Development
RLV Calculator
Development

Residual Land Value Calculator

Work backwards from GDV to determine the maximum you can pay for land while achieving your target profit margin.

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

Costs as % of Build

Residual land value
Maximum land price
Residual Land Value

£506,333

Max land price

Target Profit

£416,667

At 20% POC

Non-Land Costs

£1,577,000

All other costs

Land to GDV

20.3%

Land as % of GDV

Maximum Land Value

£506,333

Pay up to this amount for land to achieve 20% profit on cost

RLV Waterfall

GDV£2,500,000
Less: Target profit (20%)-£416,667
Less: Build cost-£1,200,000
Less: Professional fees-£120,000
Less: Finance costs-£72,000
Less: Sales costs-£75,000
Less: Contingency-£60,000
Less: Other costs-£50,000
= Residual Land Value£506,333

Profit Sensitivity

At 15% POC

£596,913

At 20% POC

£506,333

At 25% POC

£423,000

About Residual Land Value

  • • RLV is the maximum you can pay for land while achieving target profit
  • • This is how professional developers value land
  • • Remember to deduct SDLT on land from this figure
  • • Land typically represents 25-40% of GDV in viable schemes
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About the Residual Land Value Calculator

What it does and how it helps you

The Residual Land Value Calculator helps UK property developers determine maximum land purchase price for development sites. Work backwards from GDV through all costs to calculate residual land value ensuring target profit margin is achieved.

Residual land value calculation using industry-standard methodology
Target profit on cost adjustment to ensure viability
Waterfall breakdown showing how RLV is derived from GDV
Sensitivity analysis showing RLV at different profit margins

How It Works

Understanding the calculation method

The Residual Land Value Calculator works backwards from end value: 1. Gross Development Value (GDV) - Total sales value of completed scheme 2. Target Profit - Your required profit on cost percentage (typically 15-25%) 3. Total Allowable Costs - Maximum costs = GDV ÷ (1 + Target Profit %) 4. Non-Land Costs - Sum of build costs, professional fees, finance costs, sales costs, contingency, and other costs 5. Residual Land Value = Total Allowable Costs - Non-Land Costs 6. Sensitivity Analysis - Shows RLV at different profit margins (15%, 20%, 25%) This is the professional method developers use to determine maximum bid price for land. Remember to deduct SDLT from the RLV figure.

When to use this calculator

Use this calculator when evaluating land purchases to determine maximum viable bid price. Essential before making offers on development sites. Helps ensure you don't overpay for land which is the most common cause of development failure. Use during feasibility stage before incurring professional fees.

Frequently Asked Questions

Common questions about this calculator

Residual Land Value (RLV) is the maximum you can pay for land while achieving your target profit. It's calculated by working backwards: GDV minus target profit minus all development costs = RLV. This is how professional developers value land - not by comparable land sales, but by what the land can support based on the finished scheme value. RLV changes daily as GDV and costs fluctuate.
Viable schemes typically show land at 25-40% of GDV. Prime London might stretch to 40-45%, provincial cities 25-35%, suburban 20-30%. If RLV exceeds 40% of GDV, margins are tight - either increase GDV, reduce build costs, or walk away. Lenders get nervous when land exceeds 35% of GDV as there's less buffer if things go wrong. Rule of thumb: land + build should not exceed 70-75% of GDV.
Target POC depends on risk and lender requirements: Minimum viable: 15% (marginal, hard to finance), Standard requirement: 20% (most lenders accept), Strong deal: 25%+ (easy finance, better terms), High risk: 25-30% (complex builds, untested locations, first-time developers). Always stress test - if costs increase 10% or GDV falls 10%, do you still hit minimum 15% POC? If not, increase target POC starting point.
YES - critically important. The RLV calculator shows maximum land price BEFORE SDLT. SDLT is typically 5% for commercial/development land (3% band 1, 4% band 2, 5% on £250k+). If RLV shows £500k, you pay £24,750 SDLT, so net to vendor is £475,250. Always calculate: Offer = RLV - SDLT. Factor SDLT into your appraisal or into 'other costs' field. Don't make this expensive mistake.
Negative RLV means scheme is unviable at your target profit - costs exceed GDV even with no land cost. Options: 1) Increase GDV (can you add value, more units, higher spec?), 2) Reduce build costs (value engineering, different spec), 3) Accept lower profit (risky - no buffer for problems), 4) Walk away (often the right answer). Never proceed with negative or marginal RLV hoping to 'make it work' - this is how developers go bust.

Related Property Terms

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