the scheme may suggest a value, but one may not be involved at this stage, or a ‘reasonableness’ check on their valuation may be required. If so this may be done in a straightforward manner using the HCA’s Development Appraisal Tool (DAT), available from: http://www.
homesandcommunities.co.uk/ourwork/ development-appraisal-tool
DAT may be used to estimate the relevant cash flows, and derive a capital value, which is the principle adopted by RICS guidance on the valuation of affordable housing. It does this using
Value of Affordable Housing = (Gross Rents pa –Management plus Repairs & Maintenance pa) / Investment Yield %
In effect this is a similar computation to that a registered provider would make before bidding for affordable housing. Making this estimate does not require a large amount of data to be entered because build costs are irrelevant. All that concerns a prospective registered provider owner is the rental stream the units will provide and the ‘running’ costs to be deducted, to estimate the net financial benefit. Finally a yield is necessary to turn the annual figures into a capital value.
Using the DAT to estimate affordable housing values
When the Development Appraisal Tool is opened it is possible to ‘compact it’ so
only the parts relevant to this exercise, as opposed to a full viability appraisal, are presented. This is done as soon as a new copy of the model is first opened, when the following screen is presented
The option ‘Affordable Housing (only) valuation’ should be selected by clicking the bottom control. The process is short. A few text entries are made on the ‘Site’ sheet to record which scheme is under consideration. The property details and rents are keyed into the ‘Res details’ sheet, as follows. (Note values are sample data only – not suggested values. The local HCA contact will be able to advise if necessary).
Res Details tab
Next the Annual Costs are entered to the right on the same screen
26
THE TERRIER - Summer 2012
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