Affordable Housing Viability Report for Residential Development at Land East of Bye Road, Swanwick, Fareham, Hampshire, S031 7Gx

AFFORDABLE HOUSING VIABILITY REPORT FOR RESIDENTIAL DEVELOPMENT AT LAND EAST OF BYE ROAD, SWANWICK, FAREHAM, HAMPSHIRE, S031 7GX.

On behalf of Steven Richard Dunleavy SSAS

By Simon Corp BSc (Hons) 30h January 2018

Contents

1. Introduction and instructions.

2. Viability Assessment

3. Policy background

4. Costs and values

5. Other model assumptions and inputs

6. Conclusion

Appendices

A- Viability result B- BCIS build cost details C- Market research

1.0 Introduction and Instructions

1.1 S106 Affordable Housing Ltd has been instructed by Steven Richard Dunleavy SSAS to prepare an affordable housing viability study to determine the viable level of affordable housing contribution that can be funded from the proposed development of land to the East of Bye Road, Swanwick providing 7no new detached dwellings.

1.2 The report has been prepared by Simon Corp. I have a BSc (Hons) in Residential Development and 24 years experience in affordable housing development. I am a Director of S106 Affordable Housing Ltd a specialist consultancy business providing development viability and affordable housing development advice.

1.3 The purpose of the study is to set out the policy background, development details, viability and cost issues and make a case for the level of affordable housing provision the development can viably sustain. We understand following the grant of planning consent the plots will be sold off to self builders, however there is no planning use class differentiation between self build and open market development and therefore we have appraised the site as a standard open market development using standard viability assumptions which accord with the guidelines set out in the RICS Financial Viability in Planning guidance.

1.4 Our methodology will be to carry out a viability assessment without any affordable housing and compare the resultant residual land value with the benchmark existing market land value to determine the total development subsidy that is available to fund any affordable housing provision. We then look at the effect on the viability of introducing an affordable housing contribution.

1.5 The appraisal has been carried out using the HCA Economic Appraisal Toolkit (EAT), where information is not available any assumptions made are either in line with industry norms or the default settings of the toolkit. 2.0 Viability Assessment

2.1 The proposed site is amenity/grazing land to the rear of 197-203 Swanwick Lane extending in total to 1.96 acres. It is proposed that an access is formed at the end of Bye Road and the site redeveloped with a scheme comprising of 7no detached houses. The area to the south of the access road will be retained as a Copse.

2.2 The Fareham Core Strategy policy CS18 will require 30% affordable housing from this development. However the Local Authority have stated they are seeking a financial contribution in lieu of provision on site at a rate equivalent to the land value of the affordable housing requirement. They have also confirmed the land value should equate to 30% of the value of the proposed units. The average sales value across the site is £710,000 and therefore the calculation will be as follows:

£710,000 x 2.1 x 30%= £447,300

2.3 S106 Affordable Housing Ltd has been instructed to assess if the development can viably support the proposed level of contribution and if this level is not viable the maximum level of affordable housing contribution that can be supported by the scheme. A development is deemed viable if the residual land value derived from the proposed scheme is above the benchmark existing use value of the site, generating a surplus to fund the affordable housing provision. Our methodology will be to run an appraisal as all open market development without any affordable housing and compare this with the existing benchmark land value to determine if a development surplus is generated to fund the affordable housing.

2.4 We have appraised the site using the EAT (Economic Appraisal Tool) as all open market sale without the affordable housing to determine the total surplus above the benchmark land value which is available to fund affordable housing. The results of EAT is a negative residual land value of -£624 however it should be noted the appraisal includes a CIL cost of £217,970. If a self build CIL relief was applied the land value would be a positive at £199,105.

2.5 The development is deemed viable if the residual land value is above the existing value use benchmark value of the site. The RICS Financial Viability in Planning guidance states that viability should be benchmarked against the existing market value of the land taking into account planning policies which effect the land. The application red line site area extends to 1.96a but we estimate the net developable area is 70% of the total site area, so we have worked on a net developable site area of 1.37 acres. The guidance states the benchmark land value should reflect the current use of the land but also provide the landowner with sufficient return to incentivise them to release the land. The land lies outside the settlement boundary but it is adjacent to the boundary and the local authority only have a land supply of marginally over two years so this will enhance the landowners expectations and the incentive they would expect to receive.

2.6 On the Furze Court, Fareham planning application which is a similar situation a compromise land value has been proposed at £108,232 for 1.43 acres which equates to £75,686 per acre. The land value is higher than a pure rural grazing land value at circa £25,000 per acre to reflect its position next to the urban edge, the planning prospects given the housing land supply issue and the landowners consequent raised expectations, but this is less than a typical benchmark land value at £250,000 per acre for land within the settlement boundary. So we would propose we apply £75,000 per acre on the net developable area of 1.37 acres and £25,000 per acre on the copse area of 0.59 acres. This equates to a total value of £117,500.

2.7 It should be noted this level of land value is a lot less than the greenfield benchmark land value used in the Fareham CIL Viability Study undertaken by Peter Brett Associates. They recommend benchmark land value should be £1.8m/ha (£728,540/acre) for sites of 5-10 units but it is not clear if this is assumed to be inside or outside the settlement boundary.

2.8 In addition to the site area the applicant already owns the roadway area in front of 23-27 Bye Road, this area of land is required to facilitate access to the site and so the value of this land also has to form part of the benchmark land value and it is within the red line of the planning application. This area of land extends to 0.06 acres and is within the settlement boundary so the higher £250,000/acre value would apply and on this basis would generate an additional land value of £15,000. This makes the total benchmark land value £132,500.

2.9 The residual land value without affordable housing but including CIL is therefore £195,551 below the benchmark land value and consequently no subsidy is generated to deliver any affordable housing contribution on this site.

2.10 The site already shows a viability deficit so clearly introducing any additional costs will only compound the viability pressure and therefore provision of the policy compliant contribution of £447,300 is not viable.

2.11 We have not allowed for any s106 contributions apart from the Solent Mitigation Strategy SPA payment at £181/unit, but we have included for the CIL payment of £105/m2 plus indexation on the net additional floor area.

2.12 If the CIL was not chargeable because a self build relief was applied the EAT would show a residual land value of £199,105 which is £66,605 above the benchmark land value. This would represent the surplus available to contribute to affordable housing if no CIL or other s106 payments are required. This would be sufficient subsidy to deliver offsite affordable housing, a typical grant level in the HCA SOAHP programme is £30,000 per unit so this will fund 2no units for shared ownership.

2.13 In summary as the residual value with no affordable housing is below the benchmark existing use value the development is unable to viably deliver any affordable housing contribution. If CIL is not required the development shows a surplus of £66,605 and this would be the sum available to fund an offsite contribution towards affordable housing.

Policy Background

Fareham Core Strategy

3.1 The affordable housing policy is contained within CS18 which states:

• The Council will require the provision of affordable housing on all schemes that can deliver a net gain of 5 or more dwellings.

• On sites that can accommodate between 5 and 9 dwellings developers will be expected to provide 30% affordable units OR the equivalent financial contribution towards off-site provision.

• On sites that can accommodate between 10 and 14 dwellings developers will be expected to provide 30% affordable units.

• On sites that can accommodate 15 or more dwellings developers will be expected to provide 40% affordable units.

3.2 The policy does recognise the importance of viability in delivering the policy and it goes on to say “Where development viability is an issue, developers will be expected to produce a financial assessment in which it is clearly demonstrated the maximum number of affordable dwellings which can be achieved on the site.” In the supporting text at 6.26 it goes on to say that developers are expected to prove justification for a lower number through the use of a viability assessment.

3.3 We have used the HCA Economic Appraisal Toolkit which is widely recognised as the benchmark viability tool having been developed by the HCA.

3.4 Fareham has an affordable housing SPD published in 2005 but this referred to the former Local Plan policies and has been superseded by the Core Strategy policy.

HCA Good Practice Note- Investment and Planning Obligations responding to the Downturn

3.5 This guidance advises Councils and Developers to work in a collaborative Way to find solutions to deliver affordable housing in a climate of depressed values and viability pressure.

3.6 This document clearly states that unviable affordable housing requirements should not stifle housing developments that would otherwise come forward. Viability should be assessed and sustainable obligations agreed now, with ongoing viability assessment through the life of the development with the potential for enhanced obligations at a later date when the development can support them.

Planning for Growth Statement 23rd March 2011

3.7 A ministerial statement by Greg Clarke outlined the government’s intention to increase flexibility in the planning system to ensure that it does not stifle economic development. In particular the statement says that in deterring planning applications Local Authorities need to be sensitive to the fact that local economies can change and the need to ensure they do not place unnecessary burdens on a development.

3.8 The statement goes on to say that unviable s106 agreements should be re- considered and where possible modify applications to allow developments to proceed.

National Planning Policy Framework March 2012

3.9 The National Planning Policy Framework (hereafter referred to as NPPF) contains an overarching policy principle that there should be a presumption in favour of sustainable development, meaning that Local Authorities should positively seek development opportunities to meet the needs of their area, unless:

• any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or

• specific policies in this Framework indicate development should be restricted.

3.10 Local Authorities should proactively drive and support sustainable economic development to deliver the homes, business and industrial units, infrastructure and thriving local places that the country needs. Every effort should be made objectively to identify and then meet the housing, business and other development needs of an area, and respond positively to wider opportunities for growth.

3.11 The document goes on to say that plans should take account of market signals, such as land prices and housing affordability, and set out a clear strategy for allocating sufficient land which is suitable for development in their area, taking account of the needs of the residential and business communities.

3.12 Local Authorities should avoid the long term protection of sites for employment use if there is no reasonable prospect of this being taken up for that purpose.

3.13 Looking more specifically at housing delivery it states “use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in this Framework, including identifying key sites which are critical to the delivery of the housing strategy over the plan period”.

3.14 There is a need to ensure there will be the right balance of housing to meet need and demand the framework states;

• Deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities, local planning authorities should:

• Plan for a mix of housing based on current and future demographic trends, market trends and the needs of different groups in the community (such as, but not limited to, families with children, older people, people with disabilities, service families and people wishing to build their own homes);

• Identify the size, type, tenure and range of housing that is required in particular locations, reflecting local demand; where they have identified that affordable housing is needed, set policies for meeting this need on site, unless off-site provision or a financial contribution of broadly equivalent value can be robustly justified (for example to improve or make more effective use of the existing housing stock) and the agreed approach contributes to the objective of creating mixed and balanced communities. Such policies should be sufficiently flexible to take account of changing market conditions over time.”

3.15 The framework reinforces previous policy statements that planning requirements should maintain economic viability, the framework states “pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable. Therefore, 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. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.”

3.16 The framework states that planning obligations normally required under s106 agreements should only be sought where they meet all of the following tests:

• Necessary to make the development acceptable in planning terms; • Directly related to the development; and

• Fairly and reasonably related in scale and kind to the development.

• Where obligations are being sought or revised, local planning authorities should take account of changes in market conditions over time and, wherever appropriate, be sufficiently flexible to prevent planned development being stalled.

• Planning conditions should only be imposed where they are necessary, relevant to planning and to the development to be permitted, enforceable, precise and reasonable in all other respects.

