consultancy software training development. user group meeting 2012

consultancysoftwaretraining

development

User Group Meeting

2012

Agenda

• Introduction (this bit)• Company update• SDS ProVal• SDS Sequel• New Products• Private Development• Questions• Lunch• Open Workshop

Company update

• Staff changes• Training accreditation• Awards• International• advantageSDS

New Clients• Bespoke Properties Ltd• Bolton at Home• Bournemouth Borough Council• Central Bedfordshire Council• City of Bradford MBC• DP9 Partnership• Equity Housing Group Ltd• First Choice Homes Oldham Ltd• Guinness Northern Counties HA Ltd• Harrow Churches Housing

Association• Helena Partnerships

• Kift Consulting• Knight Frank• Liverpool Mutual Homes• Livin Housing Limited• London Borough of Ealing• London Borough of Hounslow • Lovell Partnership • Merlin HS• Network HG• Peabody• Swan Housing Group• Waverley Borough Council

Sales Forecast

UK Outlook

• Austerity until 2018?• Tiger Index gloomy• IMF to trim global growth forecast• No one knows!

UK Outlook

UK Outlook

* As at May 2012. Source: Marketline

Government Spending

11 © MarketLine This report is a licensed product and shall not be reproduced without written permission from MarketLine

Figure 5: United Kingdom homebuilding industry volume forecast: housing units, 2011–16

Sector Outlook

• Universal credit• Increased voids/bad debts• Change from RPI to CPI• Bond market strong• HRA changes kill off transfers?• Mortgages from pensions?• Stamp duty holiday through 4G auction?• Commercial not social?• Return of the housebuilders

SDS ProVal

ProVal in ExcelKnown issues to be addressed

oDefault ‘ProVal Appraisals’ folder not always selected on savingoClosing the appraisal sometimes requires to be done twiceoAffordable equity share not calculating

SDS ProVal

ProVal in ExcelInflation oProposing to update inflation data as soon as RPI information announced.oWill not wait for HCA formal confirmation.oRisk of HCA surprising us!oRPI/CPI position - awaiting further advice

SDS ProVal

ProVal in Excel

oNext update to follow after September RPI announcedoNovember

SDS ProVal

New Release 12.4.5 – this week.

SDS ProVal

oAddresses speed and usability issuesoChanged layoutoAppraisal opening time c. 20 secs.oReports updatedoUser Manual to be updated

SDS ProVal

oNew pricing structure for upgradingoApplicable 1st January 2013

SDS ProVal LS Pricing

oNew one-off upgrade charge, based on users.oCurrent ‘unlimited’ user licences will be honoured, but changing to a fixed number of users may be beneficial.oConfirm upgrade before 31st December to avoid the supply charge. oDefer implementation as suits you.

SDS ProVal LS Pricing

oSupport charge may increase, s.t. current number of modules in ProVal XL.oIndividual quotation available on request

SDS ProVal LS Pricing

oMinimum one day training for administratorsoMinimum half day Beginners plus half day Refresher/Advanced for end usersoAppraisal Appreciation seminar, optional

SDS ProVal LS Pricing

oSee Andrew Markham for a trialoUse our server remotely to trialoWebinar training offered for trials

SDS ProVal LS Pricing

oOverview, highlighting principal changes

SDS Sequel

• New release v6.1.8• New features• Updated user interface• Improved appraisal import• People section fields added

• Brixx v1.0.5• Option to aggregate tenure types

SDS Sequel

• Future updates for 2013• Scaleable cashflow manager• Disaggregation of multi-tenure appraisals• Updating of appraisal from Sequel

SDS Sequel

• Don’t forget…• Office Addins for Word/Excel/Outlook• Brixx Export Utility• Free reports

…all on the website: http://www.s-d-s.co.uk

SDS Sequel

SDS Sequel

• Support available online for all SDS products:• http://community.s-d-s.co.uk

SDS Sequel

• Overview, highlighting key changes…

New Products

New Products

• Sequel Mobile (iPhone & iPad)• Landval Mobile (iPhone & iPad)• Housing Development Manual• Savills/Rightmove AVM link• SDS HomeMatch• SDS IntelliStock

Sequel Mobile

Landval Mobile

Housing Development Manual

• Created and maintained by advantageSDS• Ideal for new build, refurbishment projects,

purchase of street properties and temporary social housing

• Easy to follow, step by step guide• Includes compliance checklists• Integrates with SDS Sequel• Available now!

Savills/Rightmove

• Link from ProVal to AVM website• Property details sent to AVM• Other details entered by user• Report data entered into appraisal• Report saved with appraisal• Due: November 2012

SDS HomeMatch

• Developed for sales/homebuy staff• Online property/customer matching• Property view or people view• Affordability sensitivity options• Emailing of property details to customers• Reporting• Due: January 2012, s.t.c.

SDS StockProfiler*• Uses RSR data, together with other data, to model your entire stock• Results will display tabular/graphical data showing data such as

tenure, size and type attributes, distribution and value (NPV).• Designed to be run frequently to analyse the stock in different ways• Data shown geographically on Google Maps• Due: April 2012 s.t.c.

Phase 2:• Automatically generated appraisals of stock options• Results summarised and ranked for review• Further refinements to the appraisal then possible

Private Development, Cross Subsidy & Mix Optimisation

David Shelton

Private Development

What is the key difference between speculative development and social housing

development ?

Private Development

RISK !

Selling properties is always the biggest risk with speculative development

Private Development

Estimating sales prices is not easy!

Small differences in prices have a disproportionate effect on land value, or profit

This is called the Gearing Effect

Private Development

In what other areas is speculative development different from social housing?

