Tag Archive: CIL

“Never let a good crisis go to waste”

Richard Garland, Head of our Planning, Architecture and Development team looks at the relevance of this famous quote attributed to Winston Churchill to those with development property interests.

There are only two certainties in life, death and taxes. True but there is another, getting planning permission takes ages. Whilst we have seen some reduction in the amount of activity on short term site purchases and development, there has been very little reduction in the number of long term projects we are working on. Land promotion and the process of planning new developments including new towns takes many years and will be expected to span a number of economic cycles. It is therefore not surprising that those involved are doing everything they can to press on with their promotion, particularly as they may be well placed to fill some of the ‘delivery void’ caused by any prolonged economic downturn.

Those with sites of all types can learn from this approach which may be more applicable than it seems. Whilst considerably shorter, the typical journey of a smaller site through planning permission frequently takes over a year. That process can be extended significantly if sites first require promotion towards a local plan or detailed site assembly or long term survey work. Add onto that delays in sorting legal title issues access rights, restrictive covenants in advance of the sale or commencing development, or just the dreaded delay in planning and it can be considerably longer.

Even the longest recession in UK history only lasted five quarters. Once the market returned in 2009 and 2010, we saw competition for sites increase due to a lack of supply, leading to those with good quality sites with permission able to command a premium. For those planning to use the sale of a property to fund or assist retirement or business shifts, planning ahead is even more important.

So what should you be doing with your land and property now to make the most of the situation? In a series of three articles Richard Garland gives his top five tips under the three service areas of Planning, Architecture, and Development within which the GFW team operate:

Planning

  1. For those with permissions live now, there is a chance that you may not be able to deal with that permission as quickly as you would normally, often leading to a real chance of it expiring. Changing local plans can lead to expired permissions not being renewed. At the least renewals are expensive. Consider clarifying planning conditions now and what could be done to commence permission and keep it alive. Satisfying planning conditions also make developments more saleable or quicker to start if you intend to build out.
  2. For permissions that have significant s106, CIL, affordable housing or other onerous conditions that affect their financial viability, there exists a mechanism where these can be reviewed. Viability work needs to be assessed and approached carefully and with expertise. Our experience is that it can assist in saving considerable amounts of money which allow marginal sites to become viable and come forward.
  3. For those with sites with potential, use this time to start the local plan promotion process. Changes to the national planning policy framework in 2012, introduced to get the UK building again saw sites approved which we had previously taken a 25-year view on. Housing numbers will come under scrutiny and Planning Authorities will need to show they can deliver numbers even if there is a prolonged slowdown.
  4. Local plan promotion can start with just a red line boundary on a plan. However, successful promotion is a skillset in its own right. Demonstrating that site constraints have been overcome from the start is vital and will make your site stand out. Professionally prepared visual material is invaluable in demonstrating key parameters.
  5. Local plans have a typical 5-year review cycle and a number of those are coming up. At a time when the delivery is under question, that may present opportunities. Getting prepared and the site on the ‘radar’ of local planning authorities is vital to stand any chance. ‘Red line’ only plans submitted in haste rarely attract attention.

Over the next few weeks we will explore the Architecture and Development disciplines. To discuss this article or specific issues relating to your site please contact:

Richard Garland
07738 196051

Property Development: are housing targets financially viable?

It’s no secret that the UK is in the midst of a Housing Crisis, and there are many reasons as to why we are where we are, however, the underlying issue is simply that there’re not enough affordable homes. James Brokenshire, Housing Secretary, has been tasked with meeting the target of 300,000 homes-a-year by the mid-2020s. However, with national building costs increasing to up to 5% in 2018, it’s not financially viable for housing developers and builders to deliver the required sites along with the necessary Section 106 (S106) Planning Obligations and Community Infrastructure Levy (CIL) contributions.

Financial Viable Planning

What are S106 Planning Obligations?

Planning obligations are a legal obligation agreed between a local authority and a developer. They are most commonly used to secure affordable housing, however, they’re also used to secure financial contributions to support infrastructure surrounding a new development such as health care, education and open space provision.

S106 Planning Obligations are based on the specific needs of the local community. Many councils use the number of proposed dwellings being delivered on site to decide what this charge should be. For example, a council might ask for a contribution to the local school in an area with limited school places.

What are CIL Contributions?

Introduced by the Planning Act 2008, CIL Contributions are more transparent than S106 Planning Obligations as they are tariff based and a set contribution per square metre of development in order to cover a larger number of community improvements. There is no set national tariff for CIL Contributions, and these differ across local authorities.

Financial Viability in Planning

In the past few years, we have seen Northumberland, Newcastle and Tyneside Councils put forward local plans in order to set a framework of development up until 2036. Many sites have been put forward by landowners and developers, however, despite achieving planning permission, many sites are undeliverable due to increasing build costs and financial contributions that are requested, as detailed above.

In order to solve the housing crisis, it is essential that house builders have their project professionally valued so that they can negotiate contributions with local authorities in order to make a site financially viable and deliverable.

How Can We Help?

With George F. White’s knowledge of the development and valuation process, a comprehensive appraisal can be undertaken to illustrate to local authorities whether a site with planning permission, including S106 and CIL, contributions is financially viable. The aim of such an exercise is to negotiate relief from such burdens to allow a site to come forward.

Viability Appraisals are often most effective in areas where the local residential market is weak but development costs are increasing, which can be seen across the development industry at a national level. George F. White can provide you with advice, evidence and professional valuations so that negotiations with the local authority can be undertaken.

For help and advice on Financial Viability in Planning, please contact Matthew Simpson.

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