Housing and Growth Statement 6th September 2012

3.18 The Secretary of State for Communities and Local Government (Rt Hon Eric Pickles MP said on the 6th September 2012 “The Coalition Government’s number one priority is to get the economy growing. We must create the conditions that support local economic growth and remove barriers that stop local businesses creating jobs and getting Britain building again.”

3.19 He went on to say “It is vital that the affordable housing element of Section 106 agreements negotiated during different economic conditions is not allowed to undermine the viability of sites and prevent any construction of new housing. This results in no development, no regeneration and no community benefits at all when agreements are no longer economically viable.”

Planning Practice Guidance March 2014

3.20 The Department for Communities and Local Government provided Planning Practice Guidance on 6th March 2014. This includes a section on viability, site specific viability is covered in the section Viability and Decision Taking.

3.21 The practice note states that “in making decisions, the local planning authority will need to understand the impact of planning obligations on the proposal. Where an applicant is able to demonstrate to the satisfaction of the local planning authority that the planning obligation would cause the development to be unviable, the local planning authority should be flexible in seeking planning obligations.”

3.22 The note goes on to say this is particularly relevant for affordable housing payments and these should not be sought without regard to scheme viability.

3.23 It then continues to set out some general principles on how the principle variables; gross development value, costs, existing value and landowners return should be calculated and evidenced. This is really a summary of established known good practice in the sector.

3.24 The PPG was updated in November 2016 to remove sites of 10 unit or less and which have a maximum built form of no more than 1000m2 (gross internal area) from s106 liability.

4 Cost and Values

Benchmark Land Value

4.1 The RICS Financial Viability in Planning guidance states that viability should be benchmarked against the existing market value of the land taking into account planning policies which effect the land. The application red line site area extends to 1.96a but we estimate the net developable area is 70% of the total site area so we have worked on a site area of 1.37 acres. The guidance states the benchmark land value should reflect the current use of the land but also provide the landowner with sufficient return to incentivise them to release the land. The land lies outside the settlement boundary but it is adjacent to the boundary and the local authority only have a housing land supply of marginally over 2 years so this will enhance the landowners expectations and the incentive they would expect to receive.

4.2 On the Furze Court application which is a similar situation a compromise land value has been proposed at £108,232 for 1.43 acres which equates to £75,686 per acre. The land value is higher than a pure rural grazing land value at circa £25,000 per acre to reflect its position next to the urban edge, the planning prospects given the housing land supply issue and the landowners consequent raised expectations, but this is less than a typical benchmark land value at £250,000 per acre for land within the settlement boundary. So we would propose we apply £75,000 per acre on the net developable area of 1.37 acres and £25,000 per acre on the copse area of 0.59 acres. This equates to a total value of £117,500.

4.3 It should be noted this level of land value is a lot less than the greenfield benchmark land value used in the Fareham CIL Viability Study undertaken by Peter Brett Associates. They recommend benchmark land value should be £1.8m/ha (£728,540/acre) for sites of 5-10 units but it is not clear if this is assumed to be inside or outside the settlement boundary.

4.4 In addition to the site area the applicant already owns the roadway area in front of 23-27 Bye Road, this area of land is required to facilitate access to the site and so the value of this land also has to form part of the benchmark land value as it is within the red line of the planning application. This area of land extends to 0.06 acres and is within the settlement boundary so the higher £250,000/acre value would apply and on this basis would generate an additional land value of £15,000. This makes the total benchmark land value £132,500.

Sales values

4.5 We have undertaken an internet based market research exercise (Source: Rightmove and Zoopla) to determine achievable sales values identifying comparable properties within a half mile radius of the site either on the market, recently sale agreed or sold within the last six months.

4.6 For the three bedroom house within 0.5 miles of the site we identified a range of three bedroom detached houses from £350,000-£359,995; the latter being a newbuild property on the Bellway Homes Swanwick Lane development. We do not have floor area information for these units but they appear smaller than the proposed unit which are large for a three bedroom house at 135m2. Moving the search radius out to 1 mile we identified a larger 3 bedroom detached house on the Bovis Development near Swanwick marina at £409,950 and a three bedroom detached house recently completed on the Crayfern Homes development at Sarisbury Green sale agreed at £429,950. On balance we have therefore valued the three bedroom property at £425,000.

4.7 For the four bedroom houses we identified a range of properties from £475,000-999,950 however any properties above £800,000 appeared to be either much larger or in better locations notably along Holly Hill Lane. We have therefore set the largest proposed properties at £850,000 to reflect their size but we feel this is the maximum value that could be achieved in this location.

4.8 Within the market research comparables there are some newbuild properties on the Bellway Swanwick Lane site at £599,995 and on the Cold East development at £640,000.

4.9 Although the setting of the units on the site is good with generous plots, access is via a road characterised by 1960’s bungalows which does slightly detract from the desirability of the location. We have therefore valued all the properties as follows, these are rounded to the nearest thousand:

Plot 1 230m2 4 bedroom house £800,000 Plot 2 135m2 3 bedroom house £425,000 Plot 3 200m2 4 bedroom house £700,000 Plot 4 186m2 4 bedroom house £600,000 Plot 5 256m2 4 bedroom house £850,000 Plot 6 254m2 4 bedroom house £845,000 Plot 7 218m2 4 bedroom house £750,000

4.10 The actual price achieved will be dependent on market conditions at the time of marketing and the completed specification.

Construction Costs

4.11 In line with normal viability practice we have used the BCIS average price service to determine likely construction costs. The proposed values are the upper end of the Fareham market so we have adopted a build cost rate mid way between the median and upper quartile detached house rate at £1,880/m2.

4.12 BCIS rates are net of external works and infrastructure costs and the usual rule of thumb allowance is 15% of the base build cost. The scheme includes a significant length of estate road to be constructed in addition to new boundary treatments, hardstanding areas, soft landscaping and the costs of bringing services into the site. For these reasons we consider 15% to be an appropriate external works budget cost.

