Economic viability and development economics rest at the centre of the planning system, as Local Planning Authorities seek to raise money for necessary infrastructure and social benefits including affordable housing. This is a constantly changing environment: on the one hand, development economics (finance and development costs, sales values, required returns) alter as the level of general confidence changes; on the other, Government policy is characterised by a stream of initiatives designed to encourage new development, while preserving the Section 106 regime of developer obligations.
The way affordable housing is delivered has always been subject to change, with Registered Providers (aka Housing Associations) becoming more like home builders as each Government reconceives their role. The past two years in particular have seen Registered Providers take a new position in the market, encouraged by the new Affordable Rent regime. The impact of this shift on development economics and viability is substantial, and remains a challenge to market participants.
Changes to the planning system itself, intended to enable more locally-based decision making, see the rejection of Regional Plan targets in favour of the NPPF and Local Development Frameworks. New locally-set targets for density, unprofitable planning uses and affordable housing have often been set in more prosperous times, and at times do not fit the current market dynamic. This is an inevitable function of the time taken to create and adopt local plans. With house price inflation now affecting the London market once again, the dynamic is changing once again.
Economic Viability Assessment
U.L.L Property advises its clients how the principles of development economics can be applied to planning applications, to enable a viable outcome. When submitting planning applications LPA’s now expect developers to submit an independent assessment of economic viability, which has its basis in market assumptions. Providing these assessments is a core service provided by U.L.L., and we have a strong track record of success on behalf of clients in London and the South East.