Feel free to explore Landcycle. If you're interested in further advice regarding obtaining a formal Royal Institute of Chartered Surveyors (RICS) Valuation, planning strategy, and the timelines and likelihood of obtaining planning permission, don't hesitate to contact us. 

What exactly is a Valuation? The term 'valuation' is often thrown around, but it's worth considering the formal definition provided by the Royal Institute of Chartered Surveyors (RICS): "An opinion of the value of an asset or liability on a stated basis, at a specified date. Unless limitations are agreed in the terms of engagement, this will be provided after an inspection and any further investigations and enquiries that are appropriate, having regard to the nature of the asset and the purpose of the valuation."

In the context of Landcycle, we haven't inspected the property, agreed upon terms of engagement, or conducted any investigations into its value impact.

Understanding the concept of 'value' is equally important. In simple terms, the market value of a property refers to the amount that a willing buyer and a willing seller agree upon in an arm's length transaction where both parties are knowledgeable and act without compulsion.

The Valuation Tool: To arrive at a property value (specifically the value of development land following a planning consent), numerous complex variables must be considered. Our tool is based on what's known as the 'residual' method of valuation. I believe this method is most suitable for identifying the value of development land.

In essence, the residual valuation method forms an opinion of future value by considering the total value of properties sold as a result of being developed for sale. This figure, known as the Gross Development Value (GDV), represents the income generated by the project. The GDV can vary and is influenced by factors such as the predicted value and size of units, whether units are sold privately on the open market or designated as 'affordable homes,' and sold to a registered social landlord.

The valuation tool utilizes an aggregated value of actual sold prices in the property area, the average pound per square foot (£/sqft) resale, and the average optimum size of units being developed. We then automatically apply an assumption regarding the percentage of these properties that will be sold as affordable units.

The next step in the residual process involves deducting costs from the GDV. These costs include land costs (the predicted sale price of the land), building costs, professional fees, and any abnormal costs such as ecology, highway works, or ground works. The project's profit is then determined as a percentage of 'profit on costs,' which establishes its viability. Most commercial housebuilders anticipate a return on their costs of around 20%-25%. Therefore, costs can be adjusted, primarily the land cost, to allow a developer to achieve their expected return. Ultimately, the land value can be deduced at the end of the process.

In a residential development scenario, the price of the land is what a party is willing to sell and buy for, and a residual valuation exercise determines that figure based on the aforementioned variables.

RICS always recommends that valuations be based on more than one method. While the comparison method is often cited as an alternative, in my experience, due to the multitude of variables that can affect land value, even between neighboring or nearby examples, it's an unreliable conclusion to rely upon. Nonetheless, it can be considered as long as any variables or differences are accounted for.

In conclusion, Landcycle isn't a formal valuation tool and shouldn't be relied upon for making final decisions. However, it can serve as a helpful guide. Like any valuation method, the conclusion is only as reliable as the information used throughout the process. Therefore, if you're aware, for example, that your land can't be developed without gaining access via third-party land or if it's located in a floodplain or within the grounds of a listed building, it's essential to make allowances for these facts. The key point here is that any valuer would need to conduct a thorough inspection of the property and be aware of all relevant facts to conclude a reliable valuation figure.

We hope you find Landcycle enjoyable and useful.