00% (1,182,189)

Finance Costs -

Finance Fees 33,023,591 @ 2.00% (660,472)


Developers Profit -



(blended) 17.83%


RESIDUAL LAND VALUE


SDLT 4,315,830 @ (302,108)



Interest on Land 4,315,830 @ 7.0% (302,108)


TRESHOLD LAND VALUE





BALANCE

Surplus/(Deficit) 1,214,486

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CIL £/psm

Surplus/(Deficit) 1,214,486 0 5 10 15 20

5% 3,366,432 3,238,820 3,111,208 2,983,596 2,855,984

10% 2,828,445 2,707,550 2,586,654 2,465,759 2,344,863

Affordable Housing % 15% 2,290,459 2,176,280 2,062,101 1,947,922 1,833,743

20% 1,752,473 1,645,010 1,537,547 1,430,085 1,322,622

25% 1,214,486 1,113,740 1,012,994 912,247 811,501

30% 676,500 582,470 488,440 394,410 300,380



Values

Surplus/(Deficit) 1,214,486 90% 95% 100% 105% 110%

90% 1,263,572 2,550,669 3,837,766 5,124,863 6,411,960

95% (48,068) 1,239,029 2,526,126 3,813,223 5,100,320

Construction costs 100% (1,334,319) (72,611) 1,214,486 2,501,583 3,788,680

105% (2,715,180) (1,359,443) (97,154) 1,189,943 2,477,040

110% (4,267,417) (2,744,225) (1,384,566) (121,697) 1,165,400

115% (5,819,653) (4,296,461) (2,773,270) (1,409,690) (146,240)

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable






NOTES

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14 Residential Dwellings (High)

SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 3 21% 195.0

3 bed houses 6 43% 480.0

4 bed houses 5 36% 500.0



14 100% 1,175.0


2 bed houses 2,462 160,030

3 bed houses 2,438 195,000

4 bed houses 2,250 225,000






RP Transfer Values (£): 80% % of MV








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2 bed houses 3 @ 160,030 480,090

3 bed houses 6 @ 195,000 1,170,000

4 bed houses 5 @ 225,000 1,125,000





14 (rounded) 2,775,090

Social Rented GDV -

2 bed houses 0 @ 80,015 -

3 bed houses 0 @ 97,500 -

4 bed houses 0 @ 112,500 -





0 (rounded) -

Intermediate GDV -

2 bed houses 0 @ 96,018 -

3 bed houses 0 @ 117,000 -

4 bed houses 0 @ 135,000 -





0 (rounded) -

14.00 (total)

GDV 2,775,090

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DEVELOPMENT COSTS

Initial Payments -












Contingency 1,175,340 @ 5% (58,767)


Disposal Costs -




Finance Costs -

Finance Fees 1,502,105 @ 2.00% (30,042)


Developers Profit -

On private for sale 2,775,090 @ 20.00% (555,018)

On affordable housing pre-sale 0 @ 6.00% -

(blended) 20.00%


RESIDUAL LAND VALUE


SDLT 647,524 @ (25,901)



Interest on Land 647,524 @ 7.0% (45,327)


TRESHOLD LAND VALUE





BALANCE


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CIL £/psm

Surplus/(Deficit) 344,194 20 40 60 80 100

5% 295,451 274,010 252,570 231,130 214,627

10% 269,276 248,964 228,653 213,263 192,719


20% 216,928 203,687 185,426 167,164 148,903

25% 195,475 178,355 161,235 144,115 126,995

30% 169,001 153,023 137,044 121,065 105,087



Values

Surplus/(Deficit) 344,194 90% 95% 100% 105% 110%

90% 275,235 368,054 460,873 553,692 646,511

95% 216,895 309,714 402,533 495,352 588,171

Construction costs 100% 162,910 251,375 344,194 437,013 529,832

105% 103,903 197,783 285,854 378,673 471,492

110% 44,897 138,777 227,515 320,334 413,153

115% (9,402) 79,771 173,651 261,995 354,814

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable



AH discount from GDV 0

AH contribution £/dwelling 0 £ / dwelling (total scheme)


NOTES

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SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 19 38% 1,235.0

3 bed houses 20 40% 1,600.0

4 bed houses 11 22% 1,100.0



50 100% 3,935.0


2 bed houses 2,462 160,030

3 bed houses 2,438 195,000

4 bed houses 2,250 225,000












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2 bed houses 14 @ 160,030 2,280,428

