Session 4: You have viability

evidence – so what?

Consultation

• Why

• Who with

• When

• So what and what do you do with the results?

Consultations Engagement

• A fundamental part of plan making and a

requirement of NPPF, CIL Regs, Harman

Guidance

• Don’t be afraid to ask the developers– For some evidence to support figures

– To explain / for detail

• Record process and comments

METICULOUSLY

• What have you actually asked and is it in the

context of delivering the development plan

Engagement Phases

• Delay at your peril

• Two or three stages

Stage 1 Engagement

• Background and why

– Methodology

– Viability test

– Appraisal assumptions

• Not results

• Certainly not policy

Stage 1 includes establishing agreement on

methodology and assumptions (build costs, sale

prices etc.) Does not include workings.

Stage 2 Engagement

• Changes made from first consultation (or not)

– Methodology

– Viability test

– Appraisal assumptions

• Draft Results

• Emerging conclusions

• Still not policy

Stage 3 Engagement

• Results

• Factors other than viability to consider

• Emerging and developing policy

• Changes to existing policy

• Approve now or hang on?

WPV & plans found sound in 2014

Local Authority Developer’s Profit Threshold Land Value

Barbergh 17% £370,000/ha

Cannock Chase 20% on GDV £100,000-£400,000/ha

Christchurch & East

Dorset

20% on GDC £308,000/ha (un-serviced)

£1,235,000/ha (serviced)

East Hampshire 20% market/6% Affordable £450,000/ha

Erewash 17% £300,000/ha

Fenland 15-20% £1-2m/ha (serviced)

GNDP 20% market/17.5% large sites/6%

Affordable

£370,000-£430,000/ha

Reigate & Banstead 17.5% market/6% Affordable £500,000/ha

Stafford 20% (comprising 5% for internal

overheads).

£250,000/ha

Staffordshire Moorlands 17.5% market/6% Affordable £1.26-£1.41m/ha (serviced)

Warrington 17.5% £100,000-£300,000/ha

Confidentiality

• FOI Act 2000 (Sections 41 and 43(2))

• Environmental Information Regulations 12(5)(e)

• R (English) v East Staffordshire Borough Council and Anor

(2010 EWHC 2744

• Heygate Decision (2014)

• Recent ICO Decisions (2012-2014)

• RICS GN – Paragraph 4.3

• “This viability report is provided on a confidential basis to the Council. We

therefore request that the report should not be disclosed to any third

parties (other than consultants instructed by the Council to review this

report) under the Freedom of Information Act 2000 (sections 41 and 43(2))

or under the Environmental Information Regulations.” (para 4.3.3)

• Planning Performance Agreements

Case study: South Worcestershire

Case Study – South Worcestershire

Local Plan

No additional requirements

• No affordable housing

• Built to Building Regulations (Part L)

• Density informed by consultation with officers and

developers – lower than policy to reflect current

delivery (targets assume high content of flats etc)

• Greenfield sites over 1 hectare have 40% open

space

• No CIL or s106

• All other requirements over high quality and locally

distinctive design and safe design remain

No additional requirements

Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value

Site 1 25,000 280,000 650,432 0 0 0 25,000 280,000 621,823

Site 2 25,000 280,000 621,867 0 0 0 25,000 280,000 596,858

Site 3 25,000 280,000 995,236 0 0 0 25,000 280,000 932,853

Site 4 25,000 280,000 1,126,237 25,000 280,000 994,779 25,000 280,000 1,060,508

Site 5 0 0 0 25,000 280,000 922,171 25,000 280,000 1,596,523

Site 6 0 0 0 350,000 420,000 757,823 350,000 420,000 2,315,869

Site 7 0 0 0 350,000 420,000 1,347,757 0 0 0

Site 8 350,000 420,000 1,626,764 350,000 420,000 2,639,944 350,000 420,000 3,154,171

Site 9 350,000 420,000 1,453,344 350,000 420,000 1,453,344 350,000 420,000 1,312,746

Site 10 25,000 280,000 2,426,809 25,000 280,000 2,232,961 25,000 280,000 1,145,242

Site 11 50,000 310,000 1,881,763 50,000 310,000 2,236,383 50,000 310,000 1,881,763

Site 12 350,000 420,000 2,237,069 350,000 420,000 2,377,585 350,000 420,000 1,393,974

Site 13 350,000 420,000 1,211,920 350,000 420,000 464,046 350,000 420,000 1,964,321

Site 14 750,000 900,000 2,132,497 750,000 900,000 1,476,716 750,000 900,000 3,728,997

