� � The Viability Assessment conducted by Savills on behalf of LB Hackney assumes the land value to be zero and as such the deficit of the scheme overall means that 19.4% ‘is the maximum reasonable amount of affordable housing that can be 0000001288 00000 n Specific legal advice about your specific circumstances should always be sought separately before taking any action. %PDF-1.4 %���� This is far below the affordable housing policies of the local authorities in this study, which on average require that 28% of new homes built should be affordable homes. Specifically, affordable housing targets of 0% through to 50%, including 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45% and 50%. hެX�r�8}�W�i�ܲ����ɱ�����ei�5�lm�"$rB�Z����n\H꒩�d��LAT�>��_���F��,g��ˈ�d��� �����$+eA����ՕJ�J��V����l�WY>�>{woy�WՓ�����yB3�-�oۮ%ˊ�q�������faFY�`���,� ����U%k�w�JH�KU������%���6��y�„�#0Y��d�3�(�7��Mi`S���"�iJ2�h�4{.4,8)�16�� �c��a@�(��mi���*�.�sS���. For example, if a site is delivering a proportion of market and affordable housing (including starter homes) and, perhaps commercial uses, they can share development costs (including the provision of services and other infrastructure) and help improve the viability of the custom build element of a scheme. For land sold now, the effect of the Mayor’s new approach may be to drive down prices to the benchmark land value level. Therefore District-wide viability studies prepared by Local Planning Authorities This will be the subject of future blog entries. Sale Prices The viability appraisal should be supported by evidence from comparable development They do not constitute legal advice and should not be relied upon as such. 183 0 obj<>stream This is usually in the form of Local Plan viability assessment, Community Infrastructure Levy viability evidence, viability evidence attached to a strategic land availability assessment, affordable housing study, infrastructure delivery plan and/or planning obligations guidance. The study is to focus on Affordable Housing and will produce findings that will allow the Council to have a robust evidence base for setting affordable housing targets and thresholds. Our assessment of viability specifically focuses on current affordable housing requirements, CIL liabilities and other financial requirements specifically required under S106. 0000002254 00000 n These were designed to reflect actual sites, the local housing market, emerging Regional Spatial Strategy (RSS), and also to test certain key elements of the market and their impacts on viability. Financial Viability Assessments based on such a premise are unlikely to carry any weight. In most cases this will be far less that the developer actually paid for a site. 0000001655 00000 n years in the practical delivery of affordable housing. M�XQ��^*��'ݚ�� [)�#��Cw��SB�If����Y�\��h�-�3�Dۓ���s �C�ó�{'���������. Comment: The real issue is that many developers are in a bind. Affordable Housing Viability Assessments Affordable Housing can be a significant cost to Residential and Mixed Use development schemes and providing Affordable Housing in compliance with the Local Authority’s target can render some development schemes unviable. Plan. <<4E40ED55E900F54EB50D7589F44ABE90>]>> To calculate the income/values on a pounds per square metre basis (£/m2) it will necessary to work out how. Author: Catherine Howard, Partner, Planning, Real Estate, London, Your email address will not be published. Please contact us for more information and to enquire about our workshops on this subject. x�b```f``���$�x���Y862`�����k3��31Qg��#cޯ�5� Sevenoaks District Council – Affordable Housing Viability Assessment housing needs, and information on the range of site sizes and types which are likely to come forward. The SHMA FINANCIAL VIABILITY ASSESSMENT FOR AFFORDABLE HOUSING THRESHOLDS AND EMPLOYMENT REDEVELOPMENT 1.0 Introduction ... appraisal to offset risks including for example, the availability of grant support for affordable housing. The LPA’s policy might, for example, dictate that 40% of the residential units created by a new development are sold at below market rates to support the provision of affordable housing. The role for viability assessment is primarily at the plan making stage. Post was not sent - check your email addresses! Viability assessment should not compromise sustainable development but should be used to ensure that policies are realistic, and that the total cumulative cost of all relevant policies will not undermine deliverability of the plan. Published: 13 November 2014. viability assessment which argued that only half of the required proportion of affordable housing could be provided. Viability Assessment under the Government’s new ‘Planning Rule Book’ ... (governing affordable housing and other obligations) are ‘iterative’ in drafting, ‘realistic’ and ultimately ‘deliverable’ upon adoption with affordable housing requirements to form fixed positions in plans. Swansea Affordable Housing Viability Study – May 2016 Page 12 Testing assumptions 3.6 The analysis is based on a range of policy tests. xref 0000007186 00000 n In particular, we will be addressing those core policies that are concerned with affordable housing and sustainability. 1.2 The Council’s previous Affordable Housing Viability Study (AHVS) was … 0000004167 00000 n ����\>���C��;�:sWVe�x�#["��V�V����~̷�`P�ld�� ��t��ץ�%o3�m]�um���s�S�{^z��0�㱳س)��]���ظwCMW�LN��۔C��tEV{%*���nsr*�nY&xl��R�>�eB|f �.&@�6 �Ɩ�m�� +�ݎWER���O͖‡�[?