3 bed houses 15 @ 195,000 2,925,000

4 bed houses 8 @ 225,000 1,856,250





38 (rounded) 7,061,678

Social Rented GDV -

2 bed houses 2 @ 80,015 190,036

3 bed houses 3 @ 97,500 243,750

4 bed houses 1 @ 112,500 154,688





6 (rounded) 588,473

Intermediate GDV -

2 bed houses 2 @ 96,018 228,043

3 bed houses 3 @ 117,000 292,500

4 bed houses 1 @ 135,000 185,625





6 (rounded) 706,168

50.00 (total)

GDV 8,356,318

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DEVELOPMENT COSTS

Initial Payments -












Contingency 3,952,632 @ 5% (197,632)


Disposal Costs -




Finance Costs -

Finance Fees 4,900,783 @ 2.00% (98,016)


Developers Profit -



(blended) 17.83%


RESIDUAL LAND VALUE


SDLT 1,787,790 @ (89,389)



Interest on Land 1,787,790 @ 7.0% (125,145)


TRESHOLD LAND VALUE





BALANCE


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CIL £/psm

Surplus/(Deficit) 752,188 20 40 60 80 100

5% 1,006,937 936,810 905,996 834,209 762,422

10% 920,470 893,047 825,038 757,030 689,021


20% 784,028 723,576 663,124 602,672 542,220

25% 695,514 638,840 582,167 525,493 468,819

30% 607,000 554,105 501,209 448,314 395,418



Values

Surplus/(Deficit) 752,188 90% 95% 100% 105% 110%

90% 670,741 906,264 1,097,023 1,327,100 1,557,177

95% 475,942 711,465 906,727 1,136,804 1,366,881

Construction costs 100% 281,143 516,665 752,188 946,509 1,176,586

105% 86,344 321,866 557,389 792,911 986,291

110% (100,527) 127,067 362,589 598,112 833,635

115% (297,579) (59,333) 167,790 403,313 638,835

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable






NOTES

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150 Residential Dwelling (High)

SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 45 30% 2,925.0

3 bed houses 60 40% 4,800.0

4 bed houses 15 10% 1,500.0



150 100% 11,328.7


2 bed houses 2,462 160,030

3 bed houses 2,438 195,000

4 bed houses 2,250 225,000












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2 bed houses 34 @ 160,030 5,401,013

3 bed houses 45 @ 195,000 8,775,000

4 bed houses 11 @ 225,000 2,531,250



1 bed apartment 11 @ 100,000 1,125,000

2 bed apartment 11 @ 124,995 1,406,194

113 (rounded) 19,238,456

Social Rented GDV -

2 bed houses 6 @ 80,015 450,084

3 bed houses 8 @ 97,500 731,250

4 bed houses 2 @ 112,500 210,938



1 bed apartment 2 @ 50,000 93,750

2 bed apartment 2 @ 62,498 117,183

19 (rounded) 1,603,205

Intermediate GDV -

2 bed houses 6 @ 96,018 540,101

3 bed houses 8 @ 117,000 877,500

4 bed houses 2 @ 135,000 253,125



1 bed apartment 2 @ 60,000 112,500

2 bed apartment 2 @ 74,997 140,619

19 (rounded) 1,923,846

150.00 (total)

GDV 22,765,507

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DEVELOPMENT COSTS

Initial Payments -












Contingency 11,474,017 @ 5% (573,701)


Disposal Costs -




Finance Costs -

Finance Fees 14,125,450 @ 2.00% (282,509)


Developers Profit -



(blended) 17.83%


RESIDUAL LAND VALUE


SDLT 4,219,966 @ (295,398)



Interest on Land 4,219,966 @ 7.0% (295,398)


