South East Lincolnshire Whole Plan Viability Study Final draft report
On behalf of South East Lincolnshire Joint Strategic Planning Committee
Project Ref: 27119-002 | Date: January 2016
Office Address: Waterloo House, Victoria Square, Birmingham B2 5TB T: +44 (0)121 633 2900 E: [email protected] South East Lincolnshire Whole Plan Viability Study
Document Control Sheet
Project Name: South East Lincolnshire Whole Plan Viability Study Report Title: Draft Final Report Doc Ref: 27119-002 Date: 24th December 2015
Name Position Signature Date
Prepared and Stuart Cook Associate SC 21.12.2015 reviewed by: Prepared and Senior Shilpa Rasaiah SR 24.12.2015 reviewed by: Associate
Approved by: Michael Parkinson Partner
For and on behalf of Peter Brett Associates LLP
Revision Date Description Prepared Reviewed Approved
Peter Brett Associates LLP disclaims any responsibility to the Client and others in respect of any matters outside the scope of this report. This report has been prepared with reasonable skill, care and diligence within the terms of the Contract with the Client and generally in accordance with the appropriate ACE Agreement and taking account of the manpower, resources, investigations and testing devoted to it by agreement with the Client. This report is confidential to the Client and Peter Brett Associates LLP accepts no responsibility of whatsoever nature to third parties to whom this report or any part thereof is made known. Any such party relies upon the report at their own risk.
© Peter Brett Associates LLP 2015
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Contents
1 Introduction ...... 1 1.1 Study scope ...... 1 1.2 Study approach ...... 1 1.3 Study caveats ...... 3 1.4 Report structure ...... 4 2 National policy content ...... 5 2.1 Introduction ...... 5 2.2 National policy and recent consultation on affordable housing ...... 6 2.3 National policy on infrastructure ...... 7 2.4 National housing standards ...... 8 2.5 Further planning documents should not introduce additional cost ...... 8 2.6 National policy on community infrastructure levy ...... 9 3 The Local policy and development context ...... 12 3.1 Introduction ...... 12 3.2 Population growth and future spatial distribution policy ...... 12 3.3 Infrastructure policy ...... 13 3.4 Developer contributions and mechanism to fund infrastructure costs ...... 14 3.5 Affordable housing past delivery, consultation response and policy ...... 15 4 Residential viability testing ...... 17 4.1 Introduction ...... 17 4.2 Residual land value approach to viability appraisals ...... 17 4.3 Viability assumptions ...... 17 4.5 Developability consideration for the urban extension ...... 31 5 Commercial viability testing ...... 33 5.1 Introduction ...... 33 5.2 Planned commercial growth ...... 33 5.3 The commercial development typologies ...... 33 5.4 Viability assumptions ...... 35 5.5 Other development costs ...... 36 5.6 Commercial viability appraisal findings ...... 37 6 Conclusions and recommendations ...... 38 6.1 Introduction ...... 38 6.2 Development context findings ...... 38 6.3 Is the Local Plan deliverable and developable? ...... 39 6.4 Viability findings and recommendations ...... 39
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Appendices
Appendix A – Developer consultations Appendix B – Residential market research and appraisals Appendix C – Commercial market research and appraisals
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1 Introduction
1.1 Study scope
1.1.1 Peter Brett Associates (PBA) LLP has been commissioned by South Holland District Council on behalf of the South East Lincolnshire Joint Strategic Planning Committee (representing South Holland District Council and Boston Borough Council) to assess the viability of the South East Lincolnshire Local Plan 2011 – 2036 - Draft for Public Consultation January 2016 (abbreviated in this report as the Draft Local Plan). We refer to the two local authority areas in this report as South East Lincolnshire. This report looks at the whole plan viability (abbreviated to viability study) including guidance on the percentage of affordable housing policy and informing the scope for a preliminary draft Community Infrastructure Levy (CIL).
1.1.2 The main purpose of this plan viability assessment is to ensure that the requirements of the National Planning Policy Framework (NPPF) are met. That is, the policy requirements in the Draft Local Plan should not threaten the development viability of the plan as a whole. The objective of this study is to inform policy decisions relating to the trade-offs between the policy aspirations of achieving sustainable development and the realities of economic viability.
Defining local plan viability
1.1.3 The 'Viability Testing Local Plans - Advice for Planning practitioners Report’ prepared by the Local housing Delivery Group and chaired by Sir John Harman June 2012 (referred to as the Harman Report) distinguishes between individual development and plan viability as follows:
‘An individual development can be said to be viable if, after taking account of all costs, including central and local government policy and regulatory costs, and the cost and availability of development finance, the scheme provides a competitive return to the developer to ensure that development takes place, and generates a land value sufficient to persuade the land owner to sell the land for the development proposed.’
‘At a Local Plan level, viability is very closely linked to the concept of deliverability. In the case of housing, a Local Plan can be said to be deliverable if sufficient sites are viable (as defined in the previous paragraph) to deliver the plan’s housing requirement over the plan period’.
1.2 Study approach
1.2.1 The preparation of the Draft Local Plan spatial options and policies has adopted an ‘iterative approach’. The identified need for affordable housing and infrastructure informed the viability assessment, and the initial findings from this plan viability assessment presented to the client team during autumn 2015 have informed the policy considerations for affordable housing and infrastructure policies incorporated in the Draft Local Plan.
1.2.2 The approach to this plan viability assessment is summarised in Figure 1.1 on the following page. The process set out is broken down into a number of stages.
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Figure 1.1 Whole plan viability process
1.Understanding 2.Understanding 3.Viability testing: 4.Do we have a policy costs sites sites + policy deliverable, developable plan?
What policies can local site A) What kind of sites viability pay for? do we have? Understanding plan viability Allocate sites to a tipping points locally tailored site Which sites can come forward in profile (eg greenfield, Does the plan policy Policy layer 1: basic S106 Y0-5, after policy costs are paid? brownfield, infill, town have cost Policy layer 1b: higher S106 Which sites can come forward in centre regeneration) implications? assumptions for infrastructure Y5+? Identify the policies Policy layer 2: affordable housing Is the plan developable and that matter to viability B) What are the Policy layer 3: CIL deliverable? market value zones? Policy layer 4: other policies eg Decide on any design, carbon offset geographical differentiation on Sensitivity testing on key variables values (eg sales values, build costs, affordable housing %) C) When are sites coming forward? According to housing trajectory, which site are coming forward in Y0-5? (must be deliverable). Which in Y5+? (must be developable)
Source: PBA 2015
Understanding the policy costs
1.2.3 Articulating the impact of policy costs provides a starting point for the analysis. All policies included in the draft Plan have been provided by the client team to assess their impact on viability. This is based on an iterative process, which considers cost implications of policy and then makes refinements to the policy until an acceptable balance between viability and sustainability is reached.
Understanding the sites
1.2.4 The next stage is to understand the sort of development sites likely to emerge through the planning process. In order to understand the sites, the following three questions are asked:
What are the market value zones for the area? An otherwise identical development may have a very different value, depending on its location. The report seeks to understand how this economic geography might affect site viability in the area.
What kind of sites are emerging through the plan? Different sites might have different viabilities depending on the existing use or condition of the site. Site typologies are tailored to local conditions based on the emerging sites coming forward in the strategic housing land availability assessment.
When are sites coming forward? An analysis is undertaken of emerging housing trajectory to understand the time period that different developments are expected, and explore whether the NPPF would require a site to be ‘deliverable’ in Years 0-5 of the plan, or ‘developable’ in Years 6 onwards.
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Viability testing the sites
1.2.5 The next stage is to assess the viability of the site typologies. The approach is to add gradually escalating levels of policy costs in order to judge the point at which policy costs make development unviable.
1.2.6 Understanding the basic viability of sites and then adding policy costs such as affordable housing, infrastructure, and other policy requirements is the starting point. Further to this is to establish an understanding of the trade-offs involved between these policy choices, so that elected members and their officers may arrive at a reasoned and prioritised set of policy ‘trade-offs’.
Assessing whether the plan is developable and deliverable
1.2.7 The output from this stage forms the central response to the overall study question: is the plan deliverable and developable?
1.2.8 With regards to the housing supply, the National Planning Policy Framework states that evidence must show the Inspector that the plan is ‘deliverable’ for the first five year period following adoption. The approach required for land for years 6-10 and beyond is different to that adopted for the sites expected in Years 0-5 of the plan. These residential sites need to be ‘developable’ and take account of longer term timescales and proactive interventions that maybe put in place.
Stakeholder engagement
1.2.9 We are grateful for the valuable inputs provided by a range of stakeholders. The following stakeholder engagement has taken place as part of this study:
A number of interviews have been undertaken with various developers, registered providers and the strategic site promoters to inform the appraisal assumptions. See Appendix A for a list of consultees.
A developer workshop held in June 2015 which was attended by various developers and agents. A copy of the meeting note is in Appendix A.
1.3 Study caveats
1.3.1 The bulk of the research and developer consultation was undertaken during Summer of 2015, at the time the Draft Local Plan was at an early stage of preparation and the choices of sites and policies were not finalised, so the typologies used in this study represent where the bulk of development is likely to take place.
1.3.2 Viability is not static; it will be constantly changing with changes in policy and market conditions and the objective at Plan level is to allow sufficient buffer in setting any CIL charge or policy to reflect variations. Viability is also not an exact science with clear threshold values, as landowner expectations will vary and slight adjustments to appraisal assumptions can make a difference to the final outcomes and so it is helpful to maintain a buffer.
1.3.3 Changes in national policy introduced after the viability assessment were undertaken, such as the removal the affordable housing threshold from the NPPF have not been tested. Similarly the possible impact of any changes which may result from the December 2015 NPPF consultation on the possible broadening of the definition of affordable housing have not been tested though these matters have been considered.
1.3.4 The plan wide viability is not appropriate for site specific assessment as these will be informed by site specific considerations. The assumptions adopted for this study are reasonable in
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terms of representing the broad range of development for plan making purposes. All policies included in the Draft Local Plan, which might impact on viability have been kept sufficiently flexible to reflect site specific considerations.
1.3.5 The report and the accompanying appraisals have been prepared as a supporting document to inform the Local Plan evidence base and planning policy. The findings should not be relied upon for any other purpose.
1.3.6 No responsibility whatsoever is accepted by any third party who may seek to rely on the content of the report for any other purpose than for the stated objectives for which it has been prepared. This report does not provide formal Red Book site specific valuation; it provides a strategic overview for the Local Plan.
1.4 Report structure
1.4.1 The rest of this report is set out as follows:
Section 2 sets out the national policy and legal requirements relating to whole plan viability, affordable housing and community infrastructure levy which inform the study assessment.
Section 3 outlines the local plan policy and development context that has informed the viability assessment for this area.
Sections 4 to 5 set out the approach to residential and commercial viability assessment, the development scenarios tested the assumptions and viability appraisal findings.
Section 6 concludes by setting out the main findings informs recommendations for the plan viability, infrastructure and affordable housing policy.
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2 National policy content
2.1 Introduction
2.1.1 This chapter sets out the main national policies from the NPPF and other regulations and statements relevant to this study which includes policies on viability, affordable housing, infrastructure and housing standards.
National Planning Policy Framework
2.1.2 The NPPF recognises that the ‘developer funding pot’ or residual value is finite and decisions relating on how this funding is distributed between affordable housing, infrastructure, and other policy requirements have to be considered as a whole.
2.1.3 The NPPF advises that cumulative effects of policy should not combine to render plans unviable:
‘Pursuing sustainable development requires careful attention to viability and costs in plan- making and decision-taking. Plans should be deliverable. Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable’. 1
2.1.4 With regard to non-residential development, the NPPF states that local planning authorities ‘should have a clear understanding of business needs within the economic markets operating in and across their area. To achieve this, they should understand their changing needs and identify and address barriers to investment, including a lack of housing, infrastructure or viability.’ 2
2.1.5 Note the NPPF does not state that all sites must be viable now in order to appear in the plan. Instead, the NPPF is concerned to ensure that the bulk of the development is not rendered unviable by unrealistic policy costs.
