Valuation Concepts Relevant to Development

Question 1

What is hope value?

Answer 1

• The additional value arising from the expectation that planning consent or enhanced use may be achieved in the future.
• Often relevant when land has potential for future development but no current consent.

Question 2

What is marriage value in a development context?

Answer 2

• Value created when two or more interests combine to produce greater value than separately.
• Often applied in site assembly or when adjoining parcels unlock enhanced development potential.

Question 3

Why are ransom strips relevant to development appraisal?

Answer 3

• A ransom strip controls access to a development site and may significantly impact land value.
• Case law (Stokes v Cambridge, 1961) supports sharing uplift, often around one‑third of value created.
• Must be considered in site acquisition and viability assessments.

Question 4

What is purchaser’s cost in a residual valuation?

Answer 4

• An allowance for SDLT, agents’ fees, and legal fees deducted from GDV when calculating net value.
• Prevents overstating the achievable sale price.