Policy: Draft Planning Practice Guidance: Viability
Issued by: Ministry of Housing, Communities and Local Government
Issue date: March 2018
Background: Last September, the government published a consultation document that included proposals to make viability assessments "simpler, quicker and more transparent". A key proposal was to change national planning policy to make clear that where a proposed development accords with all relevant policies in the plan, there is no need for a viability assessment to accompany the planning application.
Last month, the government published a draft revised National Planning Policy Framework (NPPF) that incorporated proposals from this consultation. Draft planning practice guidance, intended to be read alongside the draft revised NPPF, was published shortly afterwards and provides additional detail on the new viability measures.
Key points: The guidance sets out the government’s recommended approach to viability assessments. It says it aims to "support transparency in the viability assessment process", allowing communities to see what infrastructure and affordable housing has been provided by developers. Assessments should be publicly available, except in "exceptional circumstances".
Viability assessments should take place at the plan-making stage, the draft PPG says. Local plans should set out the contributions expected from different types of development and, where necessary, from different sites. They should include expected requirements for affordable housing and for supporting infrastructure, such as facilities for education, transport, health, and green and digital infrastructure.
Councils are reminded that plan policies "should be realistic and the total cumulative cost of all relevant policies should not be of a scale that will make development unviable".
Plans should be informed by evidence of infrastructure and affordable housing need, alongsode consideration of local and national policies, the document says. Drafting of plan policies should be "informed by engagement with landowners, developers, infrastructure and affordable housing providers". A typology approach may be used to set requirements for groups of sites based on shared characteristics, such as location, size and current and proposed use. Individual viability assessments may be carried out for strategic sites, the document adds.
Affordable housing and infrastructure requirements should be set at a level that allows sites to be delivered without the need for further viability assessments at the decision-making stage, according to the guidance. Where applications come forward in accordance with the policies in an up-to-date development plan, no viability assessment should be required.
There may be circumstances where viability assessments could still be required, which should be set out in local plans, the document says. This could include cases where development is proposed on unallocated sites, where further information on infrastructure costs is required, or where a significant change in economic conditions has occurred since plan adoption.
Evidence on costs and values should be provided by developers and landowners at the plan-making stage, according to the draft guidance. Developers should consider the cost of all relevant policies when buying land, it says, and are reminded that the price paid for land does not justify failing to accord with relevant policies in the plan.
When defining land value for any viability assessment, planners should calculate a benchmark land value "on the basis of the existing use value of the land, plus a premium for the landowner", according to the guidance. This premium should "reflect the minimum price at which it is considered a rational landowner would be willing to sell their land", it says. A figure equivalent to 20 per cent of gross development value "may be considered a suitable return" for developers when establishing the viability of plan policies at the plan-making stage, it says.
The draft guidance can be found here.