Programme: Session title Subject Comments 10.00- 10.45 Development land valuation Residential land valuation: General approach. Technical terms Looking at principles of market evidence and residual valuations. (RICS VIP 12) 10.45- 11.30 Development Values. Valuation of Market housing Valuation of Affordable housing. Commercial properties. Market housing values. Effect of CfSH. Affordable housing- tenures, approach to value, DCF. Grant, Valuation issues Include investment values 11.30- 1145 Break 11.45-12.45 Gross Development Costs Build costs Contingency Professional CIL/ S106 Marketing Funding & Finance costs Profit Land value & costs BCIS, CfSH costs, Externals, abnormals 12.45- 13.15 13.15- 14.30 Development viability Principles Information required Planning appeal decisions. Valuing Benchmark Planning uncertainty Assessing results RICS “Financial Viability in Planning” Valuation of “hope” 14.30- 15.15 Viability toolkits Sensitivity testing Include practical application Development programme, out-turn approach 15.15-15.30 Break 15.30- 16.30 Exception Review mechanisms Questions
01/08/08 Flambard Way, Godalming commercial and res dev Current viability- future growth considered for viability. Inspector allowed, SoS dismissed. SoS confirmed approach of present market values Important decision: Confirmed current values/ costs as being appropriate. Question mark about whether an out turn approach is suitable. 12/08/08 Jericho Canalside, Oxford 54 dwlg res dev with canal facilities. AH viability: Relevance of purchase price in assessment. paid 9 months before appeal taken in to account in assessing affordability (Therefore considered sufficiently recent for comparison approach. Earlier appeal (2005) concluded lower AH provision was reasonable- taken in to account. Widely quoted: Sold by tender, and other bidders close to purchase price. Appeal dismissed so no judicial review possible. DVS expert for OCC. Superceded by Clay/ Glebe Farm & Gun Wharf, Bow cases. 19/08/08 67-73 Bath Rd, Longwell Bristol Sheltered housing. Commuted sum viability. Purchase price v current values/ costs Explicitly approves methodology of current costs and land values using appraisal toolkit. Toolkit used was HC/ Grimley model. Purchase price not considered. 27/08/08 1 Ivy Lane, Hounslow AH viability: Res dev 18 flats Emerging AH & S106 policy affecting viability. Because of incorrect advice impact of this should be taken in to account in assessing viability. Purchaser misled by LA on policy requirement, resulting in over-payment for site. Limited impact because of unusual circumstances. 11/02/09 Fitzalan Rd, & Church St, Littlehampton Sheltered housing. Commuted sum viability. Date of viability review. Taken as June/ Aug 2008- after original planning application and purchase date, but not at date of appeal. Neither party updated appraisal to appeal date, and not commented by inspector. Limited application. 26/02/09 Maunsell House, 154 - 160 Croydon New residential development Uplift in site value above MV in existing use. Inspector accepted the principle of uplift in MV over existing (Offices) Important decision: Inspector considered 20% uplift on a site
Road, Beckenham use to incentivise land owner to bring site forward. value of ~£2m was reasonable in this case. 02/03/09 189 Streatham Rd, Mitcham Mixed deve with 14 dwlgs. Date of assessment as being current use value, using values at date of appeal. Decision considers need to be pragmatic in current depressed market conditions to get development underway. 30/04/09 Land N of Flemingate, Beverley Multi phase mixed development Viability approach on multi-phase schemes Assessment of viability on should be made as they come forward for detailed planning, not at the initial overall outline stage. Important decision: SoS review. scheme. Viability on schemes in the future should be addressed at that time when market conditions prevailing may differ to the current market. 19/07/09 Norton Church Hall, Sheffield New res development New LA SPD to be taken in to account at appeal. Inspector accepted that new SPD adopted after planning application should be taken in to account in appeal consideration. SPD related to AH requirement. 05/08/09 41-43 Beaufort Gardens, London SW1 Conversion of hotel to 9 flats Build costs- day 1. Build costs specifically identified as being assessed at day 1, not mid point. Insp preferred Savills house sales evidence as based on Estate Agency knowledge Appeal allowed. Inspector reluctant to agree whose evidence he preferred. 06/10/09 Land at Lydney Bypass, Lydney Large strategic dev site Whether an approach is the correct method Confirms that in multi-phase strategic sites developable over many years an out-turn approach is reasonable Important decision: Specifically contrasted approach at Flambards Way, Godalming. Supported by SoS, Ct of Appeal & High Court. 11/12/09 High hearing Wakefield DC LDP viability assessment Viability approach Barratts challenged report as being too optimistic based on current Case dismissed. The policy adopted did pay due regard to national policy turn
