If you own land in Sussex or Kent, you have probably heard some version of:.
“This could be worth a fortune if you get planning.”
Sometimes that is true. Sometimes it is not.
The difference usually comes down to one thing.
Do the numbers actually stack up once you include all the real costs and risks?
At Bellco, we do not value land based on optimism or pub talk. We value land the way lenders and professional developers do: by running a proper development appraisal and working backwards from the end value.
That process is called a residual land valuation.
It is simple in principle and brutally honest in practice. It also explains why some landowner expectations are miles away from what a site can genuinely support.
This guide is written in plain English, in a contractor developer tone, and it includes a worked example for 20 houses in Rother, East Sussex using real world cost allowances like CIL, finance, contingency and developer profit.
What Is A Residual Land Valuation?
Residual land valuation is a method of working out the maximum price a developer can pay for land while still delivering the scheme, meeting obligations, funding it, and making a sensible profit.
In short:
Residual Land Value = Gross Development Value minus Total Development Costs minus Developer Profit
Gross Development Value (GDV) is the total sales income once the homes are built and sold.
Total Development Costs is everything it costs to deliver the scheme, not just construction.
Developer profit is not a bonus. It is the return required to justify the risk and satisfy funders. In real life, if the profit allowance is not there, the scheme does not get funded.
How Developers Actually Think About Land Value
Most landowners start with:
What are the finished houses worth?
Developers start with:
What will this cost to deliver, what risks are we carrying, and what is left once we allow for a proper return?
That is why two people can look at the same piece of land and reach totally different conclusions.
If somebody ignores CIL, ignores lender requirements, ignores contingency, and assumes a low profit, they will tell you your land is worth far more than a serious buyer can pay.
The maths always wins.
What Costs Must Be Included In A Proper Development Appraisal
A proper residual appraisal includes items like:
Build costs
Including Groundworks, super-structure, M & E, finishes, external works, drainage, utilities, roads and paths.
Contingency
Most lenders require 10 percent. If it is not in the appraisal, you are not funding the job.
Professional fees
Architect, engineer, planning, building control, ecology, surveys, legal. On housing led schemes you will often see 8 to 12 percent of build costs depending on stage and complexity.
CIL
In Rother, the residential CIL rate varies by zone and is index linked. The Council’s published 2026 indexed rates show residential rates ranging from about £196.36 per m² up to about £290.91 per m² depending on location.
Section 106
We are not including Section 106 in the example below because you cannot accurately price it until you understand the exact planning position, heads of terms, and whether affordable housing is triggered. But it is important you understand this: if S106 comes in heavy, land value drops.
Building Safety Levy
From October 2026, a Building Safety Levy is intended to apply to most new residential development, calculated per square metre, and rates vary by local authority with higher rates for greenfield and discounts for previously developed land.
Finance costs
These are all the construction costs associated with the development incMost developers need to allow for finance costs, a realistic allowance of 8 to 12 percent. We will use 10 percent in the worked example.
Sales and marketing
All developments need multiple exit routes, you should always include costs for sales & marketing, a realistic allowance is 3 to 5 percent of GDV. We will use 4 percent in the worked example.
Developer profit
All lenders must see a minimum of 20%, and for initial appraisal we use 25%. We use 25% initially, as the risk is higher at this stage with no planning.
Example: 20 Houses In Rother, East Sussex
This example is deliberately simple and transparent. It is designed to show landowners how quickly costs stack up.
Assumptions
- 20 houses
- 100 m² each
- Total GIA 2,000 m²
Base GDV
£4,600 per m²
Build cost
£2,100 per m²
CIL in Rother
In Rother District Council’s 2026 indexed residential rates, roughly £196.36 per m² to £290.91 per m² depending on zone. For this we will use the middle range.
Building Safety Levy
We will use the average rate of £34m2 for this.
Note: the official levy is set out in government guidance and varies by local authority.
Finance
10%
Sales and marketing
4% of GDV
Contingency
10% of construction cost
Developer profit
25% of GDV
Important
Section 106 is excluded from the calculation at this stage.
Step 1 – Calculate GDV
- Total GDV = 2,000 m² x £4,600 per m²
- GDV = £9,200,000
Step 2 – Calculate Build Cost
- Build cost = 2,000 m² x £2,100 per m²
Build cost = £4,200,000
Contingency at 10% - Contingency = £420,000
Step 3 – Add Sales And Marketing
Sales and marketing at 4% of GDV:
- = 4 percent x £9,200,000
- = £368,000
Step 4 – Add CIL Rother Range
This is a simple midpoint between the published low and high zone rates.
- Mid CIL scenario: £243.64 per m² x 2,000 m² = £487,280
Step 5 – Add Building Safety Levy Example
- Greenfield example: £40.23 per m² x 2,000 m² = £80,460
Step 6 – Add Professional Fees Allowance
For this worked example, we will include professional fees at 10 percent of build cost.
