1.14 Development gain arises when Mapeley sells properties at a profit. It is the difference between sale proceeds and the price agreed by Mapeley in 2001 adjusted using an established property index, less qualifying expenditure. By April 2009 the Department had received £4.5 million from the sale of 16 properties for £34 million. Mapeley made a loss on five of these buildings. The Department does not share losses. It employs an independent agent to check the value of sold properties. Figure 6 shows how the Department's share is calculated.
1.15 The thresholds used in calculating the gain should change in line with an established property index. Mapeley provides the calculation, which the Department should check to agree its share. Mapeley did not adjust the thresholds, so the Department's share on the sale of two buildings was overstated by £191,000.