Briefing: What new viability assessment guidance will mean for practitioners

Robust analysis of costs and policy requirements will be required to comply with the guidance, says Clare Plant.

Development: new RICS viability guidance out for consultation
Development: new RICS viability guidance out for consultation

Q What is the new guidance designed to achieve?

A The updated planning practice guidance seeks to make sure that viability assessments are carried out primarily at the plan-making stage. The planning application process currently allows applicants to renegotiate planning contributions based on the submission of site-specific viability evidence. The new guidance shifts emphasis to plan-makers, who are advised to test the viability of proposed policies. Following the adoption of the local plan, the opportunity to challenge the level of planning contribution required as part of an application will be limited to where it can be demonstrated that circumstances differ from the viability assumptions underpinning the local plan.

Q How should councils go about assessing viability at the plan-making stage and what is a proportionate viability assessment?

A Councils should assess viability based on site typologies, rather than individual sites (except in the case of strategic development sites) at the plan-making stage, the guidance says. It adds that this means the assessment would be made of the viability of different types of sites, based on their location, size, current/proposed use and whether they are brownfield or greenfield. The value and cost assumptions used to assess viability should reflect standard industry expectations, the guidance says. Local planning authorities (LPAs) will be expected to set out clear justification for assumptions applied. For assessments to be proportionate, they should take account of all proposed policies, including matters such as design standards and housing mix, as well as Community Infrastructure Levy (CIL) and section 106 requirements, it adds.

Q How can LPAs ensure policy requirements are realistic?

A The assessment of viability at the plan-making stage is an opportunity to consider the financial impact of proposed policies to ensure they do not burden development unduly. The process adopted for local plan viability testing should allow developers to scrutinise assessments to ensure plan-making supports deliverable development.

Q How should LPAs carry out a typology-based approach?

A Attention should be paid to the special characteristics of a location to identify where appraisal assumptions may differ from the standard approach in the local area. Appropriate typologies should reflect this. For example, where an authority is subject to heritage designations, assumptions applied to the typologies should anticipate the design quality required. In largely urban areas, it may be possible to assess costs associated with matters such as decontamination from recent developments to arrive at accurate average cost assumptions. Gathering of local evidence and the input of developers will be key to this process.

Q How should applicants approach engaging on viability at the plan-making stage?

A Landowners, developers and promoters will need to present detailed development cost evidence when promoting major development sites through the local plan process. A lack of evidence could result in unviable planning contributions or the omission of the site from local plan allocation. Therefore, the onus is on applicants to engage at an earlier stage in the local plan process to provide input on proposed policies and on the LPA’s approach to viability testing. The requirement for detailed costs information in the promotion of strategic sites and the need to analyse appraisal assumptions where a typology-based approach is applied will invariably lead to increased costs associated with the promotion of land through the local plan process, so landowners may seek to identify delivery partners at an earlier stage.

Q How will the Royal Institution of Chartered Surveyors’ (RICS) consultation on conduct and reporting on financial viability in planning complement the new guidance?

A The draft professional advice for RICS members seeks to ensure greater transparency in viability assessments as well as the inclusion of non-technical summaries and the prohibition of performance-related fees for consultants.

Clare Plant is director at consultancy DLP Planning

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