Viability is complex and time-consuming, and the numbers can be crunched in a variety of ways using various methods.
For housing development, the planning policy expectations towards affordable housing and infrastructure (education, open space, health, transport, water, management, green and digital) place demands on development that must be taken into account when considering if it’s viable to construct.
The National Planning Policy Framework and the National Planning Guidance on Viability emphasise that viability should be assessed and considered at the planning policymaking stage, rather than when a local planning authority (LPA) is considering an individual planning application. The framework and guidance also ask for consistency in the approach to viability assessments, including standardised inputs, along with transparency of the data.
This doesn’t mean that we’ve seen the end of viability assessments with individual planning applications. Last autumn, we heard a speaker from the Ministry of Housing, Communities and Local Government acknowledge that this emphasis on viability at the plan-making stage didn’t rule out assessment for individual sites and schemes.
What you need to remember
- Get more involved at the plan-making stage. The viability data assessed at this stage will be scrutinised for an individual application. Where there are up-to-date planning policies setting out the required percentage of affordable housing provision and contributions for housing schemes, planning applications should comply and will be assumed viable
- If you want to submit a viability assessment for a scheme at the planning application stage, justify the particular circumstances for why this is required. The planning system and development isn’t immune to the uncertainty of the wider economic climate. Such factors, where relevant, may justify a viability assessment on a planning application.
- The price paid for land won’t be an appropriate justification for failure to meet relevant policies in the plan. If you’ve paid above market value for land, this is a developer risk. It won’t be taken into account when assessing viability. A benchmark land value will be used.
- Although the guidance refers to standardised inputs for viability assessments, some inputs, such as build costs, will always vary scheme by scheme. The LPA don’t have to consider assumptions in a viability assessment when making a decision if they aren’t credible. The weight to be attached to the viability assessment as a material planning consideration is a matter for the decision-maker, and the courts are unlikely to get involved.
- The guidance doesn’t limit the size of a scheme, where viability can be assessed. This is correct even where a LPA’s own policies may state viability will only be considered on certain sized schemes (e.g. strategic sites).
Can you keep confidential information out of the public domain?
- The presumption is that all the viability information will be made publically available, except for confidential or commercially sensitive information, such as ongoing negotiations over land purchase and information relating to compensation payments (e.g. rights of lights). We’re currently waiting for the publication of the government’s executive summary template, which was due last autumn. This will be a public document and we hope it provides clarity.
What about viability on build-to-rent schemes?
- The national guidance acknowledges that there are different economic (and therefore viability) considerations in respect of Build to Rent schemes. These are about longer term investment and income streams, and the numbers can be crunched differently to schemes where units are to be sold.
The use of viability assessments at the planning application stage is embedded into the planning system. It can reduce the burden loaded onto new housing development for the provision of the full policy required quota of affordable housing and infrastructure requirements.
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