Academic journal article The Town Planning Review

Fit for Policy? Some Evidence on the Application of Development Viability Models in the United Kingdom Planning System

Academic journal article The Town Planning Review

Fit for Policy? Some Evidence on the Application of Development Viability Models in the United Kingdom Planning System

Article excerpt

This paper investigates the application and use of development viability models in the formation of planning policies in the United Kingdom (UK). Particular attention is paid to three key areas: the assumed development scheme in development viability models, the use of forecasts and the debate concerning Threshold Land Value. The empirical section reports on the results of an interview survey involving the main producers of development viability models and appraisals. It is concluded that, although development viability models have intrinsic limitation associated with model composition and input uncertainties, the most significant limitation is related to the ways in which they have been adapted for use in the planning system. In addition, it is suggested that the contested nature of Threshold Land Value is an example of calculative practices providing a façade of technocratic rationality in the planning system.

Keywords: development, planning, policy, viability, appraisal

In the United Kingdom (UK), the planning system has become not only the arena through which the spatial distribution of development is contested (what goes where?), but also how the financial gains generated by the interaction of the planning system and land and property markets are distributed (who gets what?). Development can create both negative and positive spillover for the community and profits (or losses) for developers and landowners. In competitive markets, it is expected that developers should obtain normal profits from development with the remaining financial gains flowing to landowners. It has been a well-established principle in the UK planning system that the state captures a proportion of the financial uplifts created by planning permission for the benefit of the community. Currently, the fundamental basis of policy is that local government is able to legally impose planning obligations and infrastructure levies on developers upon the granting of planning permission, so long as development remains economically viable at given levels of obligations and levies. However, the recession has highlighted how the capacity to extract planning obligations from sites can change rapidly and substantially over time. Developers and landowners have been challenging previously agreed obligations as policies become negotiable.

Over the last decade, the use of development viability modelling to provide an evidence base for both site-specific negotiations between local planning authorities (LPAs) and developers and the formation of policies regarding land allocations, planning obligations and, increasingly, levels of the Community Infrastructure Levy (CIL) have become embedded in UK planning system. 'Circular 05/2005' first documented the submission of 'financial information' to inform negotiations on levels of affordable housing (ODPM, 2005). This shifthas been reinforced in 2008 and 2010 in Planning Policy Statement 12, Planning Policy Statement 3: Housing and through a series of planning appeals. Despite the change of government in 2010, the National Planning Policy Framework (2012) has stated that the planning authorities should pay: 'careful attention to viability'. Echoing standard definitions of the market value of real estate assets, it states that:

[T]o ensure viability, the costs of any requirements ... such as requirements for affordable housing, standards, infrastructure provision and other requirements should ... provide competitive returns to a willing landowner and a willing developer to enable development to be deliverable. (DCLG, 2012, 41)

Clearly, development viability modelling is likely to remain central to the UK's planning policy formation. While there is little empirical evidence on the practice of development viability modelling in the UK planning system, its methods and assumptions are contested and controversial. Since model outputs can affect the distribution among the community, landowners and developers of the financial gains generated by planning policies and permissions, this is perhaps not surprising. …

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