Step 1: GDV
Units multiplied by net internal area multiplied by achievable resale £ per sqft. NIA defaults to 85 percent of GIA on flats and 88 percent on terraces. Yield mode capitalises NOI for commercial GDV.
Step 2: Build cost
GIA in sqm multiplied by BCIS Q2-2026 regional band. Default is the mid figure; adjust within the band based on spec, height and brownfield risk. ONS construction output inflation is the escalator between BCIS cuts.
Step 3: Soft costs
Professional fees (default 12 percent of build). Section 106 + CIL + BNG (per unit). SDLT on the land bid grossed up at the assumed rate.
Step 4: Contingency
Default 7.5 percent on hard + soft costs. Raise to 10 to 15 percent for conversion or unknown-structure schemes.
Step 5: Finance
Drawdown profile approximated as S-curve: average outstanding balance is 50 percent of peak debt over the build duration. Interest rate is the all-in rate (do not separate base + margin).
Step 6: Profit + residual
Target profit subtracted from GDV minus costs. Remainder is land value before SDLT gross-up. Divide by (1 + SDLT rate) for the maximum land bid.
Step 7: Sensitivity
Five-by-five matrix: GDV stress on the rows (-15 to +5 percent), build-cost shock on the columns (-5 to +20 percent). Cells colour-coded against the target PoC; below 10 percent is an abort cell.
What this is not
- Not a RICS Red Book valuation. No regulated valuer has signed off the working numbers.
- Not a lender DIP. Senior debt sizing is indicative.
- Not a planning viability submission. PPG-Viability requires both residual and comparable.
- Not investment advice.