Guest speaker: Rory Clarke – Cornerstone Barristers

Navigating Viability: Where are we now? Rory Clarke Cornerstone Barristers

Recent Developments Revising Affordable Housing Commitments Recent Appeal Decisions Confidentiality in viability assessments Viability in the NPPF, NPPG and “Review and Appeal” Guidance

Revising AH Commitments Seeking to agree an amendment with the authority Making an application under s.106A Making an application under s.106BA

By Agreement Can be done at any time Does the obligation serve a useful planning purpose? No appeal: challenge by Judicial Review

s.106A Application Must wait 5 years after signing s.106 (unless pre 6/4/10) All options open (not only Affordable Housing) Must show “no useful purpose” in obligation Decision within 8 weeks Appeal to an Inspector

s.106BA Application Deals with AH commitments only Apply at any time up to April 2016 Must show scheme not viable LPA must modify AH to make scheme viable Decision in 28 days (35 days in London)

Appeals (s.106BC) Streamlined procedure Decision within 28 days Modifications last 3 years

Guidance “Review and appeals” Purpose: “more homes” Developer submits revised viability assessment Use current costs and sales values Open-book valuation strongly encouraged Can alter mix, tenure, phasing

Summary

Appeal Decisions

Former Holsworthy Showground 40% reduced to 20.5% (in 3½ years) 4 months from application to appeal decision Land value benchmarked against comparable sites Developer’s values preferred

Mast Pond Wharf, Woolwich Scheme not viable, even with 0% AH 10% increase in value required to reach viability LPA argued, if can’t make viable now, don’t change(!) Developer won

Tamewater Court, Dobscross 500+ scheme, long development life Phasing tricky: modification lasts 3 years Profit levels 16.8% Land values were agreed

Montague Close, Walton-on-Thames Developer started work while unviable Projected profit of 8%, 10% with no AH Fully built by time of appeal decision No modification: scheme was built, therefore viable!

Appeals: Summary

Confidentiality

“Elephant & Castle” decision (1) Large regeneration project, marginal viability Viability assessment seen by District Valuer Service ICO ruled that it be disclosed to the public Appeal by LB Southwark

“Elephant & Castle” decision (2) EIR applied Most of viability assessment disclosable Protected: financial model, some sales projections Viability assessment seen by District Valuer Service Case-by-case nature of decision emphasised

Assessing Land Value

Land Value “Competitive Returns” to Landowner: NPPF Key driver of Affordable Housing levels Greater Land Value => Less Affordable Housing

Guidance 2012: NPPF : “Competitive Returns” to Landowner 2012: Taylor review 2013: “Review and appeal” 2014: NPPG

Land Value Starting point is price actually paid Need for benchmarking Existing Use Value or Alternative Use Value EUV + premium Shinfield decision “sharing of benefits” Return to “market value”

Who gets the cake?

Circular Guidance? AH levels driven by prices Are prices driven by AH levels? Recognition that we must ignore overbids How do we eliminate overbids from comparator prices? Bidders now have fallback of s.106BC

Navigating Viability: Where are we now? Rory Clarke Cornerstone Barristers