Ipswich Garden Suburb Viability Appraisal – Final Report On behalf of Ipswich City Council Project Ref: 28509 | Rev: Final | Date: May 2015 Office Address: 16 Brewhouse Yard, Clerkenwell, London EC1V 4LJ T: +44 (0)207 566 8600 E: [email protected] Ipswich Garden Suburb Viability Appraisal Document Control Sheet Project Name: Ipswich Garden Suburb Project Ref: 28509 Report Title: Viability Appraisal Doc Ref: Final Report Date: May 2015 Name Position Signature Date Kate Ginks Surveyor KG 20.05.2015 Prepared by: Stuart Cook Associate SC 27.05.2015 Reviewed by David Codling Director DC 27.05.2015 Approved by: Cristina Howick Partner CH 27.05.2015 For and on behalf of Peter Brett Associates LLP Peter Brett Associates LLP disclaims any responsibility to the Client and others in respect of any matters outside the scope of this report. This report has been prepared with reasonable skill, care and diligence within the terms of the Contract with the Client and generally in accordance with the appropriate RICS Agreement and taking account of the manpower, resources, investigations and testing devoted to it by agreement with the Client. This report is confidential to the Client and Peter Brett Associates LLP accepts no responsibility of whatsoever nature to third parties to whom this report or any part thereof is made known. Any such party relies upon the report at their own risk. © Peter Brett Associates LLP 2015 ii Ipswich Garden Suburb Viability Appraisal Contents 1 Introduction ................................................................................................................................. 7 1.1 Commission ................................................................................................................... 7 1.2 April 2015 Commission ................................................................................................. 8 1.3 Structure of Report ........................................................................................................ 8 1.4 Limitations of Report...................................................................................................... 9 2 Analysis of Costs (2013) ........................................................................................................... 10 2.1 Introduction .................................................................................................................. 10 2.2 Build Costs - Houses & District Centre........................................................................ 10 2.3 External Works ............................................................................................................ 10 2.4 Code for Sustainable Homes Level 4 .......................................................................... 10 2.5 Enabling Works ........................................................................................................... 11 2.6 Abnormal Costs ........................................................................................................... 11 2.7 Contingency & Fees .................................................................................................... 11 2.8 Sales Agents & Marketing Fees .................................................................................. 12 2.9 Build Rate .................................................................................................................... 13 2.10 Finance Costs .............................................................................................................. 13 2.11 Land Acquisition Costs ................................................................................................ 13 2.12 Developer Return ........................................................................................................ 13 2.13 Other S.106 Costs ....................................................................................................... 14 2.14 Unit Sizes .................................................................................................................... 15 3 Analysis of Sales Values .......................................................................................................... 17 3.1 Introduction .................................................................................................................. 17 3.2 Residential Market Overview ....................................................................................... 17 3.3 Residential Sales Values Ipswich ................................................................................ 18 3.4 Affordable Housing Sales Values ................................................................................ 21 3.5 District & Local Centre Sales Values........................................................................... 21 3.6 Threshold Land Value ................................................................................................. 22 4 Results of Viability Assessment 2013 ..................................................................................... 24 4.1 Introduction .................................................................................................................. 24 4.2 Affordable Housing Policy Requirement...................................................................... 24 5 Sensitivity Testing ..................................................................................................................... 25 5.1 Introduction .................................................................................................................. 25 5.2 Scenario 1 –Costs & Values as at May 2015 .............................................................. 25 5.3 Scenario 2 – Future Costs & Values in 2020 .............................................................. 27 6 Conclusions ............................................................................................................................... 30 6.1 Introduction .................................................................................................................. 30 6.2 Development Appraisal Assumptions.......................................................................... 30 6.3 Results of Viability Testing 2013 ................................................................................. 30 iii Ipswich Garden Suburb Viability Appraisal 6.4 Updated results ........................................................................................................... 31 7 Summary & Recommendation ................................................................................................. 33 Figures Figure 2.3 S.106 Costs .......................................................................................................................... 14 Figure 3.1 Average House Prices in Suffolk and the UK ...................................................................... 17 Figure 3.2 Map: Average house prices across Ipswich ........................................................................ 18 Figure 3.3 Average house price by Census Standard Table ward (January 2011 to August 2013 ...... 19 Tables Table 1.1 Results of viability testing October 2013 ................................................................................. 8 Table 2.1 BCIS build cost data – Ipswich .............................................................................................. 10 Table 2.5 Professional fees as a percentage ........................................................................................ 12 Table 2.6 Agents & marketing fees ....................................................................................................... 12 Table 2.7 HMRC SDLT Rates ............................................................................................................... 13 Table 2.8 Unit Sizes .............................................................................................................................. 15 Table 3.2 Retail rental evidence of Ipswich ........................................................................................... 21 Table 3.3 Yield and void matrix: Q2 2013 ............................................................................................. 22 Table 5.3 Results of viability testing Scenario 1 – present day costs and values (May 2015) ............. 26 Table 5.6 Results of viability testing Scenario 2 – Future Costs & Values in 2020............................... 29 Table 6.1 Affordable Housing % by Phase – 2013 Assessment ........................................................... 31 Table 6.2 Results of viability testing Scenario 1 – present day costs and values (May 2015) ............. 32 Table 6.3 Results of viability testing Scenario 2 – Future Costs & Values in 2020............................... 32 Appendices Appendix A Viability Testing Results: 2013 Appendix B Viability Testing Results: Scenario 1 – Present Day Costs & Values (May 2015) Appendix C Viability testing results: Scenario 2 – Future Costs & Values in 2020 iv Ipswich Garden Suburb Viability Appraisal v Ipswich Garden Suburb Viability Appraisal 1 Introduction 1.1 Commission 1.1.1 In March 2013 Peter Brett Associates (PBA) were instructed to undertake the viability analysis of the proposed development at Northern Fringe (now referred to in policy documents as the Ipswich Garden Suburb). 1.1.2 The purpose of the viability analysis in 2013 was to test the impact on viability of the draft infrastructure list. 1.1.3 The viability analysis in 2013