Development
POC Calculator
Development

Profit on Cost Calculator

Calculate developer profit on cost percentage to assess deal viability. Most lenders require 15-20% POC for development finance.

AI-Powered
Free to use
Development figures
Enter project costs and GDV

Core Costs

Other Costs

Profit analysis
Key development metrics
Profit on Cost

19.0%

Acceptable

Profit on GDV

16.0%

Margin on sales

Gross Profit

£400,000

GDV minus all costs

Total Costs

£2,100,000

All project costs

Profit on Cost

19.0%

Developer Profit

£400,000

0%15%20%25%+
Marginal - some lenders may accept

Cost Breakdown

Land cost£500,000 (24%)
Build cost£1,200,000 (57%)
Professional fees£120,000
Finance costs£150,000
Sales costs£50,000
Contingency£60,000
Other costs£20,000
Total costs£2,100,000

Return on Equity

63.5%

Based on 30% equity

Equity Required

£630,000

Est. 30% of costs

Lender Requirements

  • • Most lenders require minimum 15-20% profit on cost
  • • Higher risk projects may need 25%+ POC
  • • POC is calculated as: (GDV - Total Costs) ÷ Total Costs × 100
  • • This is the primary metric used by development lenders
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About the Profit on Cost Calculator

What it does and how it helps you

The Profit on Cost Calculator helps UK property developers assess development viability and lender requirements. Calculate profit on cost (POC), profit on GDV, and return on equity to determine if your scheme meets lender criteria for development finance.

Profit on Cost calculation - the primary metric lenders assess
Profit on GDV and margin analysis for developer returns
Return on equity calculation based on 30% equity assumption
Visual POC gauge showing lender acceptance thresholds

How It Works

Understanding the calculation method

The Profit on Cost Calculator measures developer profit: 1. Gross Development Value (GDV) - Total sales value of completed scheme 2. Total Development Costs - Sum of land, build costs, professional fees, finance costs, sales costs, contingency, and other costs 3. Gross Profit - GDV minus total costs (before tax) 4. Profit on Cost (POC) - (Gross Profit ÷ Total Costs) × 100 - the key metric lenders use 5. Profit on GDV - (Gross Profit ÷ GDV) × 100 - alternative margin measure 6. Return on Equity - (Gross Profit ÷ Equity Required) × 100 - investor return metric The calculator assesses if POC meets typical lender requirements (15-20% minimum, preferably 20%+).

When to use this calculator

Use this calculator during feasibility stage to check if development meets lender profit requirements before approaching lenders. Essential for development appraisals, assessing deal viability, and determining if scheme will secure development finance. Most lenders require 15-20% POC minimum.

Frequently Asked Questions

Common questions about this calculator

Most development lenders require minimum 15-20% profit on cost, with 20%+ preferred. Strong schemes achieve 25%+. POC below 15% is typically rejected or requires increased equity. Higher risk schemes (complex builds, untested locations, first-time developers) need higher POC (20-25%) to secure finance. Remember: POC is before tax and doesn't include holding costs or developer time.
Profit on Cost = (GDV - Costs) ÷ Costs × 100. Profit on GDV = (GDV - Costs) ÷ GDV × 100. Lenders prefer POC as it measures return on capital invested. 20% POC equals 16.7% profit on GDV. POC is unlimited (can exceed 100%), while profit on GDV caps at 100%. Example: £2.5m GDV, £2m costs = 25% POC or 20% on GDV. Always quote POC to lenders, not profit on GDV.
Include everything: 1) Land (inc. SDLT), 2) Build costs (inc. prelims, overheads, profit), 3) Professional fees (architect, engineer, QS, PM, planning - typically 10-15%), 4) Finance costs (interest + arrangement fees), 5) Sales/marketing (agents, legals - 3% GDV), 6) CIL/S106, 7) Contingency (5-10%), 8) Other costs (utilities, enabling works). DO NOT include developer profit in costs - profit is what's left after all costs.
POC indicates safety buffer. 20% POC means costs can overrun by 20% or sales can fall by 16.7% before lender loses money. High POC = strong deal, easier approval, better rates. Low POC means tight margins, higher lender risk, harder to secure finance. Lenders stress-test POC by increasing costs 10-15% and reducing GDV 10% - scheme must still show acceptable profit after stress.
Possibly, but challenging. 15-20% POC is marginal - some lenders accept for experienced developers on prime locations with pre-sales. You'll need: strong track record, higher equity (30-35%), pre-sold units reducing risk, conservative GDV with evidenced comparables, and tight cost control. Expect higher rates (12-14%) and lower LTC (60-65%). Better to improve scheme viability - reduce land cost, increase GDV, or reduce build costs to achieve 20%+ POC.

Related Property Terms

Profit on cost calculatorDevelopment profit margin UKPOC calculator developmentDevelopment finance requirementsLender profit requirementsDevelopment viability calculatorProfit on GDV calculatorReturn on equity propertyDevelopment appraisal profitDeveloper margin calculator