Following publication of the revised NPPF and NPPG (July 18) repercussions are starting to be felt in terms of viability assessments. Intelligent Land has undertaken viability negotiations on various sized residential development sites throughout Southern England. As a result of this work the following key issues are identified:
Downward pressure Developer’s Return. The NPPF considers a suitable developer’s return as between 15-20% of gross development value. In Intelligent Lands experience Local Authorities and their advisors interpret this by taking the mid point of 17.5%. This figure is becoming harder to challenge even if the current economic climate justifies a higher return.
Benchmark Site Value (BSV). This issue relates to what value should be received by the land owner in return for releasing greenfield sites for development. Historically, values of circa £100k to £200k have been accepted and adopted by Local Authorities when testing viability. The NPPG sets out changes to how BSV should be calculated. The NPPG stipulates that BSV should be based on existing use (commonly agricultural) with a premium to incentivise the land owner to bring their land forward for development. The guidance is silent on the level of premium, however it does confirm that the level of premium should be reasonable, based on professional judgement and be based on market evidence. In Intelligent Lands experience there is significant downward pressure on BSV assumptions.
Help To Buy (HTB). It is well documented that HTB has played a key role in supporting the new build housing market. From April 2021 eligibility price caps will be reduced and the loan scheme will only be available to first time buyers. These changes are likely to restrict the size of houses that can be acquired and reduce the supply of buyers.
To assist viability discussions Intelligent Land recommends considering the following:
Benchmark site value analysis is changing as a result of the NPPG. It is recommend that robust evidence is gathered and viability assessments are undertaken as soon as possible. As time goes by acceptable benchmark site values are likely to reduce by acting quickly developers and land owners may be able to adopt higher values before the full effects of the NPPG filter through.
Viability strategy should be considered at the outset and form part of the overall planning strategy for each development.
Housing mix should be considered at an early stage to enable future proofing against legislative changes such as Help to Buy.
Flexibility should be built into Section 106 Agreements. This should include prescriptive metrics (profit, cost BSV) against which viability can be measured at future reviews. Flexibility could also future proof against legislative, market and other financial changes that may occur throughout a developments lifetime.
Intelligent Land would welcome the opportunity to discuss viability of specific projects.
Please contact us for more information.
Local Government Reorganisation in Dorset
On 1 April the county of Dorset began life with two new unitary authorities, one for the south east Dorset conurbation covering the former Council areas of Bournemouth, Christchurch and Poole (BCP Council). The other unitary covers the rest of Dorset which was previously administered by Dorset County Council and the Borough or District Councils of Weymouth & Portland, West Dorset, North Dorset, East Dorset and Purbeck.
Local elections were held on 2 May resulting in the Conservatives narrowly taking control of Dorset Council, while for BCP Council there was no overall control with the Conservatives forming the largest group. However, all the other parties have since come together to form a Unity Alliance with Poole Lib Dem Councillor Vikki Slade appointed the first leader of the new BCP Council.
So what does this mean for planning and development in the two authorities? While the reduction in Councils should theoretically make planning discussions easier, particularly now that they have all services and responsibilities ‘in-house’, the big issue of housing demand and where it will go has not been resolved. The boundaries between the two new Councils follows the existing ones between the urban and rural authorities. Given the tightly drawn inner boundary of the Green Belt and lack of space for outward expansion the two Councils will have to work together to resolve where the much needed housing growth will go.
Given the different political make-up of the controlling groups of both Council’s, and in particular the wide ranging interests of those forming BCP’s Unity Alliance, it will be fascinating to see how this will play out in the discussion of where will the housing go, and of special interest the approach to the south east Dorset Green Belt.
The Councils have until April 2024 to produce single local plans for their areas. The clock is already ticking and they will need to get started now. There are some very big decisions that need to be made many of which will be unpopular with some politicians and their constituents. However, this is a big opportunity for the new Councils to stand up and be counted and deliver the future social and economic needs of Dorset while protecting those special parts of our natural environment.
Intelligent Land welcomes Simon Trueick - Associate Director
Simon’s planning career spans 30 years, having worked for several Local Authorities and in the private sector. His last 12 years have been in management roles for a wide range of local authority functions both within and outside areas of professional expertise.
Most recently Simon headed up a joint planning policy team for two authorities – Christchurch Borough Council and East Dorset District Council. In 2014, the two Councils successfully adopted a sound joint Core Strategy – one of the first in the country, and subsequently have embarked on significant local plan reviews. In both cases, Simon lead on identifying and bringing forward new greenfield housing development, including Green Belt release.
Simon’s previous roles in both Development Management and Policy included 11 years with New Forest District Council where he lead the Council’s successful case on a large container port proposal, including managing consultants and two barristers, and giving evidence at a 56-week public inquiry.
Simon is a customer focussed individual who has established an excellent track record of delivery of major projects including local planning documents, major applications and appeals, and key evidence studies. He has direct and long term experience of partnership working in planning and other disciplines. He has considerable expertise in project managing multi-disciplinary teams and specialist consultants to deliver plans and development proposals. Latterly, Simon was member of the LGA Peer Challenge team and has undertaken a number of Peer Reviews in other local authorities.
Key areas of expertise: