Profit on Cost
Calculate development profit on both cost and GDV, and test viability headroom.
Introduction
Who this is for: Developers and lenders testing scheme viability.
Why it matters: Lenders quote profit on cost; agents often quote profit on GDV. They are different numbers from the same scheme, and confusing them makes a deal look better or worse than it is.
Typical scenario: A developer needs to demonstrate 20% profit on cost to secure development finance.
- Quoting profit on GDV when a lender has asked for profit on cost — always the higher-sounding figure.
- Excluding land and finance from "cost" when calculating the ratio.
- Not testing what happens if GDV falls 10% — most schemes are far more sensitive than expected.
Inputs
Scheme
Analysis
Profit is £700,000 — 16.3% on cost, or 14.0% on GDV. GDV would need to fall 14.0% to reach break-even.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Sensitivity
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Export
Live Results
Profit
£700,000
Profit on Cost
16.28%
Profit on GDV
14.00%
Total Cost
£4,300,000