TRESHOLD LAND VALUE





BALANCE


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CIL £/psm

Surplus/(Deficit) 1,897,947 20 40 60 80 100

5% 2,734,618 2,540,539 2,346,460 2,152,381 1,958,302

10% 2,487,145 2,303,281 2,119,417 1,935,552 1,751,688


20% 1,992,199 1,828,764 1,665,330 1,501,895 1,338,460

25% 1,744,726 1,591,506 1,438,286 1,285,066 1,131,846

30% 1,497,254 1,354,248 1,211,243 1,068,237 925,232



Values

Surplus/(Deficit) 1,897,947 90% 95% 100% 105% 110%

90% 1,744,438 2,358,076 2,971,714 3,585,352 4,198,990

95% 1,207,555 1,821,192 2,434,830 3,048,468 3,662,106

Construction costs 100% 670,671 1,284,309 1,897,947 2,511,584 3,125,222

105% 133,787 747,425 1,361,063 1,974,701 2,588,338

110% (373,160) 210,541 824,179 1,437,817 2,051,455

115% (914,136) (294,589) 287,295 900,933 1,514,571

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable






NOTES

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SCHEME DETAILS



2 bed houses 65.0 700 100.0% 65.0 700

3 bed houses 80.0 861 100.0% 80.0 861

4 bed houses 100.0 1,076 100.0% 100.0 1,076

1 bed apartment 50.0 538 82.0% 61.0 656

2 bed apartment 65.0 700 82.0% 79.3 853


2 bed houses 104 30% 6,760.0

3 bed houses 140 40% 11,200.0

4 bed houses 36 10% 3,600.0



350 100% 26,468.5


2 bed houses 2,462 160,030

3 bed houses 2,438 195,000

4 bed houses 2,250 225,000












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2 bed houses 78 @ 160,030 12,482,340

3 bed houses 105 @ 195,000 20,475,000

4 bed houses 27 @ 225,000 6,075,000



1 bed apartment 26 @ 100,000 2,625,000

2 bed apartment 26 @ 124,995 3,281,119

263 (rounded) 44,938,459

Social Rented GDV -

2 bed houses 13 @ 80,015 1,040,195

3 bed houses 18 @ 97,500 1,706,250

4 bed houses 5 @ 112,500 506,250



1 bed apartment 4 @ 50,000 218,750

2 bed apartment 4 @ 62,498 273,427

44 (rounded) 3,744,872

Intermediate GDV -

2 bed houses 13 @ 96,018 1,248,234

3 bed houses 18 @ 117,000 2,047,500

4 bed houses 5 @ 135,000 607,500



1 bed apartment 4 @ 60,000 262,500

2 bed apartment 4 @ 74,997 328,112

44 (rounded) 4,493,846

350.00 (total)

GDV 53,177,176

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DEVELOPMENT COSTS

Initial Payments -






Demolition and Site Clearance (allowance) 14.41 acres @ 75,000 per acre (1,081,063)





External works inc. utilities reinforcement (allowance) 23,189,303 @ 10% (2,318,930)

Contingency 26,589,296 @ 5% (1,329,465)

Professional Fees 27,918,761 @ 10% (2,791,876)

Disposal Costs -



Marketing and Promotion 44,938,459 GDV @ 3.00% (1,348,154)

Finance Costs -

Finance Fees 33,277,610 @ 2.00% (665,552)


Developers Profit -



(blended) 17.83%


RESIDUAL LAND VALUE


SDLT 9,499,462 @ (664,962)



Interest on Land 9,499,462 @ 7.0% (664,962)


TRESHOLD LAND VALUE





BALANCE


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CIL £/psm

Surplus/(Deficit) 4,783,858 20 40 60 80 100

5% 6,718,963 6,233,771 5,748,580 5,263,388 4,778,196

10% 6,139,425 5,679,770 5,220,114 4,760,459 4,300,804


20% 4,980,349 4,571,767 4,163,184 3,754,602 3,346,019

25% 4,400,812 4,017,766 3,634,719 3,251,673 2,868,627

30% 3,821,274 3,463,764 3,106,254 2,748,745 2,391,235



Values

Surplus/(Deficit) 4,783,858 90% 95% 100% 105% 110%

90% 4,474,812 5,919,790 7,364,767 8,809,744 10,254,721

95% 3,184,358 4,629,335 6,074,312 7,519,289 8,964,266

Construction costs 100% 1,893,903 3,338,881 4,783,858 6,228,835 7,673,812

105% 603,449 2,048,426 3,493,403 4,938,380 6,383,358

110% (687,005) 757,972 2,202,949 3,647,926 5,092,903

115% (1,947,502) (532,483) 912,494 2,357,471 3,802,449

Green = viable

Red = not viable

CIL £/psm

Green = viable

Red = not viable






NOTES

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Printed: 05/03/2014 16:08

C:\Users\Parm\Documents\AVL local (C)\_Client Projects\1401 CIL Refresh Study_Sandwell MBC\_Appraisals\140226 Sandwell