viability, showing 30% AH viability over the cycle of LDP period. 25/02/10 Clay Farm & Farm, Shelford Rd, Cambridge Multi phase strategic res dev site Viability methodology. Use of price paid for land. Land price paid is irrelevant, as is developer’s accountancy method. Risk reflects market uncertainty and AH should not be the “flex”. Insp took account of economic cycle argument even though this was not raised by either expert. Important decision: dealing with viability approach, use of land price paid etc. SoS decision- differed from PINS re use of Supplementary Planning Obligation to deal with delivery mechanics for AH. Considers delivery a short term problem and can be ignored in this case. 26/05/10 Former Royal Hotel, Newbury, Gillingham Viability Methodology LA argued discounts of defaults because of “in house” services available to developer. Arguments rejected by insp, who preferred HCA EAT & BCIS data. LA sought discount of build cost, prof fees, profit & interest cost. Insp preferred industry “standards” in the absence of good alternative evidence. 10/03/10 Roche buildings, Broadwater Road, Welwyn Garden City Viability Land valuation date & escalator mechanism Appellant argued land value as purchase price to ensure delivery, and proposed escalator mechanism for commuted sum in lieu of AH/s106. Insp rejected both- LA should not carry the risk. Insp reiterated the existing land value is correct approach. Developer carries risk not LA. 30/06/10 West of Innsworth Lane & North of A40, Innsworth, Gloucester Multi phase strategic res dev site Viability reviews deferred if AH amount is inadequate. Similar arguments as Lydney. Insp did not appear to understand IRR approach on multi-phase developments Case supports the Beverley, lydney and HCA documents requirement to revisit viability in long phased schemes
03/11/10 Gun Wharf, 241 Old Ford Road, London Viability Methodology for site value Appellant sought to adopt write down from 2007 purchase price. LA argued policy compliant RLV basis Insp confirmed Clay Farm & Welwyn Garden City appeals approach was correct- RLV. Regard only to purchase price in contextual information. 03/12/10 1 Leeming Lane, Leeming Bar, Northallerton Viability Market evidence & profit levels P Lee (DVS) housing sales evidence felt to be more robust than that of Savills. Profit level at 15% based on market evidence accepted. PL used a % of GDV for interest Appeal dismissed. Worth noting the preference of our evidence over Savills- in contrast to appeal inspector at 41-45 Beaufort Gardens 12/04/11 Carlton Cinema, 161 Essex, London Enabling development. Approach to assessing viability Requirement for the appellant to demonstrate: 1. A business case for 2. That alternative options had been fully considered. 3. That the works proposed should not aim to recover original purchase price, but be sufficient to pay for the restoration works. 4. Use of the building will ensure future sustainability of the building. 5. That the development would be deliverable. Appeal dismissed. Appellant’s expert adopted a future growth approach- No comment made about this. Main concern was that the enabling works would not be done ‘til after the funding development had been completed- Lack of certainty and risk of enabling works being done because of this. 28/02/12 Water way, York Viability Benchmark- adoption of purchase price Inspector preferred the detailed build cost approach of the appellant. Accepted appellant overall profit level of 20% of GDC, which reflected risk. Applicant level of 15% of GDV. Appeal dismissed. Considered property had originally been purchased as an investment. Fall in value reflected in profit level. Benchmark taken as MV-
existing use, not historic purchase price. 11/05/12 Bunhill Row, Islington Viability Benchmark- adoption of purchase price Inspector considered purchase wrong as benchmark- Developer risk. James Brown/ Savills usual argument used by appellant and not considered correct