Closing the “viability loophole”? A return for the developer must be taken into account when setting local plans

Authors: Matthew White, Partner and Head of UK Planning; Catherine Howard, Partner; and Lucy Morton, Professional Support Lawyer, Planning, London

The Government is recommending that viability is assessed in detail by the local authority at the stage of setting its development plan and allocating land for certain uses, and that specific assumptions should be made at that stage regarding land value and what is a reasonable return for a developer – using the ‘existing use value plus’ (EUV+) land valuation method and assuming a return of 20% of gross development value (GDV) for the developer in appropriate circumstances.  It could then be more difficult for a developer to re-open negotiations on viability at a later stage.

The Government’s new Draft Planning Practice Guidance for Viability sets out more detail on the new proposals, as we explain in this post.  This draft guidance is one of a raft of new publications which the Government have released, including new draft National Planning Policy Framework (NPPF) and a consultation on developer contributions including Community Infrastructure Levy (CIL) which are all aiming to increase the supply of housing, provide certainty for developers, capture land value more effectively and improve and speed up the planning process.

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Will land values fall if future planning permission is ignored?

Authors: Matthew White, Partner and Head of Planning; Lucy Morton, Professional Support Lawyer, Planning, London

What if land values fell because the value attached to future potential planning permission was disregarded? This is what the Labour party is proposing, through reform of the compulsory purchase process. A Government committee is also asking questions on whether the Community Infrastructure Levy (CIL) is working and what other methods could be used to capture the value of land (here is the link to the inquiry).  We’ve seen some dramatic headlines recently but land value capture is not a new idea and has been around for decades. What are the implications for developers?

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How to solve a housing crisis: commercial viability, land value and affordable housing

Author: Martyn Jarvis, Associate, Planning, Real Estate, London

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The UK is facing a housing crisis, most pronounced in London, and this is set to be a key factor in the forthcoming Mayoral elections.  Meanwhile, commercial viability is the talk of the town.  How “viable” a scheme is will influence how much affordable housing can be provided.   Requiring disclosure of viability information across London, standardising land value calculations, standardising viability methodology and fixing affordable housing targets are amongst recent recommendations made to the Government and to the Mayor.

Transparent viability information is already required in Islington, and with Greenwich and Southwark following suit where schemes are not policy compliant, the London Assembly are now urging the Mayor to adopt this approach across London.  Over the past few weeks the London Assembly Planning Committee and London First have both presented papers aimed at steering a policy shift once the new Mayor takes office.

 

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