CIL Residential Viability Models v2.4


140220 Sandwell CIL Commerical Viability Models v2.4

B1 Offices 400 sqm

SCHEME DETAILS

Floor areas: GIA (sqm) GIA (sqft) Net to Gross % NIA (sqm) NIA (sqft)

Offices 400.0 4,306 85.0% 340.0 3,660

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 400.0 4,306 340.0 3,660


sqft £ psf £

Offices 3,660 @ 16.25 59,472

- 0 @ -

- 0 @ -

Estimated Gross Rental Value per annum 59,472

Yield @ 7.75%

capitalised rent 767,383

less

Rent Free / Void allowance 18 months rent (89,208)

Purchasers costs @ 5.76% (36,935) 641,240

GDV 641,240

Page 2/38

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B1 Offices 400 sqm

DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -

Site Specific S106/278 (allowance) (4,000)



Offices 400.0 sqm @ 1,184 psm (473,600)

- 0.0 psm -

- 0.0 sqm @ psm -

Extra over for BREEAM 400.0 sqm @ 0 psm -

External works inc. utilities reinforcement (allowance) 473,600 @ 10% (47,360)

Contingency 530,844 @ 5% (26,542)

Professional Fees 557,386 @ 10% (55,739)

Disposal Costs -

Letting Agents Costs 59,472 ERV @ 15.00% (8,921)

Letting Legal Costs 59,472 ERV @ 5.00% (2,974)

Investment Sale Agents Costs 641,240 GDV @ 1.00% (6,412)

Investment Sale Legal Costs 641,240 GDV @ 0.50% (3,206)

Marketing and Promotion 641,240 GDV @ 1.00% (6,412)

Finance Costs -

Finance Fees 672,104 @ 2.00% (13,442)


Developers Profit -

% on costs 702,839 @ 20.00% (140,568)

TOTAL COSTS (843,407)

RESIDUAL LAND VALUE

Residual Land Value (gross) (202,167)

SDLT - @ -

Acquisition Agent fees - @ 1.0% -

Acquisition Legal fees - @ 0.5% -

Interest on Land - @ 7.0% -

Residual Land Value (net) (202,167)

TRESHOLD LAND VALUE

Site density 7,500 sqm per hectare 75% site coverage



Threshold Land Value 29,652

BALANCE

Surplus/(Deficit) (231,819)

Page 3/38

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B1 Offices 400 sqm


Values

Surplus/(Deficit) (231,819) 90% 95% 100% 105% 110%

90% (218,045) (186,980) (155,915) (124,850) (93,785)

95% (255,997) (224,932) (193,867) (162,802) (131,737)

Construction costs 100% (293,949) (262,884) (231,819) (200,754) (169,689)

105% (331,902) (300,836) (269,771) (238,706) (207,641)

110% (369,854) (338,789) (307,723) (276,658) (245,593)

115% (407,806) (376,741) (345,676) (314,610) (283,545)

Green = viable

Red = not viable

NOTES

Page 4/38

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B1 Offices 2,000 sqm

SCHEME DETAILS


Offices 2,000.0 21,528 85.0% 1,700.0 18,299

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 2,000.0 21,528 1,700.0 18,299


sqft £ psf £

Offices 18,299 @ 16.25 297,361

- 0 @ -

- 0 @ -


Yield @ 7.75%

capitalised rent 3,836,916

less


Purchasers costs @ 5.76% (184,677) 3,206,198

GDV 3,206,198

Page 5/38

Printed: 05/03/2014 16:13





DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Offices 2,000.0 sqm @ 1,184 psm (2,368,000)

- 0.0 psm -

- 0.0 sqm @ psm -

Extra over for BREEAM 2,000.0 sqm @ 0 psm -


Contingency 2,654,220 @ 5% (132,711)


Disposal Costs -



Investment Sale Agents Costs 3,206,198 GDV @ 1.00% (32,062)

Investment Sale Legal Costs 3,206,198 GDV @ 0.50% (16,031)


Finance Costs -

Finance Fees 3,260,518 @ 2.00% (65,210)


Developers Profit -

% on costs 3,434,555 @ 20.00% (686,911)


