In message , at 21:57:30 on Mon, 9 Apr
2018, James Heaton remarked:

a big profit for the developer

What's the industry standard margin for this kind of development? A
quick google suggests that 20% would be regarded as "record breaking"
(although that's what I'd expect on a much smaller development).

15% of £350k is close to £50k, which neatly gives £100k again for the
non-residential infrastructure, community contribution, and loss made
on the affordable houses (which I'd expect to be changing hands at
about £250k).

Benchmark profit 17.5% to 20% of GDV, at the lower end for large sites.
So on a £350k house with 17.5% profit on GDV, this would be a profit of
£52,500 near enough. (Profit on GDV is akin to a 'finding the original
quantity' calculation - 50k profit would be 50/(350-50) = 16.6%, 60k
would be 60/(350-60) = 20.6%

Anything significantly below this figure and the developer is likely to
go to viability to get planning obligations reduced.

Thanks, and for highlighting the difference between margin and markup.

I got my original 20% figure from a developer who was charging what I
thought was somewhat under the market price for houses on a small (~8)
fill-in development. He said that the way they worked, was add up all
the land and build (and community) costs, apply the 20%, and then see
whether they sold or not.

If they flew off the "shelf" (aka bought-off-plan) then they'd still
make their 20%, plus have reduced ongoing marketing costs. If they
hadn't sold by the time they were completed, then generally they
wouldn't reduce the price, but hold tight until the local market caught
up with them.

Fast forward to 2010's, and I see a slight variant on that strategy,
which is perhaps what's happening at Ebbsfleet/Northstowe on a slightly
larger scale, is build a relative small Phase 1, and see how they sell
before starting on Phase 2 (or I've even seen a Phase 1a).

One estate near me was started in 2005, and they've only just begun
Phase 5 (plots 550-620), and by the look of it there's another five
years[1] before they do the last houses, followed by the final bits
[assuming they ever do] like the 'Village Hall' and so on

[1] About 300 more in future phases, including 100 in suspiciously-named
"windfall" which I presume is packing them in tighter, and with less
green space, than when the project was first conceived^H^H sold to
the planners.
--
Roland Perry