4.13 The BCIS rates also exclude any costs in connection with garages, on the site there are 11 carports and 1 garage. We have allowed a cost of £5,000 per carport and £15,000 for the garage making a total additional cost of £70,000.

4.14 The BCIS average price service provides a good evidential base for the build cost assumptions as it is based on actual tender returns. We would however comment that our experience in the market place is that BCIS is not keeping pace with actual build costs, the sub-contract market is very overheated with demand outstripping capacity resulting in fast increasing rates. The increasing labour costs are being compounded by additional increases in material costs with long call off periods for certain materials notably bricks.

4.15 We have separately allowed for design fees at 7% and contingency of 5% both of which are below the default values of the toolkit.

Developers Profit

4.16 We have set developers profit at 17.5% of gross development value. Up to relatively recently the default level of developers profit was 20% but with more competition in the land market there is a view that developers are squeezing margins to secure sites so a reduced level is appropriate.

4.17 However we do consider this to be on the low end of the spectrum, many lenders in fact demand a higher profit level and 20% is generally accepted as the default level to attract debt finance and we consider 17.5% to be the minimum profit level required.

4.18 The result of the EU Referendum may also have an effect on funders expectations of developers profit with many commentators expecting profit levels to go back up to 20% to reflect increased uncertainty in the market. At the time of writing we don’t know how most funders will react to the decision so we have retained profits at 17.5% of gross development value.

5. Other Model Assumptions and Inputs

5.1 The basis for assumptions on sales values, construction costs and profit are set out in section 5.

Programme

5.2 The EAT assumes a 6 month lead in to site start for detail design, building regulations approval, lining up sub-contract packages and site set up. The contract period is 10 months with a sales period of 3 months.

Interest Rates

5.3 We have used a finance rate of 6.5% inclusive of all arrangement fees and monitoring costs which is in our experience a typical level. The availability of development finance remains an issue with very few of the major banks still actively lending to residential development companies. Those still in the market can “pick and choose” deals to fund and expect to see healthy margins.

Sales and marketing costs

5.4 We have allowed for an allowance of 2.5% of gross sales value for sales and marketing this will cover a sales agent at 1.5 % and additional allowances for a show home, production of marketing material and advertising and promotion.

S106 Contributions

5.5 We have not allowed for any s106 contributions apart from the Solent Mitigation SPA at £181/unit, but have included for the CIL payment of £105/m2 plus indexation on the net additional floor area.

6. Conclusion

6.1 Fareham Core Strategy Policy CS6 will require 30% affordable housing from this development which equates to an affordable housing contribution of £447,300. To establish if this level of payment is viable we have run a viability assessment on the proposed scheme to determine the residual land value it generates and compare this with the benchmark existing use value of the site. If the residual land value is higher there is deemed to be a viability surplus to fund an affordable housing payment.

6.2 We have assessed the scheme using the HCA EAT model and this shows a residual land value of -£624 which is below the benchmark land value. Therefore it is not viable for the scheme to provide an affordable housing payment.

6.3 If a self build relief is applied and there are no CIL costs within the appraisal the assessment shows a surplus of £66,605. This represents the sum that could be offered to the Local Authority as a contribution towards affordable housing and equates to the standard HCA grant level to deliver 2no shared ownership units.

Economic Appraisal Tool

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Version 2.0 July 2009

Cover Sheet Version 2.0 (July 2009) Date Printed: 1/31/2018

GVA GRIMLEY & BESPOKE PROPERTY GROUP (Worksheet 1) HCA ECONOMIC APPRAISAL TOOL

INPUT SHEET 1 - RESIDENTIAL MIX ASSUMPTIONS

Basic Site Details

Site Address Bye Road, Swanwick Site Reference File Source Scheme Description 7 houses open market

Date 30th Jan 18 Site Area (hectares) 0 Author & Organisation Simon Corp HCA Investment Manager

Residential Mix Assumptions

Affordable Housing Tenure 1: Affordable rent

Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Affordable Housing Tenure 2: Intermediate - Shared Ownership

Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Affordable Housing Tenure 3: Intermediate - Discounted Market Sale

3 Bed 2 Bed 3 Bed 4 Bed 1 Bed Flat 2 Bed Flat Other Flat House House House Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity

3 Bed 2 Bed 3 Bed 4 Bed 1 Bed Flat 2 Bed Flat Other Flat House House House Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Worksheet 1 (Page 2 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

3 Bed 2 Bed 3 Bed 4 Bed 1 Bed Flat 2 Bed Flat Other Flat House House House Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

* Other = User-defined

Open Market Housing Type 1: Three bedroom houses

3b5p Unit Size (sq m) - NIA 135 Habitable Rooms per Unit 4 Persons per Unit 5 Total Number of Units 1

Open Market Housing Type 2: Four bedroom houses

4b6p 4b6p 4b6p 4b6p 4b6p 4b6p Unit Size (sq m) - NIA 186 218 200 230 254 256 Habitable Rooms per Unit 6 6 6 6 6 6 Persons per Unit 6 6 6 6 6 6 Total Number of Units 1 1 1 1 1 1

Open Market Housing Type 3:

Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Open Market Housing Type 4:

Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Open Market Housing Type 5:

Unit Size (sq m) - NIA Habitable Rooms per Unit Persons per Unit Total Number of Units

Parking spaces (see handbook for correct definition)

Total number of residential car parking spaces 0 (Open Market and Affordable) Value of each residential car parking space £0 (See user manual for correct definition)