RESIDUAL LAND VALUE


SDLT - @ -





TRESHOLD LAND VALUE





BALANCE

Surplus/(Deficit) (1,063,529)

Page 6/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) (1,063,529) 90% 95% 100% 105% 110%

90% (991,848) (836,539) (681,230) (525,921) (370,612)

95% (1,182,998) (1,027,688) (872,379) (717,070) (561,761)

Construction costs 100% (1,374,147) (1,218,838) (1,063,529) (908,219) (752,910)

105% (1,565,296) (1,409,987) (1,254,678) (1,099,369) (944,060)

110% (1,756,446) (1,601,136) (1,445,827) (1,290,518) (1,135,209)

115% (1,947,595) (1,792,286) (1,636,976) (1,481,667) (1,326,358)

Green = viable

Red = not viable

NOTES

Page 7/38

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B2 Industrial 400 sqm

SCHEME DETAILS


Industrial 400.0 4,306 100.0% 400.0 4,306

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 400.0 4,306 400.0 4,306


sqft £ psf £

Industrial 4,306 @ 5.57 23,983

- 0 @ -

- 0 @ -


Yield @ 7.25%


less



GDV 290,102

Page 8/38

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DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Industrial 400.0 sqm @ 609 psm (243,600)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 285,823 @ 5% (14,291)


Disposal Costs -






Finance Costs -

Finance Fees 373,228 @ 2.00% (7,465)


Developers Profit -

% on costs 395,085 @ 20.00% (79,017)


RESIDUAL LAND VALUE


SDLT - @ -





TRESHOLD LAND VALUE





BALANCE


Page 9/38

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Values

Surplus/(Deficit) (228,776) 90% 95% 100% 105% 110%

90% (217,553) (203,501) (189,448) (175,395) (161,343)

95% (237,217) (223,165) (209,112) (195,059) (181,007)


105% (276,545) (262,492) (248,440) (234,387) (220,334)

110% (296,209) (282,156) (268,103) (254,051) (239,998)

115% (315,873) (301,820) (287,767) (273,715) (259,662)

Green = viable

Red = not viable

NOTES

Page 10/38

Printed: 05/03/2014 16:13




B8 Warehouse 2,000 sqm

SCHEME DETAILS


Industrial 2,000.0 21,528 100.0% 2,000.0 21,528

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 2,000.0 21,528 2,000.0 21,528


sqft £ psf £

Industrial 21,528 @ 4.50 96,878

- 0 @ -

- 0 @ -


Yield @ 7.25%


less



GDV 1,171,868

Page 11/38

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DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Industrial 2,000.0 sqm @ 422 psm (844,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 1,017,713 @ 5% (50,886)


Disposal Costs -






Finance Costs -

Finance Fees 1,279,398 @ 2.00% (25,588)


Developers Profit -

% on costs 1,351,507 @ 20.00% (270,301)


RESIDUAL LAND VALUE


SDLT - @ -





TRESHOLD LAND VALUE





BALANCE


Page 12/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) (673,819) 90% 95% 100% 105% 110%

90% (651,092) (594,326) (537,560) (480,795) (424,029)

95% (719,221) (662,455) (605,690) (548,924) (492,158)


105% (855,479) (798,714) (741,948) (685,182) (628,417)

110% (923,609) (866,843) (810,077) (753,312) (696,546)

115% (991,738) (934,972) (878,207) (821,441) (764,675)

Green = viable

Red = not viable

NOTES

Page 13/38

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SCHEME DETAILS


Industrial 5,000.0 53,821 100.0% 5,000.0 53,821

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 5,000.0 53,821 5,000.0 53,821


sqft £ psf £

Industrial 53,821 @ 4.50 242,195

- 0 @ -

- 0 @ -


Yield @ 7.25%


less



GDV 2,929,670

Page 14/38

Printed: 05/03/2014 16:13





DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Industrial 5,000.0 sqm @ 422 psm (2,110,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 2,544,283 @ 5% (127,214)


Disposal Costs -






Finance Costs -

Finance Fees 3,152,460 @ 2.00% (63,049)


Developers Profit -

% on costs 3,328,019 @ 20.00% (665,604)


RESIDUAL LAND VALUE

Residual Land Value (gross) (1,063,952)

SDLT - @ -




Residual Land Value (net) (1,063,952)