Deliverability and developability considerations in the NPPF
2.1.6 The NPPF creates the two concepts of ‘deliverability’ (which applies to residential sites which are expected in Years 0-5 of the plan) and ‘developability’ (which applies to year 6 onwards of the plan). The NPPF defines these two terms as follows:
To be deliverable, “sites should be available now, offer a suitable location for development now, and be achievable, with a realistic prospect that housing will be delivered on the site within five years and in particular that development of the site is viable.” 3
To be developable, sites expected in Year 6 onwards should be able to demonstrate a “reasonable prospect that the site is available and could be viably developed at the point envisaged”. 4
1DCLG (2012) National Planning Policy Framework (41, para 173) 2 Ibid (para 160) 3 Ibid (para 47, footnote 11 – note this study deals with the viability element only, the assessment of availability and suitability is dealt with by the client team as part of the site selection process for the SHLAA and other work. 4 Ibid (para 47, footnote 12)
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2.1.7 The NPPF advises that a more flexible approach may be taken to the sites coming forward in the period after the first five years. Sites coming forward after Year 6 might not be viable now – and might instead be only viable at that point in time. This recognises the impact of economic cycles and variations in values and policy changes over time.
2.1.8 The focus of this study is on viability only. The assessment of availability and suitability is dealt with by the client team.
2.2 National policy and recent consultation on affordable housing
2.2.1 In informing future policy on affordable housing, it is important to understand national policy on affordable housing. The NPPF states:
2.2.2 To deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities, local planning authorities should5:
plan for a mix of housing based on current and future demographic trends, market trends and the needs of different groups in the community (such as, but not limited to, families with children, older people, people with disabilities, service families and people wishing to build their own homes);
identify the size, type, tenure and range of housing that is required in particular locations, reflecting local demand; and
where they have identified that affordable housing is needed, set policies for meeting this need on site, unless off-site provision or a financial contribution of broadly equivalent value can be robustly justified (for example to improve or make more effective use of the existing housing stock) and the agreed approach contributes to the objective of creating mixed and balanced communities. Such policies should be sufficiently flexible to take account of changing market conditions over time.6
2.2.3 The NPPF does recognise that in some instances, off site provision or a financial contribution of a broadly equivalent value may contribute towards creating mixed and balanced communities.
2.2.4 Finally the NPPF recognises that market conditions change over time, and so when setting long term policy on affordable housing, incorporating a degree of flexibility is sensible to reflect changing market circumstances. The Harman report7 too acknowledges that viability will change over the plan period which will frequently cover durations of fifteen years or more. The report recommends that policies should be subject to review to enable planning authorities to take account of changes in market conditions. Otherwise significant changes in market conditions (viability assumptions) could lead to challenges of the plan policies at the point of making planning applications.
Threshold limits for affordable housing
2.2.5 The government had introduced an affordable housing threshold following the issue of a Ministerial Statement in November 20148 requiring local authorities to adopt a national threshold for affordable housing. The NPPG states that:
5 Ibid (para 50 and bullets) 6 Ibid (p13, para 50) 7 Local Housing Delivery Group Chaired by Sir John Harman (June 2012) Viability Testing Local Plans - Advice for planning practitioners 8 Ministerial Statement in Nov 2014 DCLG Support for Small Scale Developers
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‘affordable housing contributions should not be sought from developments of 10-units or less, and which have a maximum combined gross floorspace of no more than 1000sqm’9. However, these were subject to a successful legal challenge by West Berkshire Council and Reading Borough Council and the threshold polices were quashed as of August 2015. The Government has won the right to Appeal the decision and as such further national policies may impact on the affordable housing thresholds.
Consultation on the broadening the scope of affordable housing
2.2.6 The Government is committed to increasing opportunities for home ownership for first-time buyers under 40 by the provision of discounted market homes. As part of this, we outline emerging legislation and national policy that will help to address this objective.
2.2.7 The Housing and Planning Bill 2015 (the Bill), once enacted, will require planning authorities (including the Secretary of State) to promote the supply of starter homes in England. The Bill makes clear that the Secretary of State could, through regulations, require local authorities to grant permission for certain residential developments only if a requirement (to be specified in the regulations) as to starter homes is met. The Bill suggests that regulations could allow permission to be granted only if a developer enters into a planning (s106) obligation to provide starter homes or pay a contribution to the authority towards starter homes.
2.2.8 As part of this, the Government has launched a consultation in December 2015 seeking views on various proposed amendments to the NPPF. This includes a proposal to amend the planning policy definition of what constitutes affordable housing, to a fuller range of products that can support people to access home ownership. The intention is to enable greater innovation to allow new ways of providing low cost market housing or intermediate rent such as discount market sales or innovative rent to buy housing, and in some cases, removing the ‘in perpetuity’ restrictions or the need to recycle the subsidy, and helping to increase affordable home ownership opportunities.
2.2.9 We have not, at this stage, taken account of the any changes that may stem as a result of any possible changes to the definition of affordable housing as this is at consultation stage only and there is further clarity needed on the level of starter home requirement and what percentage of the total mix of affordable housing supply this would affect. However, we considerable changes in the delivery of future affordable housing are likely to take place.
2.2.10 Going forward we do predict that there will be considerable change in the provision of affordable housing and the role of Registered Providers and developers in meeting this product. In Spalding, Broadgate Homes are already delivering affordable housing on a number of their sites and could expand this role by increasing the range of new products, which will include a greater share of starter homes help to buy equity loan, shared ownership homes and some affordable homes which are likely to be funded through cross subsidy from other products.
2.2.11 The role of the Registered Provider too is likely to change to reflect a less grant and more market funded delivery, particularly after factoring in the Chancellors announcement in his Budget speech in 2015 that affordable housing providers will have to cut social housing rents by one per cent year for the next four years from April 2016. This represents a reversal of the rent formula which currently allows register providers to raise rents in line with the consumer prices index plus one per cent. See section 3 for a perspective of a Registered Provider working in this area.
2.3 National policy on infrastructure
2.3.1 The NPPF requires authorities to demonstrate that infrastructure will be available to support development:
9 NPPG Paragraph: 012 Reference ID: 23b-012-20141128
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‘It is equally important to ensure that there is a reasonable prospect that planned infrastructure is deliverable in a timely fashion. To facilitate this, it is important that local planning authorities understand district-wide development costs at the time Local Plans are drawn up.’ 10
2.3.2 It is not necessary to prove that all funding for infrastructure has been identified. The NPPF states that standards and policies in Local Plans should ‘facilitate development across the economic cycle,’11 suggesting that in some circumstances, it may be reasonable for a Local Authority to argue that viability is likely to improve over time, that policy costs may be revised, that some infrastructure is not required immediately, and that mainstream funding levels may recover.
2.3.3 The local authorities are preparing an Infrastructure Delivery Plan (IDP) to set out the necessary infrastructure and funding. A draft of the IDP has been considered at the time of writing and discussion with the project lead has informed the assumptions inputs in this study.
2.4 National housing standards
2.4.1 The Government has rationalised various housing technical standards through the publication of the Deregulation Bill 2015 which was granted Royal Assent on 26th March 201512. The new standards include a mandatory Building Regulation element and optional Building Regulation element for water efficiency and access (volumes 1 and 2) which provides a higher standard than the minimum national building regulations.
2.4.2 A nationally described space standard has also been introduced which provides local authorities some choice to require developers to build to different standards. These optional standards and space standards may only be applied where there is a local plan policy, based on evidenced local need and where the viability of development is not compromised as a result of their application.
2.4.3 The Code for Sustainable Homes (in England) has been withdrawn; instead energy saving13 standards will be included in national Building Regulations.
2.4.4 In addition, a new security standard has now been included in the Building Regulations. Building Regulation guidance has also been included on waste storage (to ensure that this is properly considered at the outset in new housing developments).
2.5 Further planning documents should not introduce additional cost
2.5.1 The NPPF clearly states that further planning documents should not be used add to financial burden:
‘Any additional development plan documents should only be used where clearly justified. Supplementary planning documents should only be used where they can help applicants make successful applications or aid infrastructure delivery, and should not be used to add unnecessarily to the financial burdens of development.’14
2.5.2 A key role of viability assessment is identifying the cumulative impact of policies, thus once a plan is in place, additional costs to development should not be introduced that will alter the
10 Ibid (p42, para 177) 11 Ibid (p42, para 174) 12 Consultation on the Housing Standards Review took place in 2013, and a written Ministerial Statement formally announcing the new approach to setting technical housing standards in England was announced on 27th March 2015. 13 Note LA will be able to set and apply policies in their Local Plans which require compliance with energy performance standards that exceed the energy requirements of Building Regulations until commencement of amendments to the Planning and Energy Act 20018. This is expected to happen in late 2016. 14 DCLG (2012) National Planning Policy Framework (para 153)
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viability and potentially render the plan-wide testing redundant. For this reason, having established the viability of the Local Plan (and associated Community Infrastructure Levy), planning authorities should critically examine the financial implications from the subsequent adopt of any Supplementary Planning Documents (SPDs) or Development Plan Documents (DPDs). Any subsequent polices or SPDs should not be progressed without a robust and proportionate review of the plan’s viability.
2.6 National policy on community infrastructure levy
2.6.1 The Community Infrastructure Levy (CIL) is a planning charge based on legislation that came into force on 6 April 2010. The levy allows local authorities in England and Wales to raise contributions from development to help pay for infrastructure that is needed to support planned development. Local authorities who wish to charge the levy must produce a draft charging schedule setting out CIL rates for their areas – which are to be expressed as pounds (£) per square metre or number of homes, as CIL will be levied on the gross internal floorspace of the net additional liable development. Before it is approved by the Council, the draft schedule has to be tested by an independent examiner.
2.6.2 The requirements which a CIL charging schedule has to meet are set out in:
The Planning Act 2008 as amended by the Localism Act 2011.
The CIL Regulations 2010, as amended.
The CIL Guidance which was updated and published in February 2014 and since replaced by National Planning Practice Guidance on CIL (NPPG CIL).15
2.6.3 The 2014 CIL amendment Regulations have altered key aspects of setting the charge for authorities who publish a Draft Charging Schedule for consultation. The key points from these various documents are summarised below.
Striking the appropriate balance
2.6.4 The revised Regulation 14 requires that a charging authority ‘strike an appropriate balance’ between:
The desirability of funding from CIL (in whole or in part) the… cost of infrastructure required to support the development of its area… and
The potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area.
2.6.5 The focus is on seeking to ensure that the CIL rate does not threaten the ability to develop viably the sites and scale of development identified in the Local Plan. Accordingly, when considering evidence the guidance requires that charging authorities should:
‘use an area based approach, involving a broad test of viability across their area’, supplemented by sampling ‘…an appropriate range of types of sites across its area…’ with the focus ‘...on strategic sites on which the relevant Plan relies and those sites where the impact of the levy on economic viability is likely to be most significant (such as brownfield sites). 16
2.6.6 This reinforces the message that charging rates do not need to be so low that CIL does not make any individual development schemes unviable (some schemes will be unviable with or
15 DCLG (February 2014) Community Infrastructure Levy Guidance and DCLG (June 2014) National Planning Practice Guidance: Community Infrastructure Levy (NPPG CIL) 16 DCLG (June 2014) NPPG CIL (para 019)
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without CIL). However, in aiming to strike an appropriate balance overall, the charging authority should avoid threatening the ability to develop viably the sites and scale of development identified in the Local Plan.
