Nigel Holland Divisional Chairman Taylor Wimpey UK Central

Nigel Holland Divisional Chairman – Taylor Wimpey UK Central & South West Division

Viability for Development Managers A Developer’s View • Who am I and what qualifies me to speak to you? – – – Board member of Taylor Wimpey UK Just under £ 1 bn of investment in housing development Over 5, 000 new homes per year Over 200 new homes developments in career A company in it for the long term – over 130 years old Over £ 300 m in community contributions in 2015 2

Central & South West in context 3

Viability – a Developer’s View The development model • Landowner - ££££££’s • Local Authority - ££££££’s • Developer - £££’s – Balance Ø Income » Land purchase - landowner » Planning Gain – local authority » Build cost » Profit 4

Viability – a Developer’s View When Viability becomes an issue? – Income is market driven Ø Private homes = market + mortgage lenders Ø Affordable homes = rent + funding available – Build cost is market & design driven Ø Design costs Ø Material costs Ø Labour rates Ø Infrastructure & Services 5

Viability – a Developer’s View When Viability becomes an issue? – Land Cost v Planning Gain v Developer Profit – Land cost needs a willing seller – Developer profit not completely flexible – Planning Gain takes the pain (but it does not have to be this way !!) 6

Viability – a Developer’s View The Landowner • • • Needs to be encouraged to sell Not generally poor Even UK Government wants highest price!! If not in the game……no development Potential to have expectations “managed” Rarely landowner = developer pre planning 7

Viability – a Developer’s View Types of land purchase • With OPP – Planning gain costs already known – viability not an issue unless major market change or RM design costs excessive • Subject to planning – Can be subject to a minimum land price payable – Viability an issue if planning gain not financially supportable • Freehold = rare • Options (Strategic Land) – Frequently include minimum price provisions – Land price can be referred for expert determination – Often high infrastructure costs 8

Viability – a Developer’s View The Developer • Without Developer = no development • Has choice on where to invest – Not infinite amount of capital – Not just about highest margin – also where working is easier • It’s a risky business – “Big 6” margins over last 10 years = average 7% – “Big 4” banks = average over 15% • Does not benefit from land value gain • Great development adds value for us too • Our legacy is our brand 9

Viability – a Developer’s View The Planning Gain requirements • Demand everything = might get nothing – No landowner = no development – No development = no planning gain • Know your red lines in advance – What can be compromised and what can not – Development linked need or “nice to have” • Manage internal conflicts – – Affordable Housing Sustainability Art Sport 10

Viability – a Developer’s View • Understand the dynamics of the negotiation – Landowner / developer / promoter • Why is the viability exercise needed? – Are expectations reasonable? – on all sides • Find a point of trust – How can trust be built up? • Who manages who? – County / Local Authority / Parish – Highways – Services • Profit is not wrong – Understand margins and returns 11

Viability – a Developer’s View • We are not here to fight you – we want the development to happen • Developer is the enabler…. . the middleman – can also be the facilitator too • No development = no highway improvements = no education contributions = no public art = no affordable housing = no new school • Good development = smiles all round 12

THANK YOU Q 13 & A