TRESHOLD LAND VALUE





BALANCE


Page 15/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) (1,623,648) 90% 95% 100% 105% 110%

90% (1,566,830) (1,424,916) (1,283,002) (1,141,088) (999,174)

95% (1,737,154) (1,595,239) (1,453,325) (1,311,411) (1,169,497)

Construction costs 100% (1,907,477) (1,765,563) (1,623,648) (1,481,734) (1,339,820)

105% (2,077,800) (1,935,886) (1,793,971) (1,652,057) (1,510,143)

110% (2,248,123) (2,106,209) (1,964,295) (1,822,380) (1,680,466)

115% (2,418,446) (2,276,532) (2,134,618) (1,992,704) (1,850,789)

Green = viable

Red = not viable

NOTES

Page 16/38

Printed: 05/03/2014 16:13




Retail Units 280 sqm

SCHEME DETAILS


Retail 280.0 3,014 80.0% 224.0 2,411

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 280.0 3,014 224.0 2,411


sqft £ psf £

Retail 2,411 @ 15.00 36,168

- 0 @ -

- 0 @ -


Yield @ 8.50%


less



GDV 368,130

Page 17/38

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DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Retail 280.0 sqm @ 725 psm (203,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 227,144 @ 5% (11,357)


Disposal Costs -






Finance Costs -

Finance Fees 317,725 @ 2.00% (6,355)


Developers Profit -

% on costs 335,698 @ 20.00% (67,140)


RESIDUAL LAND VALUE


SDLT - @ -





TRESHOLD LAND VALUE





BALANCE


Page 18/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) (39,833) 90% 95% 100% 105% 110%

90% (42,724) (24,892) (7,060) 9,262 25,401

95% (59,111) (41,278) (23,446) (5,614) 10,571


105% (91,884) (74,052) (56,219) (38,387) (20,554)

110% (108,270) (90,438) (72,606) (54,773) (36,941)

115% (124,657) (106,825) (88,992) (71,160) (53,328)

Green = viable

Red = not viable

NOTES

Page 19/38

Printed: 05/03/2014 16:13




Retail Units 280 sqm Strategic

SCHEME DETAILS


Retail 280.0 3,014 80.0% 224.0 2,411

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 280.0 3,014 224.0 2,411


sqft £ psf £

Retail 2,411 @ 19.00 45,812

- 0 @ -

- 0 @ -


Yield @ 8.00%


less



GDV 476,491

Page 20/38

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DEVELOPMENT COSTS

Initial Payments -



CIL psm GIA -




Retail 280.0 sqm @ 725 psm (203,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 227,144 @ 5% (11,357)


Disposal Costs -






Finance Costs -

Finance Fees 322,363 @ 2.00% (6,447)


Developers Profit -

% on costs 339,884 @ 20.00% (67,977)


RESIDUAL LAND VALUE


SDLT 68,630 @ (686)

Acquisition Agent fees 68,630 @ 1.0% (686)

Acquisition Legal fees 68,630 @ 0.5% (343)

Interest on Land 68,630 @ 7.0% (4,804)

Residual Land Value (net) 62,111

TRESHOLD LAND VALUE





BALANCE


Page 21/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) 46,735 90% 95% 100% 105% 110%

90% 34,618 55,506 76,395 97,284 118,172

95% 19,788 40,677 61,565 82,454 103,343


105% (9,872) 11,017 31,906 52,794 73,683

110% (25,680) (3,813) 17,076 37,964 58,853

115% (42,067) (18,986) 2,246 23,135 44,023

Green = viable

Red = not viable

NOTES

Page 22/38

Printed: 05/03/2014 16:13




Retail Warehouse 1,500 sqm

SCHEME DETAILS


Retail 1,500.0 16,146 100.0% 1,500.0 16,146

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 1,500.0 16,146 1,500.0 16,146


sqft £ psf £

Retail 16,146 @ 15.00 242,195

- 0 @ -

- 0 @ -


Yield @ 7.00%


less



GDV 3,042,480

Page 23/38

Printed: 05/03/2014 16:13





DEVELOPMENT COSTS

Initial Payments -



CIL psm GIA -




Retail 1,500.0 sqm @ 575 psm (862,500)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 1,048,031 @ 5% (52,402)


Disposal Costs -






Finance Costs -

Finance Fees 1,447,677 @ 2.00% (28,954)