2.6.7 The guidance advises that CIL rates should not be set at the very margin of viability, partly in order that they may remain robust over time as circumstances change:
‘…..if the evidence pointed to setting a charge right at the margins of viability………It would be appropriate to ensure that a ‘buffer’ or margin is included, so that the levy rate is able to support development when economic circumstances adjust.’17
Varying the CIL charge
2.6.8 CIL Regulations (Regulation 13) allows the charging authority to introduce charge variations by geographical zone in its area, by use of buildings, by scale of development (GIA of buildings or number of units) or a combination of these three factors. As part of this, some rates may be set at zero. Variations must reflect evidence of differences in viability. Differential rates should not be based on policy alone or be set by reference to the costs of infrastructure.
2.6.9 The guidance also points out that charging authorities should avoid ‘undue complexity’ when setting differential rates. It is worth noting, however, that the guidance gives an example which makes it clear that a strategic site can be regarded as a separate charging zone: ‘If the evidence shows that the area includes a zone, which could be a strategic site, which has low, very low or zero viability, the charging authority should consider setting a low or zero levy rate in that area.’ 18
Supporting evidence
2.6.10 The legislation requires a charging authority to use ‘appropriate available evidence' to inform their charging schedule19. The guidance expands on this, explaining that the available data ‘is unlikely to be fully comprehensive’.20
2.6.11 These statements are important, because they indicate that the evidence supporting CIL charging rates should be proportionate, avoiding excessive detail. One implication of this is that we should not waste time and cost analysing types of development that will not have significant impacts, either on total CIL receipts or on the overall development of the area as set out in the Local Plan.
CIL, S106, S278 and the regulation 123 infrastructure list
2.6.12 The purpose of CIL is to enable the charging authority to carry out a wide range of infrastructure projects. CIL is not expected to pay for all infrastructure requirements but could make a significant contribution. However, development specific planning obligations (commonly known as S106) to make development acceptable will continue with the introduction of CIL. In order to ensure that planning obligations and CIL operate in a complementary way, CIL Regulations 122 and 123 place limits on the use of planning obligations.
2.6.13 To overcome potential for ‘double dipping’ (i.e. being charged twice for the same infrastructure by requiring the paying of CIL and S106), it is imperative that charging authorities are clear about the authorities’ infrastructure needs and what developers will be expected to pay for and
17 DCLG (June 2014) NPPG CIL (para 019) 18 Ibid 19 Planning Act 2008 section 211 (7A) 20 DCLG (June 2014) NPPG CIL (para 019)
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through which route. The guidance expands this further in explaining how the regulation 123 list should be scripted to account for generic projects and specific named projects).
2.6.14 The Regs 123 list now forms part of the ‘appropriate available evidence’ for consideration at the CIL examination. A draft infrastructure list must be available at the preliminary draft charging schedule phase.
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3 The Local policy and development context
3.1 Introduction
3.1.1 This section draws out the key policies which impact on viability in the draft Local Plan and outlines the locations where the planned growth will take place shaping the development context going forward.
3.2 Population growth and future spatial distribution policy
3.2.1 There has been a significant growth in population since the 2011 Census, driven largely by economic migrants taking up employment opportunities mainly in the food growing and processing industry. The population of Boston Borough has increased by some 19% (to 66,500) since 2001, and in the same period South Holland District has seen an increase of some 18% (to 90,400), whereas the growth for Lincolnshire in this period has been some 13%. This growth in population represents one of the largest increases in population nationally since the 2001 Census, highlighting some very unique considerations for the Local Plan area. This growth in population has impacted on housing need and demand and on other infrastructure and services in the local area.
Type of sites informing past delivery of housing
3.2.2 Figure 3.1 shows that development in South Holland District has been progressively less reliant on brownfield sites, whilst such sites have formed an important part of the past delivery in Boston Borough, however, going forward more of the development if Boston Borough is expected to be on greenfield sites.
Figure 3.1 Gross housing completions on greenfield and brownfield sites – 2004 – 20113/14
Source: Annual Monitoring Report South East Lincolnshire draft 2013- 2014
3.2.3 The draft Local Plan Policy 11 set outs the provision for at least 18,250 dwellings in South East Lincolnshire over the plan period to meet the objectively assessed need. Policy 12 sets out the settlements where the bulk of this growth will take place in Spalding and Boston. The
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Sub Regional Centres of Spalding and Boston will support the bulk of the planned growth. The Main Service Centres such as Holbeach, Kirton, Long Sutton, Swinshead, Crowland etc. will support some growth whilst the Minor Service Centres will have generally lower levels of growth.
3.3 Infrastructure policy
3.3.1 The draft Local Plan recognises that the plan area is poorly connected, especially by the highway network, to the rest of the region. The area is served by just three principal A Roads and these are heavily used by a considerable volume of HGVs and farm vehicles. The flat character of the land and its proximity to the Wash estuary also mean that the rivers in the area have tidal influences which require daily management through the operation of pumping stations and sluices. The threat of flooding could affect whole settlements and valuable farmland with saline water and harm the area’s main economy for many years and is a particular concern for Boston.
3.3.2 Although the draft Local Plan takes a precautionary approach to flood risk, it also recognises that the Boston urban area will continue to be an area of choice for most residents, and therefore flood mitigation is a major consideration and cost in the delivery of new development. Investment at a strategic level in the Boston Barrier as a strategic flood mitigation defence is of considerable significance in helping to support the delivery of residential development in the Boston area.
3.3.3 Therefore infrastructure associated with transport communication, particularly highway, and with climate change particular flood management form an important part of the vision for the draft Local Plan. The focus is to ensure that the delivery of key infrastructure including strategic highway improvements and measures to reduce the causes and impacts of flooding should be phased in line with growth to ensure that new development is both sustainable and deliverable.
3.3.4 The following policies include the need for infrastructure delivery as part of the overall development to meet needs generated by the development:
Policy 4: strategic approach to flood risk – this policy is about the location of development in area of lowest flood risk. Planning applications will, where required, be accompanied by a site specific Flood Risk Assessment which will detail proposals for any required flood mitigation for the lifetime of the development. Such measures will be secured by a planning condition. The viability study addresses flood mitigation as an additional cost input to the development.
Policy 5: Meeting physical infrastructure and service needs – this policy sets out how physical infrastructure will be met, it places the onus on the developer to demonstrate that there will be sufficient infrastructure capacity to support the needs of the development. This includes site enabling infrastructure such as water, energy, communication and also other physical infrastructure such as education, green infrastructure, health care and transport. The justification acknowledges that infrastructure needs will change over time, and sign posts to the Infrastructure Delivery Plan21. The viability study includes a S106 developer contribution within the viability appraisal for all developments (including those below 10 units) and also considers the scope for a CIL charge to support strategic infrastructure. Once a view has been taken on whether to adopt a CIL or not, further refinements may be made to the viability assessment to inform the scale of S106 contributions.
21 Note the current Infrastructure Delivery Plan has been prepared by Lincolnshire County Council and this will be reviewed and revised by Peter Brett Associates during 2016
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Policy 6: Developer contributions - this policy could be strengthened in the supporting text by linking to a single live Infrastructure Delivery Plan (IDP), which then sets out developer contributions will be sought to support these requirements. The policy is kept sufficiently flexible to reflect local requirement.
Policy 30: promoting safe accessible open space, sport and recreational facilities – many of the requirements of this policy relate to careful design aim at crime reduction and healthy living. The policy also includes the requirement for development to support community infrastructure such as education, health care, libraries etc. arising as result of the growth.
Policy 32: vehicle and cycle parking – this policy is pre-fixed, with the words ‘where appropriate’, and aims to encourage the provision of cycle parking facilities and for car parking spaces to be capable of connection to electricity supply for both residential and commercial development. Many providers of electricity charge points often supply and install this infrastructure for free on the basis of the on-going revenue generated. Careful site specific design and layout will need to factor in any additional requirements for higher car parking standards - this could affect the layout of schemes in order to maintain the density and overall developable area to inform the scheme viability.
3.4 Developer contributions and mechanism to fund infrastructure costs
3.4.1 The following considerations will inform whether to adopt a CIL charge to support the delivery of infrastructure in South East Lincolnshire:
Is the infrastructure of a strategic nature, which is needed due to the cumulative impact of growth or can it be directly attributable to a planned growth?
The nature and distribution of the infrastructure needed in relation to the planned growth i.e. is it possible to use S106 to fund the infrastructure without exceeding the pooling restrictions?
Is the viability sufficient to support a CIL charge?
Is the funding gap greater than the scale of funding to be secured from the CIL – a consideration that will be informed by the Infrastructure Delivery Plan (IDP).
3.4.2 We briefly consider the issues guiding the emerging recommendations on the developer contributions mechanism to adopt for South East Lincolnshire. Further work on the infrastructure Delivery Plan during 2016 is intrinsically linked to this assessment and so final recommendation on the most appropriate funding mechanism will be made after work on the IDP is complete.
Type and distribution of the strategic road infrastructure
3.4.3 Based on the review of the draft Local Plan (policy 31 transport networks), and response from the client team, a priority for both authorities in South East Lincolnshire is to secure the delivery of Spalding Western Relief Road (SWRR), the Boston Distributor Road (BDR) schemes. These are recognised as long term schemes, likely to be completed in future plan periods, but with a strong commitment from members to securing their delivery. The geography of the proposed road schemes has influenced the plan growth options. The proposed growth strategy in effect forms an enabling mechanism to support the deliver the road schemes and the road scheme in turn helps to unlock the delivery of the planned growth – thus creating a symbiotic relationship.
3.4.4 A series of developer surgeries have been held with the two developers currently working on the delivery of the urban extensions in Spalding and Boston to inform the viability assumptions
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and thoughts on the delivery of the road schemes. The site promoters in each case were in favour of having a CIL funding mechanism to help fund the delivery of these transport schemes as they considered this mechanism might provide a fairer approach to achieving the delivery of the schemes but required further consideration. They could also see how the transport could be incorporated into specific urban extension delivery (depending on the alignment of the road scheme and location of the planned growth).
3.4.5 A broad framework for the delivery of the road schemes has been set out in the draft Local Plan which includes policy 31 to safeguard a corridor to support the delivery of the road schemes. Policy 13 (sustainable urban extension for housing in Spalding), sets out how each section of the SWRR will be delivered. Current urban extension consents in Spalding and Boston are both contributing towards the cost of initial phases of the respective strategic road schemes. The Q1: The Quadrant scheme by Chestnut Homes (already consented) will be delivering the first phase of the BDR, the second phase of the road scheme is expected to form part of the Q2: The Quadrant proposed urban extension, subject to the housing option progressing.
3.4.6 Based on the draft Local Plan, the current view is that the SWDDR and BRR schemes shall be attributed directly to the planned urban extensions and these will be funded either using a S106 agreements or directly as part the site enabling infrastructure costs. The recommendation informing the draft Local Plan based on the policies is not to adopt a CIL charge for the strategic urban extensions as these will be required to meet all their infrastructure requirements including relevant sections of the strategic road schemes. However, further work on the Infrastructure Delivery Plan during 2016 will review the approach and funding mechanisms as part of an iterative approach and re-consider whether to adopt a CIL or S106 to support these strategic road schemes.
Type and distribution of other strategic infrastructure
3.4.7 There is also likely to be a need to invest in additional education, health and green infrastructure/ cycling /walking routes to serve the area, as well as other strategic infrastructure not yet defined. Further work on the Infrastructure Delivery Plan in 2016 will begin to refine thinking on whether the infrastructure requirements are best met by pooling of S106 contributions or by introducing a CIL charge for the planned growth in South Holland District and possibly Boston Borough. Therefore it is too soon to entirely rule out the case for introducing a CIL charging schedule without more refined assessment of infrastructure requirements and delivery mechanisms.