�;$��d�����'}��9r�O��.' Adams Integra was instructed by Wiltshire Council to produce an Affordable Housing Viability Assessment that would address a number of issues, namely: Test the policy position of the Core Strategy. The report will determine whether or not the levels of affordable housing and CIL should be amended from current quantities. 0000000016 00000 n startxref When is an affordable housing financial viability assessment required? Financial viability appraisal inputs 35 Contact ... a proposal is likely to trigger a requirement to provide affordable housing or where viability is likely to be a relevant consideration in respect of achieving planning policy compliance. �a�2@��9���^gq�m�}Tdr5[�.\j01 TWO Methods of delivery 2.1 On all sites consisting of 10 or more dwellings, developers are required to make a contribution towards the provision of affordable housing in line with policy CP6, subject to viability. 1.1 The aim of this Affordable Housing Viability Assessment (AHVA) is to inform Pembrokeshire County Council’s Local Development Plan (LDP), in accordance with the requirements of the Welsh Assembly Government’s Technical Advice Note 2 (TAN 2) which emphasises the importance of testing the viability of affordable housing policy targets. 1.7 To undertake the viability testing, a range of ‘typical example’ sites has been developed into Development Viability Assessment Models (DVAMs). In his Supplementary Planning Guidance (SPG) on Affordable Housing and Viability issued last August, Sadiq Khan refers to the ‘circularity’ this causes: land prices are higher than they should be because buyers and sellers are not factoring in delivering much affordable housing. 5. an informed assessment of the viability of any such percentage figure is a central feature of the Planning Policy Statement (PPS3) on affordable housing. A viability assessment which supports the affordable housing requirements that will be set out as policy in the emerging Core Strategy/Local Plan and … A district-wide affordable housing viability assessment for housing delivery over the lifetime of the Core Strategy/Local Plan. Great Yarmouth BC - Affordable Housing Viability Assessment – October 2012 Page 7 2.4 The gross residual value is the starting point for negotiations about the level and scope of Section 106 contribution. 0000003862 00000 n The Mayor wants to stop this by ’embedding’ delivery of policy compliant levels of affordable housing into land prices. Newport City Council - Affordable Housing Viability Assessment – March 2012Page 12. 0 Table 1 displays the count of all properties by type, the maximum and minimum prices achieved in the sample along with the median and mean values. 0000001372 00000 n Affordable Housing and Viability Assessment Process Information regarding the process for assessing affordable housing and viability can be found below. %%EOF bed) on a 0.05 ha site. 1.5 This study focuses on the percentage of affordable housing … LPAs require an AHVS as part of their evidence base for use in preparing LDPs. The Council wished to test viability for a range of sites, and an appraisal approach was undertaken that would permit this reflecting a prescribed level of affordable housing and housing mix. � �� ��@���5$i� .3X�DT5H,��A�II��2�%,@׀DY\@J���e00(50��i ��R�i TLf@�z��si> ��+6�"e�_� �2M803�-��D��_$rm�#�p�z�Yֆ=��l �y/@�\f� ?�/c`�z The development appraisal tool is designed to inform the development management process by appraising the viability … Should contributions be made as dwellings in-kind, development would benefit from a deferral of the contribution to completion of the dwellings. Please contact us for more information. Residual values at 30 dph. So if the planning authority has a target of 35% affordable housing (to be delivered in a ratio of 70:30 – intermediate: social rent), then the developer needs to work out how much those affordable units would sell for to a registered provider of affordable housing, and how much the remaining 65% of market units would sell for. 167 17 Step 4: Comparing Residual Land Value and Benchmark Land Value. Figure 3.1 Housing (at a density of 20 dph) – Residual value in £s million. trailer Step 5: How much affordable housing can the developer afford to deliver on this site, factoring in the benchmark land value? Step 1: Calculate the Gross Development Value: The first thing to do is to work out how much the total sales value of all the units in your development would be if they were sold with a fully policy compliant percentage of affordable housing. ?\�^ޑO��on�n������Ǫ��s�z����K���I>��,�No��|swC�}�mq��W�|�p�x���z���$H������]~�6��h��ɲS�l�'�y��w�����O7w��'���6}iS'&}#:��qH��)���P%�:��N4��37M*�o�^v�n�׀k?�E�e+jPA.���̇9 Demonstrate the level of affordable housing that can be supported by a scheme; Produce a report confirming our findings; Negotiate directly with the Council or their representatives; Represent you in planning appeals – informal and formal appeal process; Act as an Expert Witness in support of the viability of the scheme This post is part of the following categories: In this blog post, we explain in simple terms how a developer is now expected to set the level of affordable housing which the Mayor of London deems viable for a particular site. You should send an un-redacted affordable housing financial viability assessment with any application that fails to fully satisfy policy requirements for affordable housing. Where viability assessments were used, new housing sites achieved just 7% affordable housing. It is not