The economic downturn and falling house prices are making property development more difficult than in recent years.  The situation is exacerbated by limited supply of new housing land which maintains a high land cost. In addition to this, demanding planning obligations by local authorities require funding; whether it be transfer of housing stock or financial contributions.  This triple effect of falling house values, increasing land prices and a share for the authority are causing many developments to stall.

Many of the planning obligations, and particularly the levels of affordable housing, were set in more buoyant times and were based on set percentages applicable to threshold development sizes, i.e. x no of houses requires x percent of affordable housing. However there are encouraging trends and policy shifts occurring nationally and locally.   The increase of authorities considering the level of planning obligation that the development can support whilst providing a competitive return to the land owner and the developer has been formalised as policy in the National Planning Policy Framework.  Furthermore the Government has recently announced a formal appeals procedure to reassess the level of planning obligation in existing permissions that have yet to commence.  Planning Inspectors are reflecting these changes in allowing appeals to reduce or remove the level of planning obligation / affordable housing in order to make a development viable.

Fundamental to the negotiation of an appropriate level of planning obligation is a financial viability appraisal that will analyse the following:

  • Value of the completed development
  • The development cost
  • The land value
  • The developers return

Wharfe Rural Planning Consultancy is qualified to undertake financial viability appraisals in accordance with the industry standard published by the Royal Institution of Chartered Surveyors, for more detail on financial viability appraisals please click here.