3.4.8 From a viability perspective, our draft findings indicated that it is possible to have a CIL charge in South Holland District but it is unlikely to be viable in all of Boston Borough Council area without moving to a zero affordable housing policy. If a CIL charge was to be introduced (for the non-strategic urban extension areas), our recommendation for South Holland District and Boston would require adjustments to the affordable housing policy. The CIL funding could then be used to support the wider objectives of the Local Plan based on items included in the Regs 123 List (such as education, green infrastructure, transport measures, and other measures to reduce the impact of climate change).
3.5 Affordable housing past delivery, consultation response and policy
3.5.1 The client team have reviewed recent planning applications to inform the scale of developer contributions achieved in relation to affordable housing. Their findings are included in Appendix B. The headline messages of what is being delivered is as follows:
Boston Borough Council has used S106 agreements relatively infrequently in the last five years, and the majority of these have been tailored to individual circumstances.
South Holland District has had a strong track record of securing S106 affordable housing ranging from 17% to 33% (policy level). However, in recent years there have been a
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number of viability assessments to re-negotiate the scale of affordable housing due to other infrastructure requirements.
Overall historic delivery of affordable housing (S106 and grant funded combined) has been strong often due to either 100% affordable housing exception schemes or similar cross subsidy schemes and HCA and other grant funding.
3.5.2 Consultation with Andy Parker, area development manager at Waterloo Housing Group during September 2015 highlighted the following messages in relation to affordable housing delivery:
They are building affordable housing in Boston BC as they have funding from the HCA and Boston Borough Council which helps to get around any funding gap created from developing in Boston.
Build costs are higher in Boston due to the cost of flood remediation.
The recent changes to affordable housing rent (1% rent reduction) will have an impact on future delivery of this product; it becomes effective in April 2016, and is likely to affect their new build programme until finance is reviewed. This could impact on the bids made by RP for S106 affordable housing schemes being promoted by developers, which could then have a knock on effect on the delivery of affordable housing schemes being sought via S106 agreements.
Average unit size is around 70 Sq.m, focusing on 2 bed units at around 35 dph. Sales value assumption is close to 50% of open market values, and build costs are higher than the market value of schemes, hence need gap funding to deliver S106 schemes.
3.5.3 The draft Local Plan Policy 15: affordable housing – highlights that Boston Borough needs 100 affordable dwellings per annum (equating to one third of the overall annual housing need) whilst South Holland District needs about 210 affordable dwellings per annum (equating to about half of the overall annual housing need) are needed as affordable housing. Part of this need will be met by Rural Exception Sites or developers specifically providing affordable housing. However some of this need will also be met via market housing schemes. Sites of 10 or more dwellings are to provide at least about 15% affordable housing in Boston Borough22 and 30% affordable housing in South Holland District on market housing sites. The affordable policy supporting text recognises that the requirement will need to be weighed against other infrastructure costs and so in some instances a site specific viability assessment may be needed to determine whether the priorities identified for development can be met.
3.5.4 For this viability study, we have tested the draft Local Plan policy 15 proposed levels of affordable housing to inform the plan viability assessment.
22 A reduction from the current policy requirement of 25%.
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4 Residential viability testing
4.1 Introduction
4.1.1 Previous stages have provided an understanding of how location and policy costs might affect viability. In effect, policy costs have been identified, the future development sites have been allocated to the site profile typologies, and market sales values have been estimated, and the planned delivery periods understood. This stage is about undertaking the viability testing to assess the ability of developments to pay for policy cost.
4.2 Residual land value approach to viability appraisals
4.2.1 The PBA development viability testing uses the residual approach to development viability. The approach takes the difference between the development values and costs and compares the ‘residual land value’ with a threshold land value to determine the balance that could be available to support policy costs such as affordable housing and infrastructure. The method is illustrated in the figure 4.2 below.
4.2.2 As noted previously, the policy costs relevant for generic typology assessment for this plan viability assessment are affordable housing, and infrastructure. All other policy cost considerations (e.g. design, site delivery layout) are incorporated in the development cost assumptions for the appraisals.
Figure 4.2 Approach to residual land value assessment for plan viability
Less development costs – including build costs, fees, finance costs etc
Benchmark land value - to Balance - available to contribute Value of completed incentivise delivery and support towards policy requirements development scheme future policy requirements (can be + or -)
Less developer’s return (profit) – minimum profit acceptable in the market to undertake the scheme
4.2.3 The purpose of the assessment is to identify the balance available to pay for policy costs at which the bulk of the development proposed in the development plan is financially viable.
4.3 Viability assumptions
4.3.1 Our calculations use readily available evidence, which has been informed and adjusted by an assessment of local transactions and stakeholder consultations. Our analysis has also been based on web research of recent properties currently on the market and Land Registry data of actual sales of new houses recently built in the study area is set out in this section. This
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research informs the type of developments currently taking place has shaped the study viability assumptions. Appendix B sets out the research that has informed some of the assumptions in this analysis.
4.3.2 This kind of strategic viability assessment involves a high degree of generalisation. To compensate for variations in assumptions it is important to build in a a viability ‘cushion’ in informing policy decisions..
4.3.3 In the case of the strategic sites, the model has been adapted to test for a range of different infrastructure requirements in the phasing of the development to bring forward sustainable development. When added to a set of locally based assumptions on new-build sales values, threshold land values and developer profits, a set of potential strategic site development viability assessments are produced. This is then built into the cashflow modelling to assess viability through the lifetime of the development, where costs and returns will be flowing through the development cycle. The purpose of the assessment is to identify the balance available to pay for policy costs at which each of the potential strategic sites is financially viable.
4.3.4 Assumptions in respect of the following are inputted into our viability model:
Density of development
Percentage of affordable housing mix and other policy costs / s106
Average size of house
Build cost
Sales values per sq. m
Sales rates
Threshold land value per ha
Site opening costs for strategic sites
Finance costs
Contingency rates
Developers profit
Site typologies
4.3.5 The sites were allocated to typologies that best reflect the type of sites likely to come forward in the study area based on a review of the emerging trajectory, a review of past delivery and discussion with the client team and consultees. This allows the study to deal efficiently with the very high level of detail that would otherwise be generated by an attempt to viability test each site. This approach is proposed by the Harman Report, which suggests ‘a more proportionate and practical approach in which local authorities create and test a range of appropriate site typologies reflecting the mix of sites upon which the plan relies’.23
4.3.6 In informing the viability assumptions, two strategic sites identified as case studies by the client team to represent the key strategic sites likely to come forward in the plan period. To
23 Local Housing Delivery Group Chaired by Sir John Harman (2012) Viability Testing Local Plans (p.9)
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inform the case study assumptions, a number of developer surgeries were hosted with site promoters to inform the viability assumptions.
4.3.7 The site typologies and case studies adopted for the viability study are summarised in Error! Reference source not found.. The density assumptions take account of the unit size adopted.
Table 4.1 Residential typologies and case studies
Greenfield scenarios – units and density
House 1 35 dph
House 2 35 dph
House 10 35 dph
House 30 35 dph
House 150 35 dph
Brownfield scenario – units and density
Flats 20 80 dph
Rural scenario – units and density
House 1 30 dph
House 2 30 dph
House 10 30 dph
House 30 30 dph
House 150 30 dph
Strategic site case studies – units and density
Spalding SUE 1000 35 dph
Boston SUE 3000 35 dph
Source: PBA, client team and site promoter inputs 2015
Informing the value zones
4.3.8 Identifying value zones is inherently challenging, as we are not necessarily comparing like with like. Even within a given type of dwelling, such as terraced house, there will be variations in quality or size which will impact on the price. There are also problems in setting charging boundaries. Thus in setting zones, requires marshalling of an ‘appropriate available evidence’ and arriving at sensible boundaries that can be easily identified. The following steps were taken:
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An assessment of house prices (on a per sq. m basis) based on data from recent properties on the market on websites such as the Right Move and the Land Registry data. House prices are generally considered a good proxy for viability.
A consideration of the distribution of planned development.
4.3.9 There will always be areas or types of development that do not neatly fit a value area because these are plan wide studies. However, as long as the majority of development is not put at risk, and the Local Authorities can still broadly achieve the Plan objectives, then the approach is acceptable.
House prices
4.3.10 Appendix B provides a summary of recent sales values for new properties being transacted. Our research identified a wide range of variations for the vast number of transactions. These were then grouped together to arrive at representative values to reflect the future plan growth areas.
4.3.11 The assessment in this section, including consultation with the client team favours allocating the residential market into the two value zones which reflects the bulk of the planned growth:
Developments in the urban centres of Spalding.
Development in the urban areas of Boston
4.3.12 The assessment found that the main delivery historically has been in the urban areas of Spalding and Boston and with limited delivery in some rural area. Going forward, the focus of future development, based on Policy 2: spatial strategy will continue to focus delivery on the main sub regional centres of Boston and Spalding, particularly on a number of large urban extensions on greenfield sites which are critical to the delivery of the planned growth, and there will also be some growth in the main service centres such as Crowland, Pinchbeck, Wrangley, etc. and then limited growth in other service centres and settlements.
Sales values
4.3.13 Based on the above research along with feedback received at the workshops and follow up interviews with the case study and SUE promoters, we have arrived at the sales values shown in table 4.2. These are used in the plan wide viability assessment.
Table 4.2 Sale value – market housing
Site Typology £ p sq. m
Spalding Houses and flats £2000
Boston Houses and flats £1,850
Source: PBA 2015
Affordable housing values
4.3.14 The appraisal assumes that affordable housing will command a transfer value to a Registered Provider based on a blended rate of 55% of market value. The discount against market value has been informed by Registered Providers and discussion with the local authority housing teams.
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4.3.15 The proposed affordable housing policy in the draft Local Plan is for market housing sites of 10 or more dwellings with at least/about 15% being affordable housing on sites in Boston Borough and at least/about 30% being affordable housing on sites in South Holland.
Floor space
4.3.16 The net (developable) area of the site informs the likely land value of a residential site. Typically, residential land values are normally reported on a per net hectare basis, since it is only this area which delivers a saleable return. The floor space assumptions are summarised in table 4.3 below.
Table 4.3 Unit size
Unit size GIA NIA
All Spalding and Boston 90 sq. m n/a
Rural and strategic houses 100 sq. m n/a
Affordable housing – all areas 70 sq. m n/a
Flatted schemes 60 sq. m 50sq.m
4.3.17 Our market research of the properties for sale found some variations in property size of dwellings on the market in Spalding/ Holbeach and Boston. Generally we noted that three bedroom dwellings in Spalding and Holbeach were around 70 to 90 sq.m, whilst three bedroom dwellings in Boston tended to be around 95 to 110 sq.m. Our discussion with developers suggested that a possible explanation for this size differential in part could be that much of the ground floor space in Boston schemes was for non habitable rooms due to flood measure requirements. However, they also stated that the three story dwellings are not popular a popular housing market product and there is a move away from this to adapt house types using alternative flood mitigation measures such as raising floor levels, installing flood gates and so forth.
4.3.18 The Technical Housing Standards for nationally described space standards published in March 2015 by the Department of Communities and Local Government prescribes national standards for one, two and three storey dwellings.
4.3.19 Based on the average size of the type of delivery taking place, that proposed housing mix in policy 14 of the draft Local Plan and consultation with local developers, we have adopted the unit sizes shown in table 5.2 to reflect the general development typology mix. This reflects a bias towards smaller dwellings sizes for affordable housing and a greater mix of house types including larger three, four and more bedroom properties for the market housing. However, it is noted that site specific schemes will add more detail to this assessment based on the type of dwellings proposed, and the mix of housing provided on sites will be applied with some flexibility.
4.3.20 Two floor areas are displayed for flatted schemes: the Gross Internal Area (GIA), including circulation space, is used to calculate build costs and Net Internal Area (NIA) is applied to calculate the sales revenue.