Developers Profit -

% on costs 1,519,479 @ 20.00% (303,896)


RESIDUAL LAND VALUE


SDLT 1,219,105 @ (48,764)



Interest on Land 1,219,105 @ 7.0% (85,337)

Residual Land Value (net) 1,066,717

TRESHOLD LAND VALUE



Threshold Land Value 570,000 £ per acre 1,408,470 £ per ha


BALANCE


Page 24/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) 312,180 90% 95% 100% 105% 110%

90% 176,106 305,063 434,019 562,975 691,932

95% 115,187 244,143 373,099 502,056 631,012


105% (6,653) 122,303 251,260 380,216 509,172

110% (67,573) 61,384 190,340 319,296 448,253

115% (128,492) 464 129,420 258,377 387,333

Green = viable

Red = not viable

NOTES

Page 25/38

Printed: 05/03/2014 16:13




Supermarket 280 sqm

SCHEME DETAILS


Retail 280.0 3,014 100.0% 280.0 3,014

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 280.0 3,014 280.0 3,014


sqft £ psf £

Retail 3,014 @ 15.00 45,210

- 0 @ -

- 0 @ -


Yield @ 5.75%


less



GDV 700,685

Page 26/38

Printed: 05/03/2014 16:13




Supermarket 280 sqm

DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Retail 280.0 sqm @ 1,011 psm (283,080)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 329,921 @ 5% (16,496)


Disposal Costs -






Finance Costs -

Finance Fees 453,055 @ 1.00% (4,531)


Developers Profit -

% on costs 472,657 @ 20.00% (94,531)


RESIDUAL LAND VALUE


SDLT 133,497 @ (1,335)


Acquisition Legal fees 133,497 @ 0.5% (667)

Interest on Land 133,497 @ 7.0% (9,345)

Residual Land Value (net) 120,815

TRESHOLD LAND VALUE





BALANCE


Page 27/38

Printed: 05/03/2014 16:13




Supermarket 280 sqm


Values

Surplus/(Deficit) 9,620 90% 95% 100% 105% 110%

90% (10,893) 19,834 50,561 81,289 112,016

95% (31,364) (637) 30,090 60,818 91,545

Construction costs 100% (51,835) (21,108) 9,620 40,347 71,074

105% (72,306) (41,579) (10,851) 19,876 50,603

110% (92,777) (62,050) (31,322) (595) 30,132

115% (113,463) (82,521) (51,793) (21,066) 9,661

Green = viable

Red = not viable

NOTES

Page 28/38

Printed: 05/03/2014 16:13




Supermarket 1,500 sqm

SCHEME DETAILS


Retail 1,500.0 16,146 100.0% 1,500.0 16,146

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 1,500.0 16,146 1,500.0 16,146


sqft £ psf £

Retail 16,146 @ 18.00 290,633

- 0 @ -

- 0 @ -


Yield @ 5.50%


less



GDV 4,859,046

Page 29/38

Printed: 05/03/2014 16:13





DEVELOPMENT COSTS

Initial Payments -



CIL psm GIA -




Retail 1,500.0 sqm @ 1,191 psm (1,786,500)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 2,064,431 @ 5% (103,222)


Disposal Costs -






Finance Costs -

Finance Fees 2,720,074 @ 2.00% (54,401)


Developers Profit -

% on costs 2,881,476 @ 20.00% (576,295)


RESIDUAL LAND VALUE


SDLT 1,401,275 @ (56,051)



Interest on Land 1,401,275 @ 7.0% (98,089)


TRESHOLD LAND VALUE





BALANCE


Page 30/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) 299,490 90% 95% 100% 105% 110%

90% 146,846 352,773 558,700 764,627 970,553

95% 17,241 223,168 429,095 635,022 840,949

Construction costs 100% (112,363) 93,564 299,490 505,417 711,344

105% (241,968) (36,041) 169,886 375,813 581,739

110% (371,572) (165,646) 40,281 246,208 452,135

115% (496,315) (295,250) (89,323) 116,603 322,530

Green = viable

Red = not viable

NOTES

Page 31/38

Printed: 05/03/2014 16:13





SCHEME DETAILS


Retail 5,000.0 53,821 100.0% 5,000.0 53,821

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 5,000.0 53,821 5,000.0 53,821


sqft £ psf £

Retail 53,821 @ 20.00 1,076,420

- 0 @ -

- 0 @ -

Estimated Gross Rental Value per annum 1,076,420

Yield @ 5.25%


less

Rent Free / Void allowance 12 months rent (1,076,420)

Purchasers costs @ 5.76% (1,058,042) 18,368,777

GDV 18,368,777

Page 32/38

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DEVELOPMENT COSTS

Initial Payments -



CIL psm GIA -




Retail 5,000.0 sqm @ 1,191 psm (5,955,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 6,991,750 @ 5% (349,588)


Disposal Costs -

Letting Agents Costs 1,076,420 ERV @ 15.00% (161,463)

Letting Legal Costs 1,076,420 ERV @ 5.00% (53,821)




Finance Costs -

Finance Fees 9,388,934 @ 2.00% (187,779)


Developers Profit -

% on costs 10,035,853 @ 20.00% (2,007,171)


RESIDUAL LAND VALUE


SDLT 6,325,753 @ (253,030)



Interest on Land 6,325,753 @ 7.0% (442,803)


TRESHOLD LAND VALUE



Threshold Land Value 1,000,000 £ per acre 2,471,000 £ per ha

Threshold Land Value 4,412,500

BALANCE


Page 33/38

Printed: 05/03/2014 16:13






Values

Surplus/(Deficit) 1,122,534 90% 95% 100% 105% 110%

90% 437,417 1,215,792 1,994,166 2,772,541 3,550,915

95% 1,601 779,975 1,558,350 2,336,724 3,115,099

Construction costs 100% (434,215) 344,159 1,122,534 1,900,908 2,679,283

105% (870,031) (91,657) 686,718 1,465,092 2,243,467

110% (1,305,847) (527,473) 250,902 1,029,276 1,807,651

115% (1,741,663) (963,289) (184,914) 593,460 1,371,835

Green = viable

Red = not viable

NOTES

Page 34/38

Printed: 05/03/2014 16:13




Hotel 100 beds

SCHEME DETAILS

Floor areas: Beds Net to Gross % NIA (sqm) NIA (sqft)

Hotel 100 beds 100.0 100.0% 100.0 1,076

- 0 85.0% 0.0 0

- 0 100.0% 0.0 0

total floor area 100.0 0 100.0 1,076


Beds Per Room £

Hotel 100 beds 100 @ 3,500.00 350,000

- 0 @ -

- 0 @ -


Yield @ 7.00%


less



GDV 4,396,747

Page 35/38

Printed: 05/03/2014 16:13




Hotel 100 beds

DEVELOPMENT COSTS

Initial Payments -



CIL 0.00 psm GIA -




Hotel 100 beds 100.0 Rooms 37,000 per room (3,700,000)

- 0.0 psm -

- 0.0 sqm @ psm -



Contingency 4,072,471 @ 5% (203,624)


Disposal Costs -






Finance Costs -

Finance Fees 4,946,483 @ 2.00% (98,930)


Developers Profit -

% on costs 5,211,203 @ 20.00% (1,042,241)


RESIDUAL LAND VALUE

Residual Land Value (gross) (1,856,696)

SDLT - @ -




Residual Land Value (net) (1,856,696)

TRESHOLD LAND VALUE





BALANCE


Page 36/38

Printed: 05/03/2014 16:13




Hotel 100 beds


Values

Surplus/(Deficit) (1,859,991) 90% 95% 100% 105% 110%

90% (1,688,609) (1,475,629) (1,262,650) (1,049,670) (836,690)

95% (1,987,280) (1,774,300) (1,561,320) (1,348,341) (1,135,361)

Construction costs 100% (2,285,951) (2,072,971) (1,859,991) (1,647,011) (1,434,032)

105% (2,584,621) (2,371,642) (2,158,662) (1,945,682) (1,732,702)

110% (2,883,292) (2,670,312) (2,457,333) (2,244,353) (2,031,373)

115% (3,181,963) (2,968,983) (2,756,003) (2,543,024) (2,330,044)

Green = viable

Red = not viable

NOTES

Page 37/38

Printed: 05/03/2014 16:13



Printed: 05/03/2014 16:13

C:\Users\Parm\Documents\AVL local (C)\_Client Projects\1401 CIL Refresh Study_Sandwell MBC\_Appraisals\140220 Sandwell

CIL Commerical Viability Models v2.4