Site 15 50,000 310,000 1,714,651 0 0 0 50,000 310,000 2,651,247

Site 16 50,000 310,000 805,244 0 0 0 50,000 310,000 1,398,921

Urban Flats

Viability Appraisals. Alternative / Viability Threshold compared with Residual Values (£/ha)

Malvern Hills Worcester Wychavon

SUE 1

SUE 2

Greenfield 1

Greenfield 2

Greenfield 3

Brownfield redev. L

Town Village Infill

Small Village Scheme

Village House

Brownfield redev. M

Medium Brownfield

Medium greenfield

Urban edge

Town centre flats

Ex garage site

Build Standards• Code for Sustainable Homes Level 4 from April 2013

– Add 6% to cost of house

• SWLP 26 Renewable and Low Carbon Energy(a) All new developments will be required to incorporate the

generation of energy…by at least 10%.

(b) All new development (as part of the major developments)

will be required to incorporate the generation of

energy…by at least 20%.

– Add 2.5% to cost of house (+/- £2,500 /dwelling)

• NOT JUST REDUCING USE – ACTUALLY ABOUT

GENERATION

• NO EVIDENCE OF ANY PRICE BENEFIT FROM

REDUCED ENERGY BILLS

CfSH Level 4 + Onsite Generation

Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value

Site 1 25,000 280,000 535,926 0 0 0 25,000 280,000 507,317

Site 2 25,000 280,000 521,654 0 0 0 25,000 280,000 496,645

Site 3 25,000 280,000 872,062 0 0 0 25,000 280,000 809,678

Site 4 25,000 280,000 995,676 25,000 280,000 864,218 25,000 280,000 929,947

Site 5 0 0 0 25,000 280,000 779,958 25,000 280,000 1,454,311

Site 6 0 0 0 350,000 420,000 484,376 350,000 420,000 2,037,874

Site 7 0 0 0 350,000 420,000 524,622 0 0 0

Site 8 350,000 420,000 1,311,267 350,000 420,000 2,349,470 350,000 420,000 2,841,637

Site 9 350,000 420,000 1,199,472 350,000 420,000 1,199,472 350,000 420,000 1,057,528

Site 10 25,000 280,000 1,762,806 25,000 280,000 1,607,728 25,000 280,000 735,859

Site 11 50,000 310,000 1,674,752 50,000 310,000 2,029,372 50,000 310,000 1,674,752

Site 12 350,000 420,000 1,941,730 350,000 420,000 2,082,246 350,000 420,000 1,120,071

Site 13 350,000 420,000 995,333 350,000 420,000 235,519 350,000 420,000 1,738,024

Site 14 750,000 900,000 1,922,648 750,000 900,000 1,266,867 750,000 900,000 3,523,165

Site 15 50,000 310,000 1,512,381 0 0 0 50,000 310,000 2,500,000

Site 16 50,000 310,000 722,386 0 0 0 50,000 310,000 1,316,871

Town Village Infill

Small Village Scheme

Village House

Brownfield redev. M

Medium Brownfield

Medium greenfield

Urban edge

Town centre flats

Ex garage site

Urban Flats

Viability Appraisals. Alternative / Viability Threshold compared with Residual Values (£/ha)

Malvern Hills Worcester Wychavon

SUE 1

SUE 2

Greenfield 1

Greenfield 2

Greenfield 3

Brownfield redev. L

Affordable Housing

• 15 or more 40%

• 10 – 14 30%

• 5 – 9 20%

As social rented, affordable rented and

intermediate tenure and provided on site

NOT TESTED Less than 5, a financial

contribution will be required.

Affordable Housing

Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value

Site 1 25,000 280,000 332,757 0 0 0 25,000 280,000 195,205

Site 2 25,000 280,000 324,151 0 0 0 25,000 280,000 203,879

Site 3 25,000 280,000 574,023 0 0 0 25,000 280,000 405,338

Site 4 25,000 280,000 656,141 25,000 280,000 453,169 25,000 280,000 478,409

Site 5 0 0 0 25,000 280,000 379,850 25,000 280,000 769,128

Site 6 0 0 0 350,000 420,000 -448 350,000 420,000 906,356

Site 7 0 0 0 350,000 420,000 -1,163,134 0 0 0

Site 8 350,000 420,000 951,958 350,000 420,000 1,239,168 350,000 420,000 1,513,254

Site 9 350,000 420,000 625,000 350,000 420,000 361,330 350,000 420,000 245,641

Site 10 25,000 280,000 1,464,601 25,000 280,000 1,100,887 25,000 280,000 419,301

Site 11 50,000 310,000 1,259,642 50,000 310,000 1,341,269 50,000 310,000 1,071,326