peripheral, optional or cosmetic. AFFORDABLE HOUSING ECONOMIC VIABILITY ASSESSMENT GLOSSARY OF TERMS (The scope of this glossary is restricted to terms used in the study) A Abnormal Development Costs - Costs that are not allowed for specifically within normal development costs. To do this, he is going to have no regard to the price developers actually paid for a site. If viability assessments use market prices that are artificially inflated by bidders ignoring requirements in development plan policies, this may undermine compliance with those policies and if those high purchase prices are used to justify lower levels of affordable housing provision then developers will, in effect, be recovering the excess paid for the site through a lower affordable housing … A variety of site typologies has been agreed in previous testing for the Council In some authorities, this variable is to a . While the Mayor expressly will not take account of what the developer actually paid for a site, he will allow the “benchmark land value” to be factored in to viability calculations if this is higher than the residual land value. Step 4: Comparing the Residual Land Value and the Benchmark Land Value: When the benchmark land value is higher than the residual land value, the Mayor would accept that it’s not viable for the developer to deliver the Council’s target level of affordable housing in their required 70:30 tenure split. But for those developers who bought land before the SPG was published, what is viable for them to deliver in the real world and what the Mayor deems viable for them to deliver simply may not tally. Affordable Housing and Viability Assessment Process Information regarding the process for assessing affordable housing and viability can be found below. endstream endobj 168 0 obj<> endobj 169 0 obj<> endobj 170 0 obj<>/Font<>/ProcSet[/PDF/Text]/ExtGState<>>> endobj 171 0 obj<> endobj 172 0 obj<> endobj 173 0 obj<> endobj 174 0 obj[/ICCBased 182 0 R] endobj 175 0 obj<> endobj 176 0 obj<> endobj 177 0 obj<> endobj 178 0 obj<> endobj 179 0 obj<>stream The final step is to work backwards from the benchmark land value to calculate what sales revenue the developer needs to generate in order to turn a reasonable profit. The results indicate that a total of 761 883 new – dwellings per year are required in the District to 2026. DSP is a consultancy highly experienced in the preparation of viability assessments for local authority policy development - including whole plan viability, affordable housing and CIL economic viability. In the workshop we also run through calculations showing how early and late viability reviews work  (post-planning) under the Mayor’s SPG. The articles published on this website, current at the dates of publication set out above, are for reference purposes only. Your email address will not be published. This is where the justification is on the grounds of financial viability. The viability assessment of recommended affordable housing contribution rates was premised on the equivalent monetary contribution of affordable housing. The assessment should demonstrate you have maximised provision of affordable housing as far as is viable. Step 3: Calculate the Benchmark Land Value: The benchmark land value is the value of a site in its existing use (say, use as an office building) plus a margin which could be between 10-30% (the margins quoted in the SPG). 5Accessed at: http://shapingtheheartstroud.org/evidence/. report: ‘Stage 1 Assessment of the Viability of Affordable Housing, ommunity Infrastructure Levy and Local Plan.’ 2. There is a presumption that affordable housing … These can include costs associated with unusual ground conditions, contamination, etc. It said that the developer must demonstrate that the maximum reasonable amount of affordable housing has been met when that amount is below the borough-wide affordable housing target. 0000003613 00000 n 167 0 obj <> endobj Redditch Borough Council - Affordable Housing ViabilityAssessment – December 2011Page 14. 0000006657 00000 n The contribution will normally be greatest in the form of affordable housing … Great Yarmouth BC - Affordable Housing Viability Assessment –October 2012Page 30. This aims to recognise the reality that if a site has a valuable price in its existing use, no one is going to sell it for a lower price than that. Case study B –Develop two detached houses (one 3 bed and one four. And once you have the gross development value, it will be a matter of negotiation between the developer, the Council and the Mayor as to how this is achieved: what split between social rented units, intermediate units and market units must the developer commit to in the section 106 agreement in order to reach this gross development value? Modern slavery and Human Trafficking Statement. Example viability assessment scenarios 32 Appendix 2. 0000000636 00000 n The Mayor is fed up with developers arguing that it’s not viable for them to deliver policy compliant levels of affordable housing due to the high prices they are paying for sites. The assessment should: generate a residual land value, include a benchmark land value against which the viability of the development can be assessed, include evidence to support all values and costs included in the assessment, including the benchmark land value, identify and justify all the assumptions used in the viability assessment … 0000003939 00000 n affordable housing targets of 0% through to 50%, including 10%, 20%, 30%, 40% and 50%. Sorry, your blog cannot share posts by email. So the next step is to calculate this value. This is step 5. Herbert Smith Freehills is running workshops which talk through an example calculation to show how this approach to viability assessment works in practice. 3.7 Residual values have been generated that reflect the Affordable Housing targets and also a contribution of £10,000 per unit to additional Section 106 items including for example… ���@u�@��kT�ܻ�`�$�_�'�t߇eB6@�߇fxx�5�FH2 & [0��$ 0000007408 00000 n Required fields are marked *, You may use these HTML tags and attributes:

