Navigating Property Development Schemes

Module Leader/Assessment set by:

Mrs. Lesley Buchanan, MRICS, MRTPI, FHEA

Maxwell Building - Office 501, 5th Floor Maxwell Building, University of Salford

Please contact initially via email L.Buchanan1@salford.ac.uk due to current Covid-19 restrictions.

Contact can also be made via Microsoft Teams and 1-2-1 appointments can be pre-arranged.

Module Aims

1.You will have a working knowledge and understanding of the purpose and objectives of a property development scheme, in the context of the current political and economic climate.

2. You will understand the residual method of valuation and the purpose of development appraisals and any other tools which are available to measure a schemes viability and risk.

3. You will be able to identify the main stakeholders in a property development project and appraise the key components which would influence each stage of the decision-making process.

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Intended Learning Outcomes

On completion of this module you will be able to:

Identify and describe the process and purpose of property development using a range of conceptual models.

Adapt and employ the appropriate residual valuation and development appraisal techniques, using different financial modelling systems.

Analyse the main cost/ income factors which would influence the success of a property development scheme, including identification of the principle stakeholders and any risk mitigation techniques.

Appraise the suitability of a site for development purposes, in the context of the current economic, social and political policies and legislation.

Assessment Brief/Task

A local landowner has recently contacted your planning and development consultancy with a new instruction seeking your advice on a potential development opportunity that they may have. They are very inexperienced in this field and are now exploring if this is the appropriate time to dispose of their property interest.

The subject site comprises a flat, square piece of land measuring 1,500 sq m situated on Penny Lane in Stockport, Cheshire, SK5. The existing use is for a public house, but this has remained vacant since 2018. Alternative options have been explored and Stockport City Council granted full planning consent to the client on 1st July 2021 for the demolition of the existing building and re-development of a new 8 storey residential scheme of 51 apartments (12 x 1 bedroom and 39 x 2 bedroom). The local planning authority do not require any affordable housing element but have instead requested a s106 contribution of £350k from the developer towards a wider placemaking strategy for the borough.

The client has requested advice on the following five points, and would like this to be presented in the form of a report, to enable this information to be shared with their investors and shareholders:

Research the current residential market, with a specific focus on Stockport, Cheshire to provide a full market commentary. In addition, please summarise the main cost/income factors which could potentially impact on the value of the land.

(ILO’s 3,4; 750 words)

2. Prepare a fully costed residual valuation to calculate the land value based on the information that has been provided by the client (please see below). This appraisal should be presented on a separate excel spreadsheet. However, your report should include a clear explanation of the main assumptions (GDV and development costs) that have been taken to derive this figure.

Site area: 1,500 sq m

Location: Penny Lane, Stockport, Cheshire, SK5

Tenure: Freehold

Planning: Full planning permission has been granted

Proposed scheme: Demolition of existing public house and construction of an 8 storey, new build, single apartment block comprising 51 apartments (12 x 1 bedroom (50 sq m)

and 39 x 2 bedroom (75 sq m).

S106 contribution: £350,000 for a placemaking strategy

Demolition costs: £75,000 - £100,000

Finance: Available at 7% interest

The market value for apartments in Stockport can be researched from databases and local property agent’s websites. You will need to make your own reasoned assumptions on build costs, professional fee’s, developers profit, project contingency and any other required costs.

Dig deeper into Navigating International Business Expansion with our selection of articles.

(ILO’s 1,2; 1500 words)

3. Provide reasoned advice to the client on the strategy that they should adopt if they wish to appoint your consultancy to proceed with a sale of the land. This will also include ways in which they could potentially increase the GVD or reduce the development costs.

4. Property development is a an inherently high- risk activity and the client is inexperienced in this sector. They would like your report to include an analysis of the systematic and unsystematic risks for the delivery of this residential scheme and advice on how these could be mitigated.

. The requirement for planning gain by the local planning authority, such as s106 contributions can significantly impact on the viability of a property development project. Please clearly outline the purpose of these obligations, define the different types in use in England at present time, in the context of the relevant legislation and research and advise the client on the policy requirements of Stockport City Council for a proposed new build residential scheme.

The date for the residual valuation will be the submission date for this coursework assessment. You can make assumptions but please ensure that these are reasonable and have been clearly explained for the client.

This is a fictional property development project, so you should not contact Stockport City Council for any information regarding the hypothetical planning consent. However, the local plan and LPA website can be reviewed.

The client will be provided with your advice in the form of a report, and this should refer to the relevant valuation and property development procedures which are currently in place in England. Please ensure that all the required points in the client’s brief have been addressed and that you fully accord with the word count for each specific task.

The residual valuation should be prepared on a excel spreadsheet and emailed to L.Buchanan1@salford.ac.uk by the required time and date. The submission will not be complete until both elements have been received. Additional tabs can be used for any supporting information.

Please support all work using appropriate references. You should also use the APA 7th Harvard Style in your submission.

Market commentary and factors impacting on value 10%

Fully costed residual valuation and reasoned advice 30%

Strategy to be adopted and ways to increase the GDV/reduce costs 10%

Identification of risks and mitigation measures 20%

Research of planning gain requirements for a residential project 20%

Presentation and referencing 10%

The tasks in this coursework assessment will address the intended ILOs for this module, as previously stated in this brief. The submission will be marked in accordance with the assessment criteria which has been duly outlined and weighted above. Please ensure that you accord with the required word count for each specific section and review all the required tasks, including the preparation of an excel spreadsheet for the residual valuation.

Word count/ duration (if applicable)

Your assessment should be no more than 5,000 words and the brief includes guidance on the required word count for each specific task that is required.

Any words that exceed this amount will not be marked and therefore will not count towards your final grade.

The coursework assessment should be presented as a professional report. Please note that the introduction, contents page, references, conclusion and any appendices will be excluded from the total word count.

Feedback arrangements

You can expect to receive feedback within 15 working days of the date of submission. You will receive feedback via Turnitin.

Support arrangements

You can obtain support for this assessment by contacting the module leader, Lesley Buchanan at L.Buchanan1@salford.ac.uk or via Microsoft Teams.

askUoS

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Personal Mitigating Circumstances

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In Year Retrieval Scheme

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Reassessment

If you fail your assessment, and are eligible for reassessment, you will need to resubmit on a date which will be confirmed to you in due course. You will be asked to resubmit the same piece of work unless advised otherwise.

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Any work submitted after the date and time shown on the cover sheet will be considered late and the mark will be capped at 50%. Any work submitted 7 days after the date and time will be considered a non-submission.