Site 12 350,000 420,000 1,357,721 350,000 420,000 1,630,041 350,000 420,000 844,132

Site 13 350,000 420,000 872,319 350,000 420,000 144,924 350,000 420,000 1,333,809

Site 14 750,000 900,000 2,132,497 750,000 900,000 1,476,716 750,000 900,000 3,728,997

Site 15 50,000 310,000 1,714,651 0 0 0 50,000 310,000 2,651,247

Site 16 50,000 310,000 805,244 0 0 0 50,000 310,000 1,398,921

Urban Flats

Viability Appraisals. Alternative / Viability Threshold compared with Residual Values (£/ha)

Malvern Hills Worcester Wychavon

SUE 1

SUE 2

Greenfield 1

Greenfield 2

Greenfield 3

Brownfield redev. L

Town Village Infill

Small Village Scheme

Village House

Brownfield redev. M

Medium Brownfield

Medium greenfield

Urban edge

Town centre flats

Ex garage site

Density

• Density informed by consultation – lower than

policy

• Greenfield sites over 1 hectare have 40%

open space

• Brownfield sites NO Public Open Space

• Greenfield sites less than 1ha but more than 5

units 20% open space

Affordable Housing, Density,

CfSH4, Onsite Generation, ‘No’ CIL

Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value

Site 1 25,000 280,000 218,251 0 0 0 25,000 280,000 80,699

Site 2 25,000 280,000 223,909 0 0 0 25,000 280,000 103,637

Site 3 25,000 280,000 450,848 0 0 0 25,000 280,000 282,163

Site 4 25,000 280,000 525,581 25,000 280,000 322,609 25,000 280,000 347,849

Site 5 0 0 0 25,000 280,000 239,889 25,000 280,000 626,916

Site 6 0 0 0 350,000 420,000 -292,137 350,000 420,000 634,317

Site 7 0 0 0 350,000 420,000 -2,048,052 0 0 0

Site 8 350,000 420,000 633,442 350,000 420,000 932,511 350,000 420,000 1,197,757

Site 9 350,000 420,000 361,544 350,000 420,000 89,196 350,000 420,000 -30,053

Site 10 25,000 280,000 991,346 25,000 280,000 701,754 25,000 280,000 151,304

Site 11 50,000 310,000 1,050,650 50,000 310,000 1,132,277 50,000 310,000 862,335

Site 12 350,000 420,000 1,083,111 350,000 420,000 1,334,701 350,000 420,000 548,379

Site 13 350,000 420,000 643,792 350,000 420,000 -83,603 350,000 420,000 1,107,512

Site 14 750,000 900,000 1,922,648 750,000 900,000 1,266,867 750,000 900,000 3,523,165

Site 15 50,000 310,000 1,512,381 0 0 0 50,000 310,000 2,500,000

Site 16 50,000 310,000 722,386 0 0 0 50,000 310,000 1,316,871

Urban Flats

Viability Appraisals. Alternative / Viability Threshold compared with Residual Values (£/ha)

Malvern Hills Worcester Wychavon

SUE 1

SUE 2

Greenfield 1

Greenfield 2

Greenfield 3

Brownfield redev. L

Town Village Infill

Small Village Scheme

Village House

Brownfield redev. M

Medium Brownfield

Medium greenfield

Urban edge

Town centre flats

Ex garage site

Uncertain MarketAverage Prices

Uncertain MarketIndexed turn over (from January 2006)

5% fall in prices

Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value Alternative

Land Value

Viability

Threshold

Residual Value

Site 1 25,000 280,000 147,873 0 0 0 25,000 280,000 11,615

Site 2 25,000 280,000 160,872 0 0 0 25,000 280,000 41,742

Site 3 25,000 280,000 368,502 0 0 0 25,000 280,000 201,689

Site 4 25,000 280,000 436,846 25,000 280,000 240,000 25,000 280,000 261,086

Site 5 0 0 0 25,000 280,000 152,118 25,000 280,000 518,310

Site 6 0 0 0 350,000 420,000 -446,987 350,000 420,000 441,647

Site 7 0 0 0 350,000 420,000 -2,437,676 0 0 0

Site 8 350,000 420,000 448,113 350,000 420,000 707,161 350,000 420,000 968,147

Site 9 350,000 420,000 180,971 350,000 420,000 -94,939 350,000 420,000 -209,804

Site 10 25,000 280,000 847,322 25,000 280,000 566,416 25,000 280,000 34,147

Site 11 50,000 310,000 862,693 50,000 310,000 931,789 50,000 310,000 687,536

Site 12 350,000 420,000 842,438 350,000 420,000 1,079,959 350,000 420,000 305,335

Site 13 350,000 420,000 436,110 350,000 420,000 -260,893 350,000 420,000 880,348

Site 14 750,000 900,000 1,648,413 750,000 900,000 1,035,523 750,000 900,000 3,172,312

Site 15 50,000 310,000 1,265,299 0 0 0 50,000 310,000 2,204,210

Site 16 50,000 310,000 611,018 0 0 0 50,000 310,000 1,188,105

Town Village Infill

Small Village Scheme

Village House

Brownfield redev. M

Medium Brownfield

Medium greenfield

Urban edge

Town centre flats

Ex garage site

Urban Flats

Viability Appraisals. Alternative / Viability Threshold compared with Residual Values (£/ha)

Malvern Hills Worcester Wychavon

SUE 1

SUE 2

Greenfield 1

Greenfield 2

Greenfield 3

Brownfield redev. L

Alternative

Land Value

Viability

Threshold

MALVERN HILLS No

Req

uire

men

t

CfS

H4

+ 2.

5%

Aff

ord

able

Targ

et

Aff

ord

able

,

CfS

H4

+2.5

%

and

Den

sity

Aff

ord

able

,

CfS

H4

+2.5

%

and

Den

sity

Pric

es le

ss 5

%

Site 1 SUE 1 25,000 280,000 650,432 535,926 332,757 218,251 147,873

Site 2 SUE 2 25,000 280,000 621,867 521,654 324,151 223,909 160,872

Site 3 Greenfield 1 25,000 280,000 995,236 872,062 574,023 450,848 368,502

Site 4 Greenfield 2 25,000 280,000 1,126,237 995,676 656,141 525,581 436,846

Site 5 Greenfield 3 0 0 0 0 0 0 0

Site 6 Brownfield redev. L 0 0 0 0 0 0 0

Site 7 Urban Flats 0 0 0 0 0 0 0

Site 8 Brownfield redev. M 350,000 420,000 1,626,764 1,311,267 951,958 633,442 448,113

Site 9 Medium Brownfield 350,000 420,000 1,453,344 1,199,472 625,000 361,544 180,971

Site 10 Medium greenfield 25,000 280,000 2,426,809 1,762,806 1,464,601 991,346 847,322

Site 11 Urban edge 50,000 310,000 1,881,763 1,674,752 1,259,642 1,050,650 862,693

Site 12 Town centre flats 350,000 420,000 2,237,069 1,941,730 1,357,721 1,083,111 842,438

Site 13 Ex garage site 350,000 420,000 1,211,920 995,333 872,319 643,792 436,110

Site 14 Town Village Infill 750,000 900,000 2,132,497 1,922,648 2,132,497 1,922,648 1,648,413

Site 15 Small Village Scheme 50,000 310,000 1,714,651 1,512,381 1,714,651 1,512,381 1,265,299

Site 16 Village House 50,000 310,000 805,244 722,386 805,244 722,386 611,018

WORCESTER CITY

Site 1 SUE 1 0 0 0 0 0 0 0

Site 2 SUE 2 0 0 0 0 0 0 0

Site 3 Greenfield 1 0 0 0 0 0 0 0

Site 4 Greenfield 2 25,000 280,000 994,779 864,218 453,169 322,609 240,000

Site 5 Greenfield 3 25,000 280,000 922,171 779,958 379,850 239,889 152,118

Site 6 Brownfield redev. L 350,000 420,000 757,823 484,376 -448 -292,137 -446,987

Site 7 Urban Flats 350,000 420,000 1,347,757 524,622 -1,163,134 -2,048,052 -2,437,676

Site 8 Brownfield redev. M 350,000 420,000 2,639,944 2,349,470 1,239,168 932,511 707,161

Site 9 Medium Brownfield 350,000 420,000 1,453,344 1,199,472 361,330 89,196 -94,939

Site 10 Medium greenfield 25,000 280,000 2,232,961 1,607,728 1,100,887 701,754 566,416

Site 11 Urban edge 50,000 310,000 2,236,383 2,029,372 1,341,269 1,132,277 931,789

Site 12 Town centre flats 350,000 420,000 2,377,585 2,082,246 1,630,041 1,334,701 1,079,959

Site 13 Ex garage site 350,000 420,000 464,046 235,519 144,924 -83,603 -260,893

Site 14 Town Village Infill 750,000 900,000 1,476,716 1,266,867 1,476,716 1,266,867 1,035,523