. Affordable Housing Viability Assessments, provide a detailed analysis of a development costs and developable value. • Figure 3.1 shows a range of residual values on a £ million per hectare basis across the Newport City local authority area. 0000003370 00000 n 1.3 The Council is building an evidence base alongside the viability work. So the next step is to calculate this value. Step 3: Calculate the Benchmark Land Value:  The benchmark land value is the value of a site in its existing use (say, use as an office building) plus a margin which could be between 10-30% (the margins quoted in the SPG). Developers should not expect affordable housing provision or other planning obligations to be waived simply because the associated costs were not taken into account when the land was purchased. The viability assessment therefore became a way of proving that the affordable housing targets were indeed “reasonable”, while still allowing the developer to make a decent profit. affordable housing provision/ financial contributions on sites of less than 15 dwellings; and, in the case of an applicant proving non-viability for affordable housing provision on site, suggest/test a scheme(s)/ criteria(ion) for deferred financial contributions/ affordable housing provision to be provided when market conditions change. City and County of Swansea Affordable Housing Viability Study – August 2013 Page 5 1.7 This study focuses on the percentage of affordable housing sought on mixed tenure sites and the size of site from above which affordable housing is sought (the site size threshold). Figure 3.2 Housing development (at a density of 30 dph) – Residual value in £s million. This is part of our ‘back to basics’ affordable housing series. It is patently a crucial requirement of the policy”. ANALYSIS: A recent High Court judgment gives important guidance on valuation evidence for the purposes of viability assessments in planning applications and appeals. The maximum he will let developers factor in to viability calculations is the value a site has in its existing use plus a margin of 10-30% where appropriate (what he refers to as the “benchmark land value”). Most frequently, VAs are used to seek a reduction in the amount of affordable housing which a LPA’s policy would otherwise require. C �` �O1 Step 2: Calculate the Residual Land Value: The next step is to work backwards from that hypothetical sales value to find out how much the developer could afford to pay for the site. Lambeth Council’s planning officer obtained a third party review and summarised both documents in his report to the planning committee, which resolved to grant permission. NPTCBC – Affordable Housing Viability Assessment Procedures – March 2014 4 Number of Units This will also include the size of each unit in square metres (gross and net), number of beds and mix, car parking provision & number of storeys. Step 5: How much affordable housing can the developer afford to deliver on this site, factoring in the benchmark land value? approach to local Affordable Housing policies. It is the res… 3.7 Residual values have been generated that reflect the Affordable Herbert Smith Freehills LLP is authorised and regulated by the Solicitors Regulation Authority. They paid more than the benchmark land value for their sites, yet the Mayor is using the benchmark value to calculate what he deems should be viable for them to provide. A Strategic Housing Market Assessment (SHMA 2014) has been produced. They're required to support a case for reductions or removal of Affordable Housing contributions often required as part of a planning application receiving planning permission. 6.10 The viability of developing two detached houses rather than one will depend. 3.13 Figure 3.2 shows the residual values for a 30 dph scheme for each of the market value areas. A viability assessment which supports the affordable housing requirements that will be set out as policy in the emerging Core Strategy/Local Plan and … Please read on for the five step guide to calculating the level of affordable housing the Mayor considers viable. the affordable housing provision is minimised. From: Homes and Communities Agency. 0000003334 00000 n So the next step is to work out how much affordable housing the developer should be able to deliver on this site, while still making a fair profit. Delivery of units on that basis simply would not generate enough sales value for the developer to have paid the price they need to pay for a site with a valuable existing office use. In fact, in order to bother selling the site at all, the owner will want to get a bit of a margin over and above that existing use value (often referred to as “existing use plus”). 0000002796 00000 n A district-wide affordable housing viability assessment for housing delivery over the lifetime of the Core Strategy/Local Plan. 0000001505 00000 n
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