Worksheet 1 (Page 3 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

GVA GRIMLEY & BESPOKE PROPERTY GROUP (Worksheet 2) HCA ECONOMIC APPRAISAL TOOL

INPUT SHEET 2 - RESIDENTIAL VALUE & COST ASSUMPTIONS

BUILDING PERIOD (month 0 = date of planning consent, allow for lead in period to start on site)

Timing (month) Construction Start 6 (whole number, minimum of 0, maximum of 60) Construction End 16 (whole number, minimum of 0, maximum of 60)

Overall Scheme End Date (this must be completed) Month Final End Date of Scheme 19 (whole number, minimum of 0, maximum of 60) (scheme built and fully let/sold)

RESIDENTIAL VALUE ASSUMPTIONS

Base Value

Affordable Housing Tenure 1: Affordable rent

Type of Unit Rent per Unit per Week (£) Total Annual Rent (£ per Unit) £0.00 0 £0.00 0 £0.00 0 £0.00 0 £0.00 0 £0.00 0 £0.00

Management Costs (% of rent) 12.00% (% of gross rent per annum)

Voids / bad debts (% of rent) 4.50% (% of gross rent per annum)

Repairs Fund (% of rent) 18.00% (% of gross rent per annum)

Yield (%) 6.25% (to capitalise the net rent, currently circa 6% but please seek a

Start Month End Month Timing of Affordable Housing 6 16 (whole number, minimum o Tenure 1 Purchase Payment

Affordable Housing Tenure 2: Intermediate - Shared Ownership

Total Unit Rent per Unit per Total Annual Rent Type of Unit Capital Value (£ psm, NIA) week of rented share (£) (£ per Unit) 0 £0 £0 £0 0 £0 £0 £0 0 £0 £0 £0 0 £0 £0 £0 0 £0 £0 £0 0 £0 £0 £0 0 £0 £0 £0

Owner-occupied share (%) 40.0%

Unsold Equity Rent Per Annum (%) 2.75% (HCA Limit of 2.75%)

Management Costs (% of rent) 6.00% (% of gross rent per annum

Voids / bad debts (% of rent) 1.50% (% of gross rent per annum

Repairs Fund (% of rent) (% of gross rent per annum

Yield (%) 6.25% (to capitalise the net rent, c

Start Month End Month Timing of Affordable Housing 6 18 (whole number, minimum o Tenure 2 Purchase Payment

Affordable Housing Tenure 3: Intermediate - Discounted Market Sale

Capital Value Type of Unit pre-discount (£ psm, NIA) 1 Bed Flat 2 Bed Flat

Worksheet 2 (Page 4 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

3 Bed Flat 2 Bed House 3 Bed House 4 Bed House Other

% of Open Market Value (ie discounted value)

Start Month End Month Timing of Affordable Housing (whole number, minimum o Tenure 3 Purchase Payment

Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity

Total Unit Rent per Unit per Total Annual Rent Type of Unit Capital Value (£ psm, NIA) week of rented share (£) (£ per Unit) 1 Bed Flat £0 £0 2 Bed Flat £0 £0 3 Bed Flat £0 £0 2 Bed House £0 £0 3 Bed House £0 £0 4 Bed House £0 £0 Other £0 £0

Owner-occupied share (%)

Unsold Equity Rent Per Annum (%)

Management Costs (% of rent) (% of gross rent per annum

Voids / bad debts (% of rent) (% of gross rent per annum

Repairs Fund (% of rent) (% of gross rent per annum

Yield (%) (to capitalise the net rent, c

Start Month End Month Timing of Affordable Housing (whole number, minimum o Tenure 4 Purchase Payment

Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Type of Unit Rent per Unit per Week (£) Total Annual Rent (£ per Unit) 1 Bed Flat 2 Bed Flat 3 Bed Flat 2 Bed House 3 Bed House 4 Bed House Other

Management Costs (% of rent) (% of gross rent per annum)

Voids / bad debts (% of rent) (% of gross rent per annum)

Repairs Fund (% of rent) (% of gross rent per annum)

Yield (%) (to capitalise the net rent, currently circa 6% but please seek a

Start Month End Month Timing of Affordable Housing (whole number, minimum o Tenure 5 Purchase Payment

Open Market Values

Capital Value (£ psm) Average value of unit Open Market Housing Type 1: Three bedroom houses £3,360 £453,651 Open Market Housing Type 2: Four bedroom houses £3,360 £752,725 Open Market Housing Type 3: - Open Market Housing Type 4: - Open Market Housing Type 5:

Month Timing of First Open Market Housing Sale 16 (whole number, minimum o Timing of Last Open Market Housing Sale 19 (whole number, minimum o

Ground rents

Worksheet 2 (Page 5 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Average ground rent per unit per annum (£) (where applicable) Affordable Housing Tenure 1: Affordable rent £0 Affordable Housing Tenure 2: Intermediate - Shared Ownership £0 Affordable Housing Tenure 3: Intermediate - Discounted Market Sale Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Open Market Housing Type 1: Three bedroom houses £0 Open Market Housing Type 2: Four bedroom houses £0 Open Market Housing Type 3: - £0 Open Market Housing Type 4: - £0 Open Market Housing Type 5: £0

Yield (%) 5.50% (to capitalise the ground rents)

Month Timing of ground rent payment 22 (whole number, minimum of 0, maximum of 60)

Social Housing Grant & Other Funding Grant per unit (£) Affordable Housing Tenure 1: Affordable rent £0 Affordable Housing Tenure 2: Intermediate - Shared Ownership £0 Affordable Housing Tenure 3: Intermediate - Discounted Market Sale Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Timing of 1st Payment Timing of 2nd Payment Timing Social Housing Grant Paid 0 0