Site 15 Small Village Scheme 0 0 0 0 0 0 0

Site 16 Village House 0 0 0 0 0 0 0

WYCHAVON

Site 1 SUE 1 25,000 280,000 621,823 507,317 195,205 80,699 11,615

Site 2 SUE 2 25,000 280,000 596,858 496,645 203,879 103,637 41,742

Site 3 Greenfield 1 25,000 280,000 932,853 809,678 405,338 282,163 201,689

Site 4 Greenfield 2 25,000 280,000 1,060,508 929,947 478,409 347,849 261,086

Site 5 Greenfield 3 25,000 280,000 1,596,523 1,454,311 769,128 626,916 518,310

Site 6 Brownfield redev. L 350,000 420,000 2,315,869 2,037,874 906,356 634,317 441,647

Site 7 Urban Flats 0 0 0 0 0 0 0

Site 8 Brownfield redev. M 350,000 420,000 3,154,171 2,841,637 1,513,254 1,197,757 968,147

Site 9 Medium Brownfield 350,000 420,000 1,312,746 1,057,528 245,641 -30,053 -209,804

Site 10 Medium greenfield 25,000 280,000 1,145,242 735,859 419,301 151,304 34,147

Site 11 Urban edge 50,000 310,000 1,881,763 1,674,752 1,071,326 862,335 687,536

Site 12 Town centre flats 350,000 420,000 1,393,974 1,120,071 844,132 548,379 305,335

Site 13 Ex garage site 350,000 420,000 1,964,321 1,738,024 1,333,809 1,107,512 880,348

Site 14 Town Village Infill 750,000 900,000 3,728,997 3,523,165 3,728,997 3,523,165 3,172,312

Site 15 Small Village Scheme 50,000 310,000 2,651,247 2,500,000 2,651,247 2,500,000 2,204,210

Site 16 Village House 50,000 310,000 1,398,921 1,316,871 1,398,921 1,316,871 1,188,105

Residual Value

Cumulative Impact

of Policies

Affordable Housing,

Density, CfSH4,

Onsite Generation

So what?

• You have a residual value – how to assess

viability

– Competitive returns

– Harman (EUV Plus) v RICS (Market Value)

– Cushion

• EUV Plus – reality checked against the market

Set it out – explain what you have done – don’t

jump to a conclusion

• Future considerations and viability over time

• Scenario testing

• Big impacts of little changes – hypersensitive

model

• Cumulative impact of policy

• Pitfalls and preparing for the EiP

Appraisal considerations

Potential Pitfalls

• Out of date Local Plan adopted prior to NPPF

• Robust housing target and up to date SHMA

• Lack of 5 year supply

• 5% or 20% additional buffer on 5 year supply

• Onerous discretionary policies

• Approach to viability out of sync with

RICS/Harman/Draft DCLG guidance website

Context and Conundrum

Informing plan making process

v

retrofitting evidence to policy

• Can you proceed

• Goes to the heart of soundness

• Cumulative impact

Don’t get into endless cycle of consultation, evidence,

consultation, doubt, evidence, consultation….

Preparing for the EiP

• Examination Statements

• PAS NPPF conformity toolkit

• Participation Statement

• Duty to Cooperate Memorandum of

Understanding

• Statement of Common Ground

• Evidence Base Technical Note

Viability checklist

• Would the approach to developer contributions/CIL

have an unacceptably adverse impact on the

economic viability of development, particularly when

seen in the context of other future requirements?

• Have you worked together with stakeholders to

understand existing business needs and likely

changes in economic markets operating in and

across your area?

• Are there enough sufficient sites, that are viable, to

deliver the plan’s housing requirements over the plan

period?

Viability checklist

• Are your assessments of and strategies for housing,

employment and other uses integrated, and do they

take full account of relevant market and economic

signals?

• Have you assessed the likely cumulative impacts on

development in your area?

• Have you discussed viability with your key

stakeholders, under the duty to cooperate,

particularly with regard to those strategic priorities

set out in paragraph 156 of the NPPF?

Viability checklist• Are affordable housing targets, thresholds and

proportions fully justified and supported by an

informed assessment of their economic viability; and

will sufficient affordable housing be delivered to meet

needs?

• Do you have an understanding of changing needs

and have you addressed barriers to investment in

the Local Plan, including a lack of housing,

infrastructure or viability?

• Can you demonstrate that district-wide

development/infrastructure costs have been

considered alongside production of your Local Plan?