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Financial Viability in Planning - Important Consultation

Category: News 17 August 2011

As you are no doubt aware the draft National Planning Policy Framework (“NPPF”) places a very welcome emphasis on achieving economic growth and, particularly, on ensuring that the scale of obligations and policy burdens do not threaten viability. However, other than confirming that a viable site must provide “acceptable returns to a willing landowner and a willing developer” there is little guidance on how viability is to be interpreted or tested. 

The concept of viability lies at the heart of many planning negotiations and has been widely debated at various Inquiries albeit there has been little convergence of views and consequently, into this breach, the RICS published, on 19th July, their draft “Financial viability in planning RICS guidance note” and consultation responses need to be submitted by 22nd August i.e. next Monday! 

The draft note provides a concise rehearsal of the nature of the problems however there are grave concerns that, when it seeks to propose solutions, it fails to provide a pragmatic methodology which will enable the house building industry to achieve the growth sought. 

It is therefore vital that you respond to this consultation to help ensure the industry has a robust platform upon which to move forward. It is only 44 pages long (including appendices) and, whilst you must form your own opinions, the following points highlight the broad nature of our concerns:- 

  • The draft pre-dates the publication of the draft NPPF and therefore fails to reflect the emphasis on growth and the presumption that planning consent should be granted to sustainable development proposals. All references to PPS3 etc are outdated. 
  • The draft note focuses on the viability of individual schemes and fails to unequivocally place the burden of proof with regard to maintaining a supply of viable land on local planning authorities when setting and reviewing their policies. It is their responsibility to ensure targets are appropriate and achievable in current circumstances – they should therefore be kept under review (paragraph 43 of draft NPPF) 
  • Paragraph 6.7 of the RICS note is circular in its argument and will be used to justify the imposition of obligations rather than facilitate delivery 
  • There is insufficient recognition that the granting of a residential consent does confer a premium value on land and that this market reality should, if a supply of deliverable sites is to be maintained, represent the baseline position in any viability appraisal with the inherent assumption that landowners should benefit from a substantial proportion of such uplift 
  • There is no recognition that different sizes and types of developers have differing margin expectations and access to development finance 
  • The guidance is in direct conflict with the draft NPPF emphasis on assessing viability using current costs and values 
  • The analysis within the draft fails to counter the destructive belief that land prices should be driven down until all planning obligations can be funded irrespective of market circumstances 

It’s not often that the development industry gets the chance to influence the overarching regime we all operate within and, at a time of historically low new supply figures, a growing shortage of housing and an industry striving to repair its finances, it’s vital that we make our voices heard.  At Pioneer we therefore urge you to consider the draft RICS guidance and submit your comments.  

Pioneer is the leading independent specialist consultancy to the development industry on housing matters. For further advice or assistance please contact:-

 

David Parker -     

DL: 0844 9798001               

Mob: 07788 140240               

dparker@pioneerps.co.uk     

 

 

Related News Tags:  NPPF |  economic growth |  viability |  land value uplift |  planning obligations |  affordable housing | 


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