Other sources of funding Value (£) Timing of Payment RSL Cross Subsidy (whole number, minimum o HCA Infrastructure Grant (whole number, minimum o LA re-cycled SHG (whole number, minimum o Other source of funding 1 (whole number, minimum o Other source of funding 2 (whole number, minimum o Land Remediation Tax Relief (whole number, minimum o

BUILDING COST, MARKETING COST & SECTION 106 ASSUMPTIONS

Building Costs - Gross Net to Gross Ratio for (£ / sq m) Building Costs (%)* Affordable Housing Tenure 1: Affordable rent £0 100% Affordable Housing Tenure 2: Intermediate - Shared Ownership £0 100% Affordable Housing Tenure 3: Intermediate - Discounted Market Sale Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Open Market Housing Type 1: Three bedroom houses £1,880 100% Open Market Housing Type 2: Four bedroom houses £1,880 100% Open Market Housing Type 3: - £0 100% Open Market Housing Type 4: - £0 100% Open Market Housing Type 5: £0 100%

* The ratio is typically 70% - 85% in blocks of flats to reflect the difference between GIA & NIA (ie common parts such as lifts, stairs, corridors etc) and 100% in houses which have no common parts

Building Costs (£ / car parking space) Residential Car Parking Building Costs (average cost / car parking space) £0

% of Building Costs Building Design Fees % (Architects, QS etc) 7.00% (typically around 10%) Building Contingencies (% of Building Costs) 5.00% (typically around 5% for ne

Section 106 Payments (£) * Cost (£) Month of Payment CIL £217,970 6 SPA £1,267 6 £0 0 £0 0 £0 0 £0 0 £0 0

* This section excludes Affordable Housing section 106 payments Site Abnormals (£) Cost (£) Month of Payment Car ports and garage £70,000 8 External works at standard 15% £417,078 8

Worksheet 2 (Page 6 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

£0 0 £0 0 £0 0 £0 0 £0 0

Building Cost Percentage Increase (if any) % Site Specific Sustainability Initiatives (%) Lifetime Homes (%) Code for Sustainable Homes (%) 0.00% Other (%)

OTHER COSTS

SITE ACQUISITION COSTS % Agents Fees (% of site value) 1.00% (typically around 1%) Legal Fees (% of site value) 0.75% (typically around 0.75%) Stamp Duty (% of site value) 4.00%

Cost (£) Month of Payment Other Acquisition Costs (£) £0 1

FINANCE COSTS

Arrangement Fee (£) £0 Interest Rate (%) 6.50% (typically around 3-5% abov Misc Fees - Surveyors etc (£) £0

Marketing Costs

Affordable Housing Marketing Costs Cost (£) Timing (month) Developer cost of sale to RSL (£) £0 6 RSL on-costs (£) £0 6 Intermediate Housing Sales and Marketing (£) £0 18

Open Market Housing Marketing Costs

Sales Fees (agents fees & marketing fees) - % 2.50% (typically around 6%) Legal Fees (per Open Market unit) - £ £500 (typically around £600 per u

DEVELOPER'S RETURN FOR RISK AND PROFIT (before taxation)

% of Housing Capital Value Open Market Housing (%) 17.50% (typically 17.5-20%) Affordable Housing (%) 0.00% (typically around 6%. profit only taken on the capital value of a

Worksheet 2 (Page 7 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

GVA GRIMLEY & BESPOKE PROPERTY GROUP (Worksheet 3) HCA ECONOMIC APPRAISAL TOOL

INPUT SHEET 3 - COMMERCIAL & NON-RESIDENTIAL

OFFICE ASSUMPTIONS

Size of office scheme (gross sq m) 0 Size of office scheme (net lettable sq m) 0

Values Rent (£ psm) £0 Yield (%) 0.00% Purchaser's costs (% of value) 0.00% (typically around 5.75% assuming a 4% stamp duty)

Building Costs Office Building Costs (Gross, £ psm) £0 Office Building Professional Fees (% of building costs) 0.00% (typically around 10% - 15%) Building Contingencies (% of building costs) 0.00% (typically around 5%)

Timing Timing (month) Start of Building Period (month) 6 (whole number, minimum of 0, maximum of 60) End of Building Period (month) 24 (whole number, minimum of 0, maximum of 60) Timing of Letting / Sale (month) 27 (whole number, minimum of 0, maximum of 60)

Letting, Advertising & Sale fees Letting fees (% of annual income) 10.00% (typically around 10% for sole agent and 15% for joint agents) Advertising fees (% of annual income) 1.00% (typically around 1%) Sale fees (% of sale price) 1.75% (typically around 1.75%)

Return for risk / profit (% of value) 18.00% (typically around 20%)

RETAIL ASSUMPTIONS

Size of retail scheme (gross sq m) 0 Size of retail scheme (net lettable sq m) 0

Values Rent (£ psm) £0 Yield (%) 0.00% Purchaser's costs (% of value) 0.00% (typically around 5.75% assuming a 4% stamp duty)

Building Costs Retail Building Costs (Gross, £ psm) £0 Retail Building Professional Fees (% of building costs) 0.00% (typically around 10% - 15%) Building Contingencies (% of building costs) 0.00% (typically around 5%)

Timing Timing (month) Start of Building Period (month) 0 (whole number, minimum of 0, maximum of 60) End of Building Period (month) 0 (whole number, minimum of 0, maximum of 60) Timing of Letting / Sale (month) 11 (whole number, minimum of 0, maximum of 60)

Letting / sale fees Letting (% of income) 0.00% (typically around 10% for sole agent and 15% for joint agents) Advertising (% of annual income) 0.00% (typically around 1%) Sale (% of sale price) 0.00% (typically around 1.75%)

Return for risk / profit (% of value) 0.00% (typically around 20%)

INDUSTRIAL ASSUMPTIONS

Size of industrial scheme (gross sq m)