Threshold land values and site opening costs
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4.3.21 To assess viability, the residual value generated by a scheme is compared with a threshold land value, which reflects ‘a competitive return for a landowner’. If the residual land value exceeds the threshold then the scheme is deemed viable. Land values used for site specific S106 testing will differ from that used in plan wide area viability studies.
4.3.22 The Harman Report states that when looking at whether or not a particular site is viable, it will be assessed against the existing planning policy, whereas a plan-wide test is carried out to help inform future policy. To avoid the circularity nature of using historic comparable market evidence, (which will continue the status quo in policy delivery) an adjustment to the threshold land values has been made to reflect future policy requirements to enable sustainable development.
4.3.23 From our recent work we highlight the following key issues in assessing the threshold land values:
All sites vary in terms of the degree to which they are serviced or free of abnormal development conditions. Such costs vary considerably from site to site and it is difficult to adopt a generic figure with any degree of accuracy. Our starting point with regards the generic scenarios tested is to assume that the value of sites (when calculating the threshold level) relates to a full serviced development plot. In real terms, abnormal development costs or site servicing costs will be met by developers when the land is purchased and this cost will be discounted in the value paid for the land.
The land transaction market is not transparent. Very little data is in the public domain and the subjective influences behind the deal are usually not available. We therefore place a strong emphasis on consultation with both landowners and developers, sense testing with delivery taking place on the ground and a review of recent viability appraisals submitted to the local authorities to inform the threshold values assumptions.
4.3.24 We have based this assessment on appropriate available evidence for a plan wide assessment of this nature. To compensate for variations in threshold values and possibly other assumptions, it is important to allow for a buffer from the theoretical maximum CIL charge.
4.3.25 In our approach we have derived land value from market evidence adjusted for policy and existing value plus landowner premium. Existing use value calculations have looked at existing employment land values and agricultural land values (see Appendix B).
4.3.26 There will be varying levels of site specific opening costs, such as utilities, drainage, and s278 highway requirements to secure the delivery of the generic sites. For the generic typologies we have assumed fully serviced site land values, so any site specific costs will come off the value paid for the land. The site opening costs for the larger strategic urban extensions can vary depending on the site. We have adopted an assumption of £10,000 per dwelling / £350,000 per net ha for the generic SUEs based on the developer inputs to this assessment.
Brownfield site remediation costs
4.3.27 The appraisals for the brownfield sites include an allowance for abnormal and remediation costs. Once detailed master planning is undertaken there will be a better understanding of these costs to inform site specific assessments.
4.3.28 For the purposes of this report and testing viability, the threshold land values and site opening assumptions used in testing viability are shown in table 4.4.
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Table 4.4 Residential threshold land values and site opening cost assumptions
Fully serviced threshold land values per net Site typology Price per plot developable ha
Fully serviced land value – opening cost to Spalding generic £680,000 £19,500 be deducted
Fully serviced land value – opening cost to Boston generic £555,000 £16,000 be deducted
Unserviced land values based on existing use values and additional Unserviced site opening cost allowance plot price
£240,000 to £350,000per net ha for site remediation Brownfield £6900 - £11,000 £385,000 cost allowance
£350,000per net ha for site opening cost Spalding SUE £300,000 £8,600 allowance
£350,000per net ha for site opening cost Boston SUE £262,500 £7,500 allowance
Source: PBA 2015
4.3.29 It is important to appreciate that assumptions on threshold land values can only be broad approximations subject to a wide margin of uncertainty. This uncertainty is considered when drawing conclusions and recommendations. The land values assumptions adopted for this study are considered suitably robust for plan wide viability testing but are not suitable for individual site viability where specific site constraints are known.
Build costs
4.3.30 Our general approach to build costs is to adopt published data by the Building Cost Information Service (BCIS). The building prices used in the BCIS data are averages taken from a wide range of different contracts and tenders in the BCIS data bank. However, developers have told us that build costs in the local area are less than stated by BCIS. As volume house builders do not dominate the delivery in this area, to reflect the local market, we have taken account of the feedback from developers to inform the build costs assumptions. Developers have indicated that build costs are around £810 per sq. m exclusive of pre-lims. Typically we would expect pre-lims to be around 12.5% of build costs. As we have no data on build costs from developers on flatted build costs, we have applied the same discount against the BCIS costs to inform this assessment. Our build cost assumptions are shown in table 4.5.
Table 4. 5 Build costs assumptions
General estate Assumed build Difference £ per sq. Dwelling type housing in costs per sq. m m Lincolnshire BCIS
Flats £911 £1,000 £89
Houses – general estate £1,073 £1,179 £106
Source: BCIS (13th June 2015 rebased for Lincolnshire) and developers 2015
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4.3.31 We have included an allowance for external works, contingencies, fees, VAT and finance charges, plus other revenue costs to the above build costs. These cost assumptions are explained in the following paragraphs.
External works costs
4.3.32 This cost incorporates all additional costs associated with the site curtilage of the built area. These include circulation space in flatted areas and garden space with housing units; incidental landscaping costs including trees and hedges, soft and hard landscaping; estate roads and connections to the strategic infrastructure such as sewers and utilities.
4.3.33 The external works costs will vary from site to site, but we have assumed a rate of 10% of build cost and applied to all the residential development scenarios.
Professional fees
4.3.34 This input incorporates all professional fees associated with the build; including fees for designs, planning, surveying, project managing, at 8% of BCIS build cost.
Contingency and flood mitigation measures
4.3.35 It is normal to build in contingency based on the risk associated with each site and has been calculated based on industry standards. They are applied at 5% of build cost and applied to all the residential development scenarios.
4.3.36 In addition, based on developer feedback and in recognition of potential mitigation works to individual dwellings to incorporate additional flood risk measures, we have applied a further 8% on build costs to reflect wider flood mitigation costs. The figure adopted has been confirmed by the strategic site promoters as a sensible assumption and also reflects the cost estimate provided by Smith & Gore to a piece of research titled ‘Sustainable Housing in Flood Risk Zones’ commissioned by Lincolnshire County Council by RAB consultants /Smith & Gore to inform the impact of flood mitigation on build costs
4.3.37 In reality cost for flood mitigation measures will vary from site to site and depending on the size of the scheme and solution adopted and likely to be higher for smaller sites that cannot take advantage of the economies of scale from specialist plant hire needed for special foundations. .
S106 Infrastructure contributions
4.3.38 The starting position for this assessment has been to include a S106 site specific developer cost allowance of £1000 for the generic scenarios has been factored in as a cost input into the appraisal assessment to reflect possible site specific infrastructure costs that might be required.
4.3.39 For the urban extension sites (SUEs) it is likely that a range of infrastructure requirements including education, health, formal sports facilities will be met through S106. Estimate unit costs for the urban extensions were provided by Lincolnshire County Council who had undertaken an initial infrastructure assessment for the plan. A cost of £4,000 has been factored into the appraisal as a cost input. These cost estimates will be refined at site specific master planning stage.
4.3.40 The S.106 contributions assumed in the viability assessment are set out in table 4.6.
4.3.41 The affordable housing element of S106 contribution will be tested at varying percentages with the results set out later in this report.
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Table 4.6 Developer contribution in the form of S106 assumptions
Scenario S106 contribution assumed per unit
Generic typologies S.106 £1000
Strategic sites S106 £4,000
Source: PBA / client team 2015
Land purchase costs
4.3.42 The land value needs to reflect additional purchase and stamp duty cost assumptions as shown in Table 4.7. These are based on land purchase costs such as surveying and legal costs to a developer in the acquisition of land and the development process itself.
4.3.43 A Stamp Duty Land Tax is payable by a developer when acquiring development land. This factor has been recognised and applied to the residual valuation as percentage cost based on the HM Customs and Revenue rates.
Table 4.7 Land purchase costs
Land purchase costs Rate Unit
Land purchase fees 1.75% land value
Stamp Duty Land Tax 1.00% - 4% HMRC land value
Source: PBA and HMRC 2015
Sales fees
4.3.44 The Gross Development Value (GDV) on open market units need to reflect additional sales cost assumptions relating to the disposing of the completed residential units. This will include legal, agents and marketing fees at the rate of 3% of the open market unit GDV, which is based on industry accepted scales established from discussions with developers and agents.
Developer’s profit
4.3.45 The developer's profit is the expected and reasonable level of return that a private developer would expect to achieve from a specific development scheme. Based on evidence that has come to our attention (see Appendix B) of the level of returns volume house builders are prepared to accept and taking account of the District Valuer responses to various site specific viability appraisals in Lincolnshire and consultations with the strategic site promoters we have adopted a profit assumption of 17.5% for open market units which is applied to the GDV. For the affordable housing element a 6% profit margin is assumed for the private house builders on a nil grant basis.
Finance
4.3.46 A monthly cashflow based on a finance cost of 7% (gross fee) has been used on the majority of the site appraisals. This is used to account for the cost of borrowing and the risk associated with the current economic climate and near term outlook and associated implications for the
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housing market. This is a typical rate which is being applied by developers to schemes of this nature.
Timescales and house build rate assumptions
4.3.47 House builders generally build to sell houses therefore they will only build at the same rate at which they can sell the completed units. Table 4.8 sets out the timescale and build rates assumed for this study.
Table 4.8 House build rates
Housebuilders build to sale therefore they will only build at the same rate at which they can sale the completed units. Based on consultation feedback we have assumed the following construction periods. There is a 6 months delay from site purchase to start on site to reflect site preperation and then a further 6 month time lag for first sale to complete on housing scenarios. Flatted develoment also has a 6 month delay between site purchase and start on site but sales do not occur until build complete. Developers' indicated that they would seek to build 30 market housing per annum per outlet in the current market. base site purchase date (can be any date in the future) 01/07/2015 Construction start Construction completion Houses – 1 Units 01/01/2016 01/05/2016
Houses – 2 Units 01/01/2016 01/07/2016
Houses – 10 Units 01/01/2016 01/01/2017
Houses – 30 Units 01/01/2016 01/01/2018
Houses – 150 Units 01/09/2016 01/03/2019
Flats - 20 Units 01/01/2016 01/03/2018
Strategic sites: Developers have indicated that sales rates are curretly around 50 units per annum for large sites. In our testing we have assumed that there would be three outlets each delivering 50 units. Based on these rates the following time-
Q.2 Boston 1,800 12 phases 01/01/2016 01/01/2028
Spalding 3750 25 phases 01/09/2015 01/09/2040
4.3.48 We have assumed that land will be drawn down at commencement of development for scenarios up to and including 100 units. On the strategic sites we have assumed land is drawn down on an annual basis.
4.3.49 Developers are highly cashflow sensitive. This is likely to be a particular challenge for strategic urban extension sites, where there are significant up-front works required for site opening up costs. In these instances, developer partners could be discouraged by a requirement to undertake major upfront infrastructure works in advance of housing sales.
4.4 Residential viability appraisal findings
4.4.1 Each generic typology has been subjected to a detailed appraisal, complete with cashflow analysis. Using Section 106 contributions as a fixed cost input in the appraisal, a number of policy options for affordable housing and CIL contributions have been tested with the client team in arriving at a sensible policy mix.
4.4.2 In working through the various iterations, we have taken account of evidence gathered, sense tested this with what is currently happening on the ground and consulted with a number of developers, registered providers and held various workshops with developers and the client team to refine the viability assumptions.
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4.4.3 We have been mindful of the fact that delivery is dominated by a handful of local developers who have a strong understanding of the local market, an understanding of how to build homes that sell at a cost that is viable and meet policy requirements for affordable housing. We have tested our viability assumptions with these developers at a number of focused developer surgeries.
Summary of residential appraisal findings
4.4.4 The viability assessments provide a broad guide about the general viability of the scenarios based on the accepted nature of plan level viability assessment. In practice the thresholds adopted will vary and the cut off points to viability will be ‘blurred’. Plan level assessment provides a broad guide based on realistically assumed values and costs to inform whether the bulk of the development is considered as viable.
