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The residential development review for central England, published this week, analyses gross margins from developing a site in the south Birmingham suburb of Selly Oak as townhouses or apartments.

It estimates that building 30 flats in three to four bedroom blocks on each acre would cost 拢2.55m. Fifteen townhouses of roughly the same height would cost 拢1.35m. Assuming that the 15 townhouses sold for 拢180,000 each and the 30 flats for 拢130,000, an acre would generate 拢2.7m if developed for family housing and 拢3.9m as apartments.

Both schemes generate the same gross margin for each acre of 拢1.35m. 鈥淐omparable margins for apartments and townhouses are achievable,鈥� the review concludes.

It adds that other factors, such as offers of discounts to investor buyers, are likely to be 鈥渕ore detrimental鈥� for margins on apartment developments than on family housing.

The report adds that townhouses can be completed piecemeal, providing a quicker return on capital, and planning permission is often easier to secure for family homes.

The review鈥檚 publication follows last week鈥檚 pre-Budget report in which Alistair Darling, chancellor of the exchequer, provided a fillip to the buy-to-let market with his changes to the capital gains tax regime.