Values Rent (£ psm) Yield (%) Purchaser's costs (% of value) (typically around 5.75% assuming a 4% stamp duty)

Building Costs Industrial Building Costs (Gross, £ psm) Industrial Building Professional Fees (% of building costs) (typically around 10% - 15%) Building Contingencies (% of building costs) (typically around 5%)

Timing Timing (month) Start of Building Period (month) (whole number, minimum of 0, maximum of 60) End of Building Period (month) (whole number, minimum of 0, maximum of 60) Timing of Letting / Sale (month) (whole number, minimum of 0, maximum of 60)

Letting / sale fees Letting (% of income) (typically around 10% for sole agent and 15% for joint agents) Advertising (% of annual income) (typically around 1%) Sale (% of sale price) (typically around 1.75%)

Worksheet 3 (Page 8 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Return for risk / profit (% of value) (typically around 20%)

LEISURE ASSUMPTIONS

Size of Leisure scheme (gross sq m) Size of Leisure scheme (net lettable sq m)

Values Rent (£ psm) Yield (%) Purchaser's costs (% of value) (typically around 5.75% assuming a 4% stamp duty)

Building Costs Leisure Building Costs (Gross, £ psm) Leisure Building Professional Fees (% of building costs) (typically around 10% - 15%) Building Contingencies (% of building costs) (typically around 5%)

Return for risk / profit (% of value) (typically around 20%)

COMMUNITY USE ASSUMPTIONS

Size of Community-use scheme (gross sq m) Size of Community-use scheme (net lettable sq m)

Values Rent (£ psm) Yield (%) Purchaser's costs (% of value) (typically around 5.75% assuming a 4% stamp duty)

Building Costs Community-use Building Costs (Gross, £ psm) Community-use Building Professional Fees (% of building costs) (typically around 10% - 15%) Building Contingencies (% of building costs) (typically around 5%)

Return for risk / profit (% of value) (typically around 20%)

Worksheet 3 (Page 9 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

GVA GRIMLEY & BESPOKE PROPERTY GROUP (Worksheet 4) HCA ECONOMIC APPRAISAL TOOL

SUMMARY

Site Address Bye Road, Swanwick Site Reference File Source Scheme Description 7 houses open market Date 30th Jan 18 Site Area (hectares) Author & Organisation Simon Corp HCA Investment Manager

Housing Mix (Affordable + Open Market)

Total Number of Units 7 units Total Number of Open Market Units 7 units Total Number of Affordable Units 0 units Total Net Internal Area (sq m) 1,479 sq m Total Habitable Rooms 40 habitable rooms % Affordable by Unit 0.0% % Affordable by Area 0.0% % Affordable by Habitable Rooms 0.0% % Social Rented within the Affordable Housing - by number of units % Social Rented within the Affordable Housing - by area % Social Rented within the Affordable Housing - by habitable rooms

Total Number of A/H Persons 0 Persons Total Number of Social Rented Persons 0 Persons Total Number of Intermediate Persons 0 Persons Total Number of Open Market Persons 41 Persons Total Number of Persons 41 Persons

Site Area 0.00 hectares Net Internal Housing Area / Hectare - sq m / hectare

Residential Values

Affordable Housing Tenure 1: Affordable rent

Total Rent Capital Value Type of Unit Yield (%) pa (£) (£) - - - 0 - - - 0 - - - 0 - - - 0 - - - 0 - - - 0 - - - Total - - -

Total Capital Value of Affordable Housing Tenure 1 £0

Affordable Housing Tenure 2: Intermediate - Shared Ownership

Capital Value Total Floorspace Total Capital Type of Unit (£ psm) (sq m) Value (£) 0 - - - 0 - - - 0 - - - 0 - - - 0 - - - £0 - - - £0 - - - Total - - -

Owner-occupied / rented % share 40%

Capital Value of owner-occupied part -

Total Rent Capital Value Type of Unit Yield (%) pa (£) (£) 0 - - - 0 - - - 0 - - - 0 - - - 0 - - - £0 - - - £0 - - - Total (full capital value if sold at OMV) - - -

Total Capital Value of Affordable Housing Tenure 2 £0

Worksheet 4 (Page 10 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Affordable Housing Tenure 3: Intermediate - Discounted Market Sale

Capital Value Total Floorspace Total Capital Type of Unit (£ psm) (sq m) Value (£) 1 Bed Flat - - - 2 Bed Flat - - - 3 Bed Flat - - - 2 Bed House - - - 3 Bed House - - - 4 Bed House - - - Other - - - Total - - -

% of Open Market Value -

Total Capital Value of Affordable Housing Tenure 3 £0

Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity

Owner-occupied / rented % share -

Capital Value of owner-occupied part -

Total Rent Capital Value Type of Unit Yield (%) pa (£) (£) 1 Bed Flat - - - 2 Bed Flat - - - 3 Bed Flat - - - 2 Bed House - - - 3 Bed House - - - 4 Bed House - - - Other - - - Total (full capital value if sold at OMV) - - -

Total Capital Value of Affordable Housing Tenure 4 £0

Affordable Housing Tenure 5: Intermediate - Discounted Market Rented

Total Rent Capital Value Type of Unit Yield (%) pa (£) (£) 1 Bed Flat - - - 2 Bed Flat - - - 3 Bed Flat - - - 2 Bed House - - - 3 Bed House - - - 4 Bed House - - - Other - - - Total - - -

Total Capital Value of Affordable Housing Tenure 5 £0

TOTAL CAPITAL VALUE OF ALL AFFORDABLE HOUSING (EXCLUDING SHG & OTHER FUNDING) £0

Social Housing Grant

Number of Grant per unit (£) Grant (£) Units Affordable rent £0 0 £0 Intermediate - Shared Ownership £0 0 £0 Intermediate - Discounted Market Sale £0 0 £0 Intermediate - Other Type of Shared Own / Share £0 0 £0 Intermediate - Discounted Market Rented £0 0 £0 SHG Total - 0 £0