4.4.5 The viability assessments show that without any policy requirements, the bulk of the development is viable, once affordable housing, infrastructure and flood mitigation costs are included into the appraisals, there is a need for policy trade-off, taking account the need for infrastructure to support delivery, affordable housing and essential flood mitigation measures necessary in certain areas.
4.4.6 Tables 4.9 to 4.11 summarise the viability findings. Examples of the typology appraisals are included in Appendix C.
4.4.7 Table 4.9 shows that the majority of the scenarios for the Spalding appraisals are showing as viable at 30% affordable housing and some allowance for developer contributions. Note schemes up to ten dwellings do not include any affordable housing provision and so have a higher scope to contribute towards a CIL. The large scenario of 150 dwellings are on the margins of viability, however this scenario could move towards being viable with slight adjustment in the density and threshold land values based on site specific assessments. However at 30% affordable housing, we do not consider there is sufficient buffer to set a CIL charge. Flatted schemes are not viable and will require adjustment.
4.4.8 Table 4.10 shows that when there is no requirement for flood mitigation measures, then the Boston appraisals are viable at 15% affordable housing. However, the bulk of the growth in Boston Borough is likely to take place in the urban town of Boston and our discussions with developers confirmed that developments here will require various forms of site specific flood mitigation measures which can add considerably to the build cost of the schemes.
4.4.9 Table 4.11 shows that as most developments in Boston Borough will need to incorporate some flood mitigation measures, then for the majority of scenarios to move to a viable position, there would need to be some reduction in the percentage of affordable housing and density levels. The scenario in table 4.3 shows affordable housing applied to schemes of more than 10 dwellings are viable with 5% affordable but for some of the larger schemes there was a need to increase the increase in site density. Flatted schemes are not showing as viable.
4.4.10 The final decision on the policy trade-offs and options will be one for elected members to decide. In the final section of this study we set out some suggested recommendations based on the known information at this point in time.
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Table 4.9 South Holland District appraisals at 30% affordable
Total Floor CIL Chargeable 30% affordable policy and £1000 per unit Space per Floor Space per for S 106 costs sq.m sq.m Residual land value Benchmark CIL Surplus No of Net site area dwellings ha Greenfield Density Floor Space Floor Space Per Ha Per £psm Per Ha Per £psm Per Ha Per £psm Spalding Houses – 1 0.03 35 90 90 £1,333,115 £423 £680,000 £216 £653,115 £207 Houses – 2 0.06 35 180 180 £1,234,519 £392 £680,000 £216 £554,519 £176 Houses – 10 0.29 35 900 900 £1,190,164 £378 £680,000 £216 £510,164 £162 Houses – 30 0.86 35 2,520 1,890 £709,227 £241 £680,000 £231 £29,227 £13 Houses – 150 4.29 35 12,600 9,450 £673,629 £229 £680,000 £231 -£6,371 -£3 Rural Spalding Houses – 1 0.03 30 100 100 £1,269,633 £423 £680,000 £227 £589,633 £197 Houses – 2 0.07 30 200 200 £1,175,733 £392 £680,000 £227 £495,733 £165 Houses – 10 0.33 30 1,000 1,000 £1,133,490 £378 £680,000 £227 £453,490 £151 Houses – 30 1.00 30 2,730 2,100 £685,538 £251 £680,000 £249 £5,538 £3 Houses – 150 5.00 30 Total13,650 Floor CIL Chargeable10,500 £651,156 £239 £680,000 £249 -£28,844 -£14 Space per Floor Space per Brownfield sq.m sq.m Residual land value Benchmark CIL Surplus No of Net site area dwellings ha Spalding Density Floor Space Floor Space Per Ha Per £psm Per Ha Per £psm Per Ha Per £psm Houses – 1 0.03 35 90 90 £1,098,315 £349 £385,000 £122 £713,315 £226 Houses – 2 0.06 35 180 180 £1,001,032 £318 £385,000 £122 £616,032 £196 Houses – 10 0.29 35 900 900 £967,568 £307 £385,000 £122 £582,568 £185 Houses – 30 0.86 35 2,520 1,890 £501,430 £171 £385,000 £131 £116,430 £53 Houses – 150 4.29 35 12,600 9,450 £473,292 £161 £385,000 £131 £88,292 £40 Flats - 20 0.25 80 1,200 840 -£1,019,971 -£212 £300,000 £63 -£1,319,971 -£393
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Table 4.10 Boston Borough appraisals at 15% affordable housing and without flood mitigation measures CIL 15% affordable policy and £1000 per Total Floor Chargeable unit for S 106 costs /£4,000 S106 Boston BC areas without flood Space per Floor Space strategic site units migitation sq.m per sq.m Residual land value Benchmark CIL Surplus
No of Net site dwellings area ha Greenfield Density Floor Space Floor Space Per Ha Per £psm Per Ha Per £psm Per Ha Per £psm Boston Houses – 1 0.03 35 90 90 £984,434 £313 £555,000 £176 £429,434 £136 Houses – 2 0.06 35 180 180 £894,623 £284 £555,000 £176 £339,623 £108 Houses – 10 0.29 35 900 900 £865,130 £275 £555,000 £176 £310,130 £98 Houses – 30 0.86 35 2,610 2,295 £630,627 £207 £555,000 £182 £75,627 £28 Houses – 150 4.29 35 13,050 11,475 £600,380 £197 £555,000 £182 £45,380 £17 Rural Boston Houses – 1 0.03 30 100 100 £937,556 £313 £555,000 £185 £382,556 £128 Houses – 2 0.07 30 200 200 £852,022 £284 £555,000 £185 £297,022 £99 Houses – 10 0.33 30 1,000 1,000 £823,933 £275 £555,000 £185 £268,933 £90 Houses – 30 1.00 30 2,865 2,550 £609,432 £213 £555,000 £194 £54,432 £21 Houses – 150 5.00 30 14,325 12,750 £580,255 £203 £555,000 £194 £25,255 £10 Total Floor CIL Space per Chargeable Brownfield sq.m Floor Space Residual land value Benchmark CIL Surplus Boston Houses – 1 0.03 35 90 90 £749,634 £238 £385,000 £122 £364,634 £116 Houses – 2 0.06 35 180 180 £661,136 £210 £385,000 £122 £276,136 £88 Houses – 10 0.29 35 900 900 £656,025 £208 £385,000 £122 £271,025 £86 Houses – 30 0.86 35 2,610 2,295 £421,996 £139 £385,000 £126 £36,996 £14 Houses – 150 4.29 35 13,050 11,475 £400,043 £131 £385,000 £126 £15,043 £6 Flats - 20 0.25 80 1,200 1,020 -£1,104,728 -£230 £240,000 £50 -£1,344,728 -£330
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Table 4.11 Boston Borough appraisals at 5% affordable housing with flood mitigations measures and density increased to 40 dph CIL 5% affordable policy and £1000 per Total Floor Chargeable unit for S 106 costs /£4,000 S106 Space per Floor Space strategic site units Boston BC areas with flood migitation sq.m per sq.m Residual land value Benchmark CIL Surplus
No of Net site dwellings area ha Greenfield Density Floor Space Floor Space Per Ha Per £psm Per Ha Per £psm Per Ha Per £psm Boston Houses – 1 0.03 40 90 90 £878,584 £244 £555,000 £154 £323,584 £90 Houses – 2 0.05 40 180 180 £777,321 £216 £555,000 £154 £222,321 £62 Houses – 10 0.25 40 900 900 £770,901 £214 £555,000 £154 £215,901 £60 Houses – 30 0.75 40 2,670 2,565 £642,487 £180 £555,000 £156 £87,487 £26 Houses – 150 3.75 40 13,350 12,825 £613,571 £172 £555,000 £156 £58,571 £17 Rural Boston Houses – 1 0.03 33 100 100 £805,369 £244 £555,000 £168 £250,369 £76 Houses – 2 0.06 33 200 200 £712,544 £216 £555,000 £168 £157,544 £48 Houses – 10 0.30 33 1,000 1,000 £706,659 £214 £555,000 £168 £151,659 £46 Houses – 30 0.91 33 2,955 2,850 £595,274 £183 £555,000 £171 £40,274 £13 Houses – 150 4.55 33 14,775 14,250 £568,584 £175 £555,000 £171 £13,584 £4 Total Floor CIL Space per Chargeable Brownfield sq.m Floor Space Residual land value Benchmark CIL Surplus Boston Houses – 1 0.03 40 90 90 £643,784 £179 £385,000 £107 £258,784 £72 Houses – 2 0.05 40 180 180 £543,834 £151 £385,000 £107 £158,834 £44 Houses – 10 0.25 40 900 900 £543,631 £151 £385,000 £107 £158,631 £44 Houses – 30 0.75 40 2,670 2,565 £433,982 £122 £385,000 £108 £48,982 £14 Houses – 150 3.75 40 13,350 12,825 £413,233 £116 £385,000 £108 £28,233 £8 Flats - 20 0.25 80 1,200 1,140 -£1,296,074 -£270 £240,000 £50 -£1,536,074 -£337
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4.5 Developability consideration for the urban extension
4.5.1 The bulk of the planned growth forming part of the ‘deliverable’ consideration of the NPPF in Spalding and Boston will be delivered through a number of consented urban extensions. Part of the first five year delivery will be through consented schemes at Holland Park in Spalding and Q1 the Quadrant in Boston.
4.5.2 The ‘developability’ consideration of the NPPF relating to the post five year housing supply will be largely through the delivery of planned urban extensions in Spalding and Boston. The draft Local plan sets out the justification for the planned growth in Spalding at policy 13: a sustainable urban extension for housing in Spalding. This policy identifies a long term delivery strategy for urban extensions at Land to the North of the Vernatt’s Drain which is linked to the delivery of the Spalding Western Relief Road.
4.5.3 The second phase of the Quadrant urban extension in Boston, known as Q2: The Quadrant is referred to in the text supporting policy 31: delivering more sustainable transport network in relation to delivering the second phase of the Boston Distributor Road.
4.5.4 As part of this this viability assessment, we held a number of developer surgeries with the promoters of these urban extensions to inform the viability assumptions for the urban extension case studies. The developers consulted also have first hand experience of dealing with flood mitigation measures in parts of Boston.
4.5.5 Appendix C sets out viability appraisals and assumptions that informed the urban extension case studies.
Boston urban extension case study sensitivity analysis
4.5.6 Q2: The Quadrant will be focused on a marina development and the emphasis is on creating an attractive waterfront marina through the development of a masterplan that demonstrates the place making potential of the area. It is assumed that the impact of this waterfront setting will help to lift sales values. In additional the delivery of the urban extension in Boston has received support from the HCA in the form low cost finance @ 4%.
4.5.7 At current values the SUE in Boston is marginally viable if there is a reduction in either site specific infrastructure or affordable housing policy requirements. To reflect future policy and developability considerations we have undertaken sensitivity analysis. Assuming a waterfront uplift in value of 15% through efforts to develop Marina and costs increase by 5%, flood mitigation costs are also incorporated and site specific infrastructure requirements are at £4,000k per unit, the Boston urban extension appraisal shows the scheme as viable and able to contribute up to 15% affordable housing, and meet the cost of the section of the Boston Relief Road serving the site through the site opening cost allowance. Table 4.12 shows that with the longer term sensitivity assumptions, there is scope to support a CIL charge (if this is considered the appropriate delivery mechanism).