Private DevelopmentSize Matters oSmaller size for a given occupationoMore likely to under-occupy

Private DevelopmentDesign & SpecificationoDesign is different – more focused on enhancing value rather than reducing maintenance costs

Private DevelopmentDesign & SpecificationoThe private market is not uniform – different product designs for different market sub sectors.

Private DevelopmentDesign & SpecificationoPrivate buyers have free choice and the main competitor is the second hand market

Private DevelopmentProcessoPrivate sector developers are fiercely competitive when buying land. oAchieving maximum land value is the first objective

Private DevelopmentProcessoTight control over building costso‘Standard types’ allow accurate estimating

Private DevelopmentProcessoPrivate developers do not build all the units in ‘one contract’oEach dwelling is a mini building projecto‘Work in Progress’ is tightly controlledoCashflow similarly strictly controlled

Private DevelopmentProcessoTiming is criticaloMore disciplined on decisions – oPrivate developers are less likely to change their mind

Private Development

Popular fallacies believed by housing associations about speculative

development?

Private Development

Building for speculative sale is the same as building for shared ownership

Different markets Different products Different pricing strategyDifferent customer profileDifferent marketing strategy

Private Development

If we don’t sell it we can let it

Dwellings for private sector not usually acceptable for social letting

May not be viable for market rental

Space and specification are different

Private Development

We can let a fixed contract for the works just like we do for other social housing schemes

Units need to be built as separate individual projects

Private Development

If Barratts can do it, why can’t we do it ?

You require…Specialist knowledgeRelevant experience

It needs…A different kind of controlA different management processA different business model

Cross Subsidy

Cross subsidising social housing from speculative housing?

Cross Subsidy

Don’t spend the profit before you’ve made it!

Retain some profit as a contingency on sales prices

Cross Subsidy

Don’t under value LCHO units as a way of reducing risk

Dwellings priced at £x will get sold at £xThe purchaser reaps the under selling

Use realistic prices and costs

Cross Subsidy

Don’t under value LCHO units as a way of making them affordable

Affordability checks are a key viability indicator for the housing association.

Cross Subsidy

Show all contingencies and risk provisions explicitly in the appraisal – don’t hide them in other inputs.

Understanding the true risk and how that has been dealt with in the appraisal is essential

The Gearing Trap

The Gearing Trap

The Gearing Trap

o A small change in sales prices leads to disproportionate change in land value.

o Similarly, once the land cost is fixed, a small change in sales prices leads to a disproportionate change in profit margin.

The Gearing Trap

o A small change in sales prices leads to disproportionate change in land value.

o Similarly, once the land cost is fixed, a small change in sales prices leads to a disproportionate change in profit margin.

Gearing

Effect of Sales Change on Land Value

Increase SV Decrease SVSales Price 250,000 262,500 5% 237,500 5%

Build 125,000 125,000 125,000

GM% 20% 50,000 52,500 47,500

Land Value 75,000 85,000 13% 65,000 -13%

Sales Value Sensitivity

Effect of Sales Change on Profit

Increase SV Decrease SVSales Price 250,000 262,500 5% 237,500 5%

Build 125,000 125,000 125,000

Land 75,000 75,000 75,000

Gross Margin 50,000 62,500 25% 37,500 -25%

Gearing

Sales Value Sensitivity

Mix Optimisation

Changing mix to maximise land valueand maximise cross subsidy

Mix Optimisation

Assume a 1 acre plot of land

What mix of units achieves the best land value ?

Mix Optimisation 2-bed 3-bed TOTAL

Floor area 70m² 80m²

Sales Price £250,000 £275,000

Build cost £77,000 £84,000

Number of units which can go on one acre (plotting density)

15 12.5

Mix A 8 5 13

Mix B 4 8 12

Mix C 10 3 13

Mix D 3 9 12

Mix Optimisation 2-bed 3-bed TOTAL

Floor area 70 80

Sales Price £250,000 £275,000

Build cost £77,000 £84,000

Number of units which can go on one acre (plotting density)

15 12.5

SP less Build cost 173,000 191,000

Mix A 8 5 13

Mix B 4 8 12

Mix C 10 3 13

Mix D 3 9 12

Mix Optimisation 2-bed 3-bed TOTAL

Floor area 70 80

Sales Price £250,000 £275,000

Build cost £77,000 £84,000

Number of units which can go on one acre (plotting density)

15 12.5

SP less Build cost 173,000 191,000

Value per acre 2,595,500 2,387,500

Mix A 8 5 13

Mix B 4 8 12

Mix C 10 3 13

Mix D 3 9 12

Mix Optimisation 2-bed 3-bed TOTAL

Floor area 70 80

Sales Price £250,000 £275,000

Build cost £77,000 £84,000

Number of units which can go on one acre (plotting density)

15 12.5

SP less Build cost

173,000 191,000

Value per acre 2,595,500 2,387,500

Total Land (acs)Mix A 8 5 13 2,339,000 0.93Mix B 4 8 12 2,220,000 0.91Mix C 10 3 13 2,303,000 0.91Mix D 3 9 12 2,238,000 0.92

Mix Optimisation

Result

Mix A £2,339,000Mix B £2,220,000

£119,000 between best and worst!

Achieved by mix aloneOn 1 acre

Mix Optimisation

Mix Optimisation

oMaximise Land Value

oMaximise Profit

oMinimise Grant

But, you must have freedom to vary mix

Questions and Feedback

The Audience!

01483 278444www.s-d-s.co.uk

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Thank you for your time