After Repair Value (ARV) Calculator
Estimate a property's value after renovation to assess investment potential and maximum offer price.
What this calculator does
This calculator applies the standard property-developer screening test to a refurbishment project. Enter the after-refurbishment value taken from comparable sold prices, your build budget, and the asking price, and it returns the maximum offer that leaves a working margin, plus the headline profit at that asking price.
The maximum offer is seventy percent of the finished value less the refurbishment cost. That thirty percent gap is not profit — it absorbs stamp duty, bridging interest and fees, conveyancing at both ends, estate agent commission, holding costs while the property is empty, and the developer's return. The calculator also flags whether the asking price clears the threshold, which is the fast answer you need when an auction catalogue lands.
When to use it
Use it as a first filter on auction lots and on properties marketed as needing modernisation. Most will fail, and finding that out in a minute is the point. It is also useful in reverse: with the finished value and a fixed asking price, the maximum offer figure tells you what refurbishment budget the deal can actually carry before the margin vanishes.
It works as a discipline check as much as a calculation. If you catch yourself justifying a purchase at seventy-eight percent of finished value because the street is improving, that reasoning is precisely what produces the break-even projects. And for a buy-refurbish-refinance approach rather than a sale, comparing the maximum offer against seventy-five percent of the finished value shows how much of your capital you could expect to release at remortgage.
Understanding the inputs
After refurbishment value is the input everything hinges on. Take it from Land Registry sold prices for finished comparable properties within the last six months on the same or a near-identical street, matched for size, layout, and specification. Asking prices and automated valuations are not evidence.
Refurbishment cost should come from a builder's itemised quote rather than a per-square-metre rule, with fifteen to twenty percent added for what a walkthrough cannot reveal. Purchase price is the guide price or your intended bid — remember auction guide prices are usually set below the reserve. The seventy percent multiplier is fixed here, so if you work to a profit-on-GDV target, compare the profit figure against twenty percent of the finished value instead.
How is this calculated?
Profit = ARV − Purchase Price − Renovation Cost. The 70% rule: Max Offer = ARV × 0.70 − Renovation Cost.
A worked example
Suppose comparable refurbished terraces on the street have sold at £260,000, your builder quotes £45,000, and the property is guided at £150,000. Maximum offer is seventy percent of £260,000, or £182,000, less the £45,000 build — so £137,000. At £150,000 the asking price fails the test by £13,000.
The headline profit looks healthier: £260,000 less £150,000 less £45,000 is £65,000. But subtract £8,750 of stamp duty including the additional-property surcharge, roughly £12,000 of bridging interest and fees over six months, £3,500 of conveyancing on both transactions, £3,900 of estate agent fees at 1.5 percent plus VAT, and £2,000 of council tax, insurance, and utilities. That leaves about £34,850 before income tax — which is why the seventy percent screen said no.
Limitations and assumptions
The profit figure is gross by construction. It excludes stamp duty and the additional-property surcharge, bridging finance costs, conveyancing at both ends, estate agent fees, holding costs on an empty property, and tax on the gain, which is normally charged as trading income rather than capital gains. Together these routinely halve the headline number.
The model also assumes a straightforward sale in a stable market within a short hold. It cannot account for a property sitting unsold for months, a chain collapsing, planning or building control delays, or a scope that expands once the plaster comes off. And it says nothing about the reliability of your finished value — a ten percent error on a £260,000 comparable is £26,000, larger than most contingency budgets. Commission a full building survey and get a written quote before bidding.
Common Questions
- Is the 70 percent rule used in the UK?
- Less commonly. UK developers typically work to a target profit of twenty to twenty-five percent of gross development value, which produces a similar discipline by a different route. The seventy percent rule is a reasonable screening proxy, but check the result against a straight profit-on-GDV calculation before relying on it.
- How do I establish the after-refurbishment value?
- Use Land Registry sold prices and portal sold-price data for comparable finished properties within the last six months, on the same or a very similar street, matching size and layout. Asking prices are not evidence. If your comparables span more than ten percent, treat the valuation as uncertain and price the risk in.
- What stamp duty will I pay on a flip?
- If it is an additional property, the five percent surcharge applies on the whole price plus standard rates. On a £150,000 purchase that is £1,250 of standard duty plus £7,500 of surcharge — £8,750 that never comes back and must sit in your cost sheet from the outset.
- How is flip profit taxed?
- Usually as trading income rather than capital gains, because buying to sell on is trading. That means income tax at your marginal rate plus Class 4 National Insurance if you trade personally, or corporation tax if you use a company. It is not covered by the capital gains annual exempt amount.
- What does bridging finance cost?
- Typically 0.75 to 1.1 percent per month, plus arrangement fees of one to two percent and exit fees on some products, with legal and valuation costs on top. On £150,000 over six months at one percent monthly, that is £9,000 of interest plus around £3,000 of fees — a substantial line that the profit figure above ignores.
- How much contingency should I hold?
- Fifteen to twenty percent of the build budget as a minimum, and more on Victorian or older stock. Damp, failed lintels, asbestos in artex or garage roofs, lead pipework, and inadequate foundations are the usual discoveries. On a period property, budget for the survey to find something your walkthrough did not.
- What does the estimated profit figure exclude?
- Stamp duty, conveyancing on both purchase and sale, survey, bridging interest and fees, estate agent fees of one to two percent plus VAT, council tax and utilities during the works, buildings insurance for an unoccupied property, and tax on the gain. Together these commonly consume twelve to eighteen percent of the sale value.
- Is refurbish-and-refinance better than selling?
- Often, because you avoid estate agent fees and the tax charge on a sale. A lender will typically remortgage at seventy-five percent of the new valuation, so buying well below that lets you release most of your capital while keeping the asset. The trade-off is that you keep the mortgage and the tenant management.
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