Table 4.12 Boston urban extension case study sensitivity analysis
CIL No of Net site Total Floor Chargeable dwellings area ha Space per Floor Space Strategic sites Density sq.m per sq.m Residual land value Benchmark CIL Surplus Q.2 Boston 1,800 51.43 35 156,600 137,700 £418,485 £137 £262,500 £86 £155,985 £58
Spalding urban extension case study sensitivity analysis
4.5.8 As the urban extension for Spading will form part of the longer term delivery, post the five year housing supply, we have undertaken some sensitivity analysis to inform developability considerations. Assuming sales values increase be 10% and build costs by 5%, the Spalding urban extension shows the scheme as viable based on up to 20% affordable housing delivery,
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S106 contributions of £4,000 per dwelling and site opening costs allowance which would contribute towards the delivery of parts of the Western Distributor District Road scheme. Table 4.13 shows that with longer term sensitivity testing, there is scope to support a CIL charge in the future (if this mechanism is considered appropriate).
Table 4.13 Spalding urban extension case study sensitivity analysis
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5 Commercial viability testing
5.1 Introduction
5.1.1 This section sets out the assumptions informing the commercial viability assessment to inform whether there is scope for introducing a CIL charging schedule for commercial uses.
5.2 Planned commercial growth
5.2.1 The CIL viability evidence will focus on those types of developments identified here as important to the delivery of the planned growth, aiming to ensure that they remain broadly viable after the CIL charge is levied. In considering appropriate available evidence, we do not consider it appropriate to undertake viability assessment for a wealth of other uses such as hotels, car show rooms and other sui geni uses that are not part of the planned growth, and are treated as ‘all other use’ category. Instead, we focus the viability assessment on the main uses identified in the emerging Local Plan.
Planned retail floorspace
5.2.2 The additional floorspace proposed in the draft Local Plan is based on evidence supported in the Employment Land Technical Paper and South East Lincolnshire Town Centres and Retail Capacity Study.
5.2.3 The draft Local Plan Policy identifies the need for up to 29,800 sq.m (net) additional retail comparison floor space in Boston and Spalding Town Centres by 2031, and approximately 3,500 sq.m (net) floor space of convenience retail, made up of small (up to 500 sq.m) floor space mainly within new strategic urban extensions, this will most likely be needed post 2021.
Planned employment floorspace
5.2.4 The draft Local Plan identifies a minimum of 82 ha of employment land allocated as main employment uses, a further 17.5 ha of land for specific occupier use, and 55.6 has for restricted employment use associated with the ports of Boston and Sutton Bridge and Spalding Rail-Freight Interchange.
5.3 The commercial development typologies
5.3.1 Like for the residential development, high level plan wide viability testing has been undertaken for some commercial development scenarios that are broadly representative of commercial development in the area. The assumptions informing these scenarios have been informed by planned future development for the study area, market analysis and the developer workshop. Appendix D sets out the research findings that have informed this assessment.
Typologies, site coverage and floorspace
5.3.2 Table 5.1 sets out the business development typologies, assumed net developable site area for each development type, the amount of floorspace appropriate for the study area and the site area coverage. The typologies include mainly business uses such as office space, industrial and retail. We have also included student accommodation in this section, because although this is a form of residential use, the viability assessment adopts a business development approach based on rents and yields.
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Table 5.1 Business use typologies – Unit sizes and site area
Site coverage Net developable Use GIA sq.m NIA sq.m (%) site area (ha)
Business Park Office 500 425 40% 0.13
Light industrial 1,000 1,000 40% 0.25
In town comparison 278 236 30% 0.09 retail
Out of town 1,000 900 50% 0.20 comparison retail
Retail convenience - 500 450 60% 0.08 small format
Source: PBA 2015
Establishing Gross Development Value (GDV)
5.3.3 In establishing the GDV for non-residential uses, this assessment has considered historical comparable evidence for new values on a local and for some uses, national, level.
5.3.4 Table 5.2 illustrates the values established for a variety of non-residential uses, expressed in sq.m of rentable floorspace and yield. The table is based on our understanding of the market, and analysis of comparable transaction data. The data has then been corroborated through a discussion with local stakeholders and through the stakeholder workshop. The convenience retail rents and yields reflect the shift in the market created by stronger competition at both ends of the market which is squeezing the middle market (e.g. Tesco, Sainsbury’s and Morrison’s). It is this middle market which had been driving investment value in the sector with an aggressive store opening programme which has now been scaled back significantly.
Table 5.2 Non-residential uses – rent, yields, and rent free
Use Rent Yield Rent free (Sq.m) (months)
Business Park Office £125 7.50% 24
Light industrial £45 8.00% 5
In town comparison retail £120 8.00% 12
Out of town comparison £180 7.50% 9 retail
Retail convenience small £200 6.00% 6 format
Source: PBA 2015, developer workshop, CoStar, EI Group
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5.4 Viability assumptions
5.4.1 Like in the residential uses testing, once a GDV has been established the cost of development (including developer profit) is then deducted. For the purposes of viability testing, the following costs and variables are some of the key inputs used within the assessment:
Build Costs;
Professional Fees and overheads;
Marketing Fees;
Legal Fees and land Stamp Duty Tax
Finance costs; and
Developer profit.
5.4.2 The initial appraisals make no allowance for any CIL or S106 contributions to establish if there is for scope to charge CIL.
Build costs
5.4.3 Build cost inputs have been established from the RICS Build Cost Information Service (BCIS) at values set at the time of this study (current build cost values) and rebased to Lincoln prices. The build costs adopted are based on the BCIS median values shown in Table 5.3.
Table 5.3 Non-residential uses – build costs
Use Build cost per sq.m
Business park office £1,407
Light industrial £549
In town comparison retail (small format) £1,143
In town comparison £862
Out of town comparison £656
Retail convenience £1,342
Source: BCIS online version ‘median prices’ adjusted for Lincolnshire June 2015
External works
5.4.4 Plot externals relate to costs for internal access roads, car parking and hard and soft landscaping associated with the site curtilage of the built area.
5.4.5 This input incorporates all additional costs, so the external works variable had been set at a rate of 15% of BCIS build cost.
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5.5 Other development costs
Professional fees
5.5.1 This input incorporates all professional fees associated with the build, including fees for designs, planning, surveying, project managing, at 8% of build cost plus externals.
Contingency
5.5.2 It is normal to build in contingency based on the risk associated with each site and has been calculated based on industry standards. They are applied at 5% of build cost plus externals.
Acquisition fees and Land Tax
5.5.3 This input represents the fees associated with the land purchase and are based upon the following industry standards: Surveyor at 1%; legal at 0.75% of residual land value.
5.5.4 A Stamp Duty Land Tax is payable by a developer when acquiring development land. This factor has been recognised and applied to the residual valuation as percentage cost against the residual land value at the standard variable rates set out by HMRC for non-residential and mixed use land and property rates against the residual land value.
Developer profit
5.5.5 The developer’s profit is the expected and reasonable level of return a private developer can expect to achieve from a development scheme. This figure is based on a 20% profit margin on development costs.
Finance
5.5.6 A monthly cashflow based on a finance cost of 7% has been used throughout the sites appraisals. This is used to account for the cost of borrowing and the risk associated with the current economic climate and near term outlook and associated implications for the market specific to the proposed development.
Land value for non-residential uses
5.5.7 After systematically removing the various costs and variables detailed above, the result is the residual land value. These are measured against a threshold land value which reflects a value range that a landowner would reasonably be expected to sell/release their land for development.
5.5.8 Our estimates of benchmark land values set out in Table 5.4 are based on market comparable derived through consultation with stakeholders and analysis of published data on CoStar and property auction site EI Group. At this current point in the economic cycle there is much uncertainty surrounding land values due to the small number of transactions occurring. Where necessary we have considered transactions in the wider housing market area and adjusted for the Lincolnshire area.
Table 5.4 Non-residential uses – land values
threshold land value per net developable Use ha
Business Park Office £250,000
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Light industrial £175,000
In town comparison retail £2,000,000
Out of town comparison retail £2,000,000
Retail convenience - small format £2,500,000
Source: PBA 2015, developer workshop, CoStar, EI Group
5.6 Commercial viability appraisal findings
5.6.1 This section sets out the assessment of non-residential development viability and also summarises the impact on viability of changes in values and costs, and how this might have an impact on the level of developer contribution. Table 5.5 summarise the theoretical CIL charge available after deduction of land purchase from the residual land value for all the commercial development appraisals assessed.
Table 5.5 Commercial viability appraisal summary and theoretical maximum CIL charge
Residual value Benchmark CIL Overage Net site South East Lincolnshire 2015 GIA sq m NIA sq m area ha Per Ha Per £psm Per Ha Per £psm Per Ha Per £psm Business Park Office 500 425 0.13 -£4,274,664 -£1,069 £250,000 £63 -£4,524,664 -£1,131 Light industrial 1,000 1,000 0.25 -£1,888,473 -£472 £175,000 £44 -£2,063,473 -£516 In town comparison retail 278 236 0.09 -£915,669 -£305 £2,000,000 £667 -£2,915,669 -£972 Out of town comparison retail 1,000 900 0.20 £223,279 £45 £2,000,000 £400 -£1,776,721 -£355 Retail convenience 500 450 0.08 £2,370,843 £395 £2,000,000 £333 £370,843 £62 Source: PBA 2015
5.6.2 It is important to note that the analysis considers development that might be built for subsequent sale or rent to a commercial tenant. However there will also be bespoke development that is undertaken for specific commercial operators either as owners or pre-lets.
5.6.3 In line with other areas of the country our analysis suggests that for commercial B-class development it is not currently viable to charge a CIL. Whilst there is variance for different types of B-space, essentially none of them generate sufficient value to justify a CIL charge.
5.6.4 The appraisal results show that convenience retail development is currently viable and if a CIL charge was to be introduced in South East Lincolnshire then there is scope to levy a charge for this use only.
5.6.5 As the economy recovers this situation may improve but for the purposes of setting a CIL we need to consider the current market. Importantly this viability assessment relates to speculative build for rent.
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6 Conclusions and recommendations
6.1 Introduction
6.1.1 This final section of the viability study draws conclusions on whether the draft Local Plan is deliverable in terms of viability and makes recommendations on the affordable housing, infrastructure and developer funding mechanism and scope for a CIL to be adopted.
6.1.2 We are grateful for the time taken by the various developers, agents and Registered Providers who either attended the developer workshop or agreed to be interviewed and to the developers of the urban extensions who helped inform the study viability assumptions for the case studies and provided valuable insight on the local the market context and unique local issues affecting this area. This has provided valuable input in shaping our understanding of the delivery and viability assumptions and study conclusions.
An iterative process in shaping the Local Plan
6.1.3 At the time the evidence was being compiled for this viability study (summer 2015), the South East Lincolnshire Draft Local Plan 2011 – 2036 was being drafted (in preparation for consultation in January 2016). In parallel, Lincolnshire County Council (LCC) have been preparing an Infrastructure Delivery Plan (IDP) for South East Lincolnshire. Broad assumptions were provided by LCC about the scale of developer contributions to fund infrastructure.
6.1.4 The draft viability study findings were presented to the client team in September 2015 to inform policy decisions for the draft Local Plan on affordable housing, infrastructure delivery and options to consider whether to pursue a CIL or not.
6.2 Development context findings
6.2.1 There has been a significant growth in population since the 2011 Census, driven largely by economic migrants taking up employment opportunities mainly in the food growing and processing industry. South East Lincolnshire’s growth in population represents one of the largest increases in population nationally since the 2001 Census, highlighting some very unique considerations for the Local Plan area. This growth in population has fuelled a strong and steady demand for housing, particularly in Spalding and Boston.
6.2.2 There are a handful of developers operating in this area who are local to the area and understand the market and development issues affecting this area very well. Most of these local developers have an established presence in the area and adopt a long term view of delivery and continuity of construction jobs. There is very limited representation by national housebuilders.
