Residual land valueRLV
The maximum amount you can pay for the site and still hit your target profit on cost. The answer to 'what is this site worth to me as a developer?'
Formula
WhereTarget profit = (TDC excl. land + RLV) × target profit on cost. Solve iteratively or use a residual model.
Why it matters
RLV is the most useful number on a site screen. It tells you the ceiling you can offer the vendor before the project stops making sense at your hurdle. Most acquisitions teams calculate RLV first and only progress sites where the asking price sits comfortably below it.
Worked example
For the Waterloo scheme with net realisation $26.2M, non-land TDC $16.9M, and a target profit on cost of 20%:
- Solve RLV such that ($26.2M − $16.9M − RLV) / ($16.9M + RLV) = 20%.
- This gives RLV ≈ $5.45M.
If the vendor is asking $7.2M, the deal does not work at a 20% profit on cost, even before allowing for stamp duty and legals on the land.
Related terms
Connected ideas in the glossary.
Questions
Frequently asked
Should RLV include stamp duty?
Most developers calculate RLV inclusive of stamp duty and acquisition costs, so it is the all-in number you can pay. Confirm which convention is being used in any RLV figure shared with you.
Is RLV the same as the offer price?
RLV is the ceiling, not the offer. Most teams offer 5–15% below RLV to leave headroom for the unexpected.
See these numbers in your own feasibility.
No spreadsheets. No setup. Fourteen-day free trial, no credit card.