- Fees = 10 percent x £4,200,000
- Fees = £420,000
Step 7 – Add Finance Allowance
Finance is typically modelled on total costs before land and profit. You asked for an 8 to 12% range. We will use 10% for a sensible midpoint.
To keep this readable, we calculate finance on:
- Build cost
- Contingency
- Fees
- CIL
- Building Safety Levy
- Sales and marketing
We will show the mid CIL and greenfield levy case in the main example.
Sub total before finance
- Build £4,200,000
- Contingency £420,000
- Fees £420,000
- CIL mid £487,280
- Building Safety Levy greenfield £80,460
- Sales £368,000
- Sub total = £5,975,740
Finance at 10 percent = £597,574
Round for appraisal: Finance = £598,000
Step 8 – Developer Profit
For initial appraisal we work at 25 percent of GDV:
- Profit = 25 percent x £9,200,000
- Profit = £2,300,000
Visual Summary Table Costs And Residual Land Value
This table shows the range of outcomes depending on CIL zone and whether the levy is brownfield or greenfield. Section 106 is still excluded.
All figures in pounds
| Item | Basis | Amount |
|---|---|---|
| Total area | 20 houses x 100m² | 2,000m² |
| GDV | 2,000m² x £4,600/m² | 9,200,000 |
| Build cost | 2,000m² x £2,100/m² | 4,200,000 |
| Contingency | 10% of build | 420,000 |
| Professional fees | 10% of build | 420,000 |
| Sales & marketing | 4% of GDV | 368,000 |
| CIL (mid) | 2,000m² x £243.64/m² | 487,280 |
| Building Safety Levy (greenfield) | 2,000m² x £40.23/m² | 80,460 |
| Subtotal before finance | sum of costs above | 5,975,740 |
| Finance | 10% of subtotal | 597,574 |
| Total costs before profit | subtotal + finance | 6,573,314 |
| Developer profit | 25% of GDV | 2,300,000 |
| Total deductions | costs + profit | 8,873,314 |
| Residual land value | GDV – total deductions | 326,686 |
Base case residual land value (rounded): £327,000
Notes on the table
- CIL rates shown are based on Rother’s published 2026 indexed rates, which vary by zone.
- The levy rates shown are illustrative based on draft structures and official guidance that levy is per m² and varies by local authority and land type.
- Section 106 is excluded and would reduce residual land value further.
Quick reality check
This is the bit most people miss. On a £9.2m GDV scheme, once you include proper lender style allowances and 25 percent profit, the land value can become very tight unless GDV rises, density increases, or costs reduce. Rother District Council requires all developments over 10 units to provide 40% affordable housing. As a developer these are built at effectively cost so this massively affects the residual land value
That does not mean your land has no value. It means the scheme needs the right planning outcome and the right economics.
What Landowners Commonly Get Wrong
- Confusing GDV with profit
GDV is turnover. Not earnings. Everything comes out before land value exists. - Assuming developers can just pay more
If a developer pays more for land, something else has to give. Usually that means profit drops below lender requirements or obligations get challenged, which stalls schemes. - Ignoring CIL and future levies
CIL is not a small number in Rother once indexation is applied. Depending on zone it can be around £196 to £291 per m² at 2026 rates.
Per m² levies add up fast. They come straight off land value. - Thinking contingency is padding
Lenders expect it. If it is not there, funding is harder, slower, or more expensive. - Underestimating programme and finance risk
A few months of planning delay or utility delay does not just hurt timelines. It hurts finance costs and profit.
If You Have Received A Letter From Bellco
We do not send blanket mailshots to every landowner.
If you have heard from us, it means we have already taken a view that your site may have potential.
Before we write to anyone, we look at the basics: location, local policy, constraints, access, likely unit mix, and a first pass residual appraisal.
If the numbers do not stack up, we will tell you straight. We do not waste your time and we do not waste ours.
Why Bellco Is Different – A Contractor Led Developer View
Bellco is contractor led. We build what we buy.
That matters because it keeps appraisals grounded in reality.
We understand construction sequencing, ground risk, drainage costs, utility upgrades, procurement, and what lenders actually require. It means our offers are based on buildable numbers, not spreadsheet optimism.
For landowners, that usually means fewer surprises, fewer retrades, and a smoother route from agreement to completion.
Residual land valuation is not a dark art. It is a disciplined calculation.
- If costs rise through CIL, levies, abnormal works, finance, or obligations, land value falls.
- If GDV rises, density improves, or costs reduce, land value improves.
That is the reality of development.
If you own land in Sussex or Kent and want a straight talking appraisal backed by real numbers, get in touch.
We will review your site confidentially and talk you through:
- What is realistically achievable
- What it is likely to be worth
- What risks sit underneath it
- What route gives you the best outcome
No fluff. No inflated promises. Just proper developer maths and a clear plan.