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Financial viability takes centre stage in early planning process
The financial viability of property development is taking on an increasingly important role in the planning and plan-making process .
» WHILE FINANCIALS HAVE ALWAYS been key to the success of any development , changes to national planning policy and related practice guidance have shifted the focus and priority .
And , according to national planning and development consultancy Lichfields these necessitate a change in approach for those seeking to promote the Local Plan process .
“ Increasingly there is a ‘ frontloading ’ of viability assessments to the plan-making stage . The impact and shift of emphasis cannot be overstated . Financial viability assessments are now very much in the planning realm ,” said Simon Coop , planning director at Lichfields .
In a new piece of research undertaken by Lichfields , entitled ‘ Fine Margins - Viability assessments in planning and plan-making ’ the practice offers a comprehensive overview of the way in which viability assessments are being conducted and for the purpose of area-wide viability studies to inform local plan preparation .
Simon Coop added : “ Recent evidence we have gathered and analysed , in the residential housing market , suggests that the soundness of local plans is increasingly being fought on a viability battleground .
“ Viability is a critical but often misunderstood concept , and one that is central to the delivery of housing sites and the successful implementation of local plan strategies .”
Drawing upon several years ’ worth of evidence from local plan and Community Infrastructure Levy ( CIL ) viability studies from across England and Wales , this research into the residential housing sector helps to bring greater clarity to an area of practice in which there are many misunderstandings .
Will Christiansen , who carried out much of the research , explained the findings should ideally reduce confusion and create more meaningful debate on this issue between developers , planners and local authorities .
Will said : “ Changes introduced in 2019 are really starting to impact the sector . There is widespread confusion in planning practice and guidance and this piece of Insight aims to demystify some of this and become a key reference document across the industry .
“ Having a housing scheme that stacks up from a financial perspective provides a sound basis for a development scheme to come forward . If the value generated by development ( GDV ) is equal to or greater than the total costs , then the scheme is viable and can go ahead .”
Traditionally , he explained , it was usually commercial surveyors who undertook financial viability assessments , and this was often later in the planning and development process . Today , he said , this is now centre stage and at the forefront of planning new housing developments .
Planning policy in England and Wales now seeks to ‘ front-load ’ all consideration of development viability so that is given a much greater emphasis at strategic plan preparation stage .
“ The assumption that flows from this is that developments that accord with the strategic
Simon Coop
Will Christiansen
plan will be viable . However , local plans provide a long-term framework for development , and it is essential that they are sufficiently flexible to account for changing circumstances , such as rising costs and potential changes in the development values over the next 10-15 years ,” said Will .
Lichfields hopes the research will be useful to those wanting :
• To gain an overview of the concepts , inputs and outputs that underpin viability assessment in a housing development context ;
• To understand in greater detail the links between viability assessment and planning ; and
• To scrutinise local plan ( or CIL ) viability evidence ( or underpin independent evidence ) with reference to a robust national dataset .
A copy of the Fine Margins Insight report is available https :// lichfields . uk / content / insights / fine-margins
Founded in 1962 , Lichfields offers a broad range of planning and development consultancy services including development management , consultation , economics , EIA , heritage , neighbourly matters and urban design . Its clients include developers , landowners and operators in the housing , retail , leisure , commercial , waste and recycling and infrastructure sectors ; as well as local authorities and government bodies .
78 » OCT 2021 » CLEARVIEW-UK . COM