Social Housing Grant per Affordable Housing Person - Social Housing Grant per Social Rented Person - Social Housing Grant per Intermediate Person -

TOTAL VALUE OF SOCIAL HOUSING GRANT £0

RSL Cross Subsidy £0

Worksheet 4 (Page 11 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

HCA Infrastructure Grant £0 LA re-cycled SHG £0 Other source of funding 1 £0 Other source of funding 2 £0 Land Remediation Tax Relief £0

OTHER SOURCES OF AFFORDABLE HOUSING FUNDING £0

TOTAL CAPITAL VALUE OF ALL AFFORDABLE HOUSING (INCLUDING SHG & OTHER FUNDING) £0

Open Market Housing

Net Area Revenue Total Revenue Type of Open Market Housing (sq m) (£ / sq m) (£) Three bedroom houses 135 £3,360 £453,651 Four bedroom houses 1,344 £3,360 £4,516,351 ------Total 1,479 - £4,970,002

Average value (£ per unit) Three bedroom houses £453,651 Four bedroom houses £752,725 - -

TOTAL CAPITAL VALUE OF OPEN MARKET HOUSING £4,970,002

Car Parking

No. of Spaces Price per Space (£) Value - - -

TOTAL VALUE OF CAR PARKING £0

Ground rent Capitalised annual ground rent Affordable Housing Tenure 1: Affordable rent £0 Affordable Housing Tenure 2: Intermediate - Shared Ownership £0 Affordable Housing Tenure 3: Intermediate - Discounted Market Sale £0 Affordable Housing Tenure 4: Intermediate - Other Type of Shared Own / Shared Equity £0 Affordable Housing Tenure 5: Intermediate - Discounted Market Rented £0

TOTAL CAPITALISED ANNUAL GROUND RENT £0

TOTAL CAPITAL VALUE OF RESIDENTIAL SCHEME £4,970,002

Non-Residential Values

Office £0 Retail £0 Industrial £0 Leisure £0 Community-use £0 £0

TOTAL CAPITAL VALUE OF NON-RESIDENTIAL SCHEME £0

TOTAL VALUE OF SCHEME £4,970,002

Worksheet 4 (Page 12 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Residential Building, Marketing & Section 106 Costs

Affordable Housing Build Costs £0 Open Market Housing Build Costs £2,780,520 £2,780,520

Cost Multipliers Site Specific Sustainability Initiatives (%) 0.0% £0 Lifetime Homes (%) 0.0% £0 Code for Sustainable Homes (%) 0.0% £0 Other (%) 0.0% £0

Residential Car Parking Build Costs £0

Other site costs

Building Contingencies 5.0% £139,026 Building Cost Fees (Architects, QS etc): 7.0% £204,368 Other Acquisition Costs (£) £0

Site Abnormals Car ports and garage £70,000 External works at standard 15% £417,078 £0 £0 £0 £0 £0 £0

Total Building Costs £3,610,992

Section 106 Costs (£) CIL £217,970 SPA £1,267 £0 £0 £0 £0 £0 0 £0

Section 106 costs £219,237

Marketing (Open Market Housing ONLY) Sales Fees: 2.5% £124,250 Legal Fees (per Open Market unit): £500 £3,500

Marketing (Affordable Housing) Developer cost of sale to RSL (£) £0 RSL on-costs (£) £0 Intermediate Housing Sales and Marketing (£) £0

Total Marketing Costs £127,750

Non-Residential Building & Marketing Costs

Building Costs Office £0 Retail £0 Industrial £0 Leisure £0 Community-use £0 £0

Professional Fees (Building, Letting & Sales) Office £0 Retail £0 Industrial £0 Leisure £0 Community-use £0 £0

Total Non-Residential Costs £0

TOTAL DIRECT COSTS: £3,957,979.27

Worksheet 4 (Page 13 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Finance and acquisition costs (finance costs are only displayed if there is a positive residual site value)

Arrangement Fee - Misc Fees (Surveyors etc) - Agents Fees - Legal Fees - Stamp Duty - Total Interest Paid -

Total Finance and Acquisition Costs -

Developer's return for risk and profit

Residential Open Market Housing Operating 'Profit' £869,750 Affordable Housing 'Profit' £0

Non-residential Office £0 Retail £0 Industrial £0 Leisure £0 Community-use £0 £0

Total Operating Profit £869,750 (profit after deducting sales and site specific finance costs but before allowing for developer overheads and taxation)

Residual Site Value

SITE VALUE TODAY -£624

EXISTING USE VALUE £132,500

DIFFERENCE BETWEEN SITE VALUE AND EXISTING USE VALUE -£133,124

Checks:

Site Value as a Percentage of Total Scheme Value 0.0%

Site Value per hectare #VALUE!

Worksheet 4 (Page 14 of 15) Version 2.0 (July 2009) Date Printed: 1/31/2018

Notes & Calculation Sheet (Worksheet 5)

83.6

Worksheet 5 (Page 15 of 15) Economic Appraisal Tool

click here to proceed

Version 2.0 July 2009

Cover Sheet Version 2.0 (July 2009) Date Printed: 1/31/2018

GVA GRIMLEY & BESPOKE PROPERTY GROUP (Worksheet 1) HCA ECONOMIC APPRAISAL TOOL

INPUT SHEET 1 - RESIDENTIAL MIX ASSUMPTIONS

Basic Site Details

Site Address Bye Road, Swanwick Site Reference File Source Scheme Description 7 houses open market- no CIL