6.2.3 Until recent years, developers in Spalding have tended to meet policy compliant levels of affordable housing policy (close to 33%), by reflecting this in the value paid for the land, developer profit and efficient build costs. This reflects the unique local nature of the area. In recent years, some promoters have sought to renegotiate the scale of affordable housing delivery close to 20% - 25% due to other costs, including land costs, policy costs or unique nature of the scheme. Developer feedback suggests that schemes should reflect the policy cost in the values paid for land and create a ‘level playing field’ for all operators in the area.
6.2.4 Developers and Registered Providers operating in Boston have stated that they have had to incorporate various measures to mitigate against flood risk which adds to the build costs. Despite this, delivery on site has continued as there is steady demand for a competitive priced housing product. Demand for three storey properties is falling. Delivery of S106 affordable housing or other developer contributions have been limited in Boston due to the cost
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sensitivity of the delivery, however HCA funding and gap funding from Boston Borough Council has supported the delivery of affordable housing. Going forward, although there is a requirement to ensure car parking and cycle storage provision is met on site, flexibility should be exercised in terms of layout and density to enable developers to generate an optimal site developable area which allows for a viable scheme to be achieved.
6.2.5 Development viability is generally stronger in South Holland District for two reasons, the cost of development is higher in Boston Borough due to the general requirement to provide flood mitigation measures and values are stronger in South Holland District fuelled in part by access to greater employment opportunities created with the development of the A16 through to Peterborough as well as rail connections well beyond South Holland. Both authorities have seen a strong rate of delivery pre-recession, which has been fuelled by a strong growth in migrant population and the introduction of a variety of help to buy homes schemes.
6.3 Is the Local Plan deliverable and developable?
6.3.1 The policies in the published draft Local Plan have informed this viability report. The main policies impacting on viability relate to affordable housing, infrastructure requirements and flood mitigation. Other optional policy costs identified are already factored into the viability appraisal 'inputs' or will be addressed through site layout and design. Going forward, as policies are refined for the final Local Plan, the client team will need to ensure that any changes to the draft policies which might impact on viability are taken account of.
6.3.2 The viability study has assessed whether to planned growth in the proposed draft Local Plan is broadly viable based on current values and with the inclusion of a sensible mix of policies, and viability assumptions in relation to land values and profit margins. Sensitivity testing has been undertaken to test the effect of an increase in costs and values for the urban extensions which will form part of the longer term delivery.
6.3.3 As the developer’s funding ‘pot’ is finite, there will need to be some policy trade-offs between the percentage of affordable housing and amount contributed toward the cost of infrastructure. We are aware that infrastructure capacity for services such as education, health and transport in many areas is close to capacity, so whereas historically developers have not had to contribute much towards infrastructure costs, going forward this is likely to increase (see infrastructure policy section below) and so will impact on the scale of affordable housing.
6.3.4 The local authorities and the strategic site promoters have a wealth of experience in supporting the delivery of planned growth. Both local authorities have recently consented urban extensions, which will support the delivery of the first five year housing supply as part of the NPPF ‘deliverable’ consideration and they will provide infrastructure to meet the needs of the site such as education, health, open space, recreation, the delivery of the first phase of the strategic road schemes for each town and affordable housing at 33% and 25% in Spalding and Boston respectively.
6.4 Viability findings and recommendations
6.4.1 The main viability findings and policy trade-off to inform the policy recommendation are summarised in the following paragraphs.
6.4.2 The appraisal findings demonstrate that viability varies across South East Lincolnshire and that different policy approaches are considered necessary.
6.4.3 Flexibility should continue to be exercised, as has been demonstrated by past delivery, in terms of layout and density to enable developers to generate an optimal site developable area which allows for a viable scheme to be achieved whilst meeting wider policy requirements such as car parking and cycle storage space.
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6.4.4 In terms of the viability assessment, the strategic urban extensions upon which the bulk of the plan growth relies are considered to be deliverable and developable, based on a sensitive approach placed on the scale of policy requirements and progress secured on the regeneration of Boston marina. As further detailed information becomes available this will help to refine the viability findings, particularly in relation to infrastructure costs.
6.4.5 Delivering the sustainable urban extensions will also be linked to providing phases of the strategic road schemes in both Spalding and Boston. The likely delivery mechanism to provide the sections of the road schemes is yet to be finalised. For this study, based on the draft Local Plan policies, we have assumed some sections of the strategic road schemes will be funded in part through the delivery of the urban extensions. The scope to use a CIL charging mechanism to support part of the delivery of these strategic road schemes has not been ruled out and will be reviewed as part of the Infrastructure Delivery Plan refinements in 2016.
6.4.6 The generic typology assessments in Spalding and the rest of South Holland District suggest that most development scenarios (above the ten dwelling threshold) are viable and can afford to support up to 30% in affordable housing policy as currently included in the draft Local Plan and all scenarios (including less than 10 dwellings) can make a contributions towards the cost of infrastructure costs in the form of S106 depending on what is required to meet the needs of that development. Some larger schemes of over 100 dwellings maybe marginal, however, slight variations to density would help to move this scenario to a viable position. The affordable housing policy 15 has been worded to allow some flexibility in the scale of affordable housing requirement where schemes are marginal.
6.4.7 The generic typology assessments in Boston and the rest of Boston Borough indicates that most development scenarios (above the ten dwelling threshold) are viable and can afford to support up to 5% in affordable housing policy once flood mitigation costs have been factored in and density levels have been allowed to increase. At this level the generic scenarios (including less than 10 dwellings) can make a contributions towards the cost of infrastructure costs in the form of S106 depending on what is required to meet the needs of that development. The flatted schemes are not showing as viable.
6.4.8 When there is no requirement for flood mitigation measures, then the Boston Borough appraisals are viable at 15% affordable housing. As the bulk of the growth in Boston Borough is likely to take place in the urban town of Boston and our discussions with developers Registered Providers confirmed that developments in Boston will require various forms of site specific flood mitigation measures which can add considerably to the build cost of the schemes. We recommend that policy 15 in relation to the affordable housing requirement for Boston Borough is reconsidered in the light of this viability assessment to reflect the need for flood mitigation measures.
6.4.9 A consultation on extending the definition of affordable housing in the NPPF was launched on 7th December 2015. The intention is to enable greater innovation in the delivery of affordable housing. It is also likely that once further details are known this could affect the viability assessment, possibly increasing the overall blended rate value of affordable housing.
6.4.10 Based on the draft Local Plan, the current view is that the Spalding Western District Distributor Road and the Boston Relief Road schemes shall be attributed directly to the planned urban extensions and these will be funded either using a S106 agreements or directly as part the site enabling infrastructure costs. The recommendation informing the draft Local Plan based on the policies is not to adopt a CIL charge for the strategic urban extensions as these will be required to meet all their infrastructure requirements including relevant sections of the strategic road schemes. However, further work on the Infrastructure Delivery Plan during 2016 will review the approach and funding mechanisms as part of an iterative approach and re-consider whether to adopt a CIL or S106 to support these strategic road schemes.
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6.4.11 From a viability perspective, our draft findings indicated that it is possible to have a CIL charge in South Holland District but it is unlikely to be viable in all of Boston Borough without moving to a zero affordable housing policy. If a CIL charge was to be introduced (for the non-strategic urban extension areas), our recommendation for South Holland District and Boston Borough would require adjustments to the affordable housing policy. The CIL funding could then be used to support the wider objectives of the Local Plan based on items included in the Regs 123 List (such as education, green infrastructure, transport measures, and other measures to reduce the impact of climate change).
6.4.12 Further work on the Infrastructure Delivery Study in 2016 should provide greater clarity to developers about infrastructure requirements, priorities and the scale of developer contributions likely to be required at a set point in time. This will also test if the current assumptions for developer contribution allowance included in the generic typologies and for the urban extensions is sufficient to support the needs of essential infrastructure and inform the recommendations as to the most appropriate funding mechanism to adopt in terms of CIL or S106, Further refinements may then be needed to the viability assessment once the findings of Infrastructure Delivery Plan (2016) have been considered.
6.4.13 With regard to commercial element of the planned development, the delivery of schemes taking place is less affected by the impact of ‘policy burdens’ for which this study is assessing, and more sensitive to wider economic market conditions of demand and supply for such development. The viability assessment assessed a range of speculative development scenarios, without the imposition of any planning obligations and found the schemes most likely to take place are those that have an identified client requiring specific development requirements rather than speculative delivery.
6.4.14 The commercial viability assessment indicates that very little speculative development is viable at present apart from retail development, and even here, it would be prudent to exercise caution and avoid any CIL charge which is close to the margins of viability.
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Appendix A Developer consultations
A.1.1 Various developer surgeries took place with the representative of the strategic site promoters – Broadgate Homes and Chestnut Homes. This allowed us to discuss in more detail the assumptions informing the case studies for the strategic site in Spalding and Boston. During these surgeries we were able to interrogate further issues relating to flood mitigation, rate of sales, infrastructure delivery sensitivity testing and possible approaches to developer funding. Although the assumptions adopted for this study do not reflect the precise approach and values adopted by each developer for their site specific assessments, the developers were broadly in agreement of the key assumptions and outputs.
A.1.2 A developer workshop involving various developers, agents and landowners took place on 24thJune 2015. Notes of the meeting are included below.
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South East Lincolnshire Whole Plan Viability Study
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Appendix B Residential market research
B.1 Boston Borough development context
B.1.1 Table B1 includes an extract of recently consented / completed schemes. It shows the variety of unit size, urban /rural location and average scheme density estimate. This shows that densities vary considerably and are frequently around 60 – 100 dph (presumably for flatted schemes), whilst other densities range from 30dph to 45 dph.
Table B1 Recent consented schemes in Boston Borough
Boston development context Urban or Rural Year Units Density Rear of 4-20 Sleaford Road Urban 2012/13 12 60 Roseberry Meadows Extension Urban 2012/13 120 26 Jewsons Tattershall Road Urban 2012/13 23 72 Tytton Lane Wyberton Urban 2012/13 28 45 Station Road Swineshead Rural 2012/13 14 41 Rear 126 London Road Urban 2012/13 33 43 Former Post Office Wide Bargate Urban 2013/14 10 91 Broadfield Lane Urban 2013/14 200 38 Church Road Old Leake Rural 2013/14 21 31 Abbey Road P2 Swineshead Rural 2013/14 19 30 Kime & Co Main Road Wrangle Rural 2013/14 27 52 South of White Horse Lane Urban 2013/14 10 100 Adj Railway Line Tattershall Road Urban 2013/14 10 100 Rear of 4-20 Sleaford Road Urban 2013/14 12 71 Greenacres Sutterton Rural 2013/14 20 30 65 Abbey Road P1 Swineshead Rural 2013/14 21 35 Blue Street Urban 2014/15 41 65 Roseberry Meadows Extension Urban 2014/15 106 23 Argyle Street Urban 2014/15 13 100 Threadneedle Street Urban 2014/15 12 200 Broadfield Lane P1 Urban 2014/15 48 46 The Qudrant Wyberton Urban 2014/15 502 34 Boston Road Kirton Rural 2014/15 140 22 Phoenix Poultry Farm Wberton Rural 2014/15 10 10 Jewsons Tattershall Road Urban 2014/15 23 72 Adj Railway Line Tattershall Road Urban 2014/15 10 100
School Lane/Church Road Old LeakeRural 2015/16 34 34 Source: Boston Borough Council Summer 2015
B.1.2 Figure B1 shows the average densities per hectare on sites of ten or more dwellings that have received planning consent in the last nine years.
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Figure B1 Average density of housing on large schemes approved in Boston Borough
Source: Draft Annual monitoring report 2013-2014
B.2 South Holland District development context
B.2.1 Density An assessment of planning permissions approved over the last two years show that on average residential densities are considerably higher within Spalding town (56 dwellings/hectare) than in South Holland’s rural settlements (34 dwellings/hectare).
B.2.2 The higher density is affected by two schemes that generate 92 dwellings per hectare and 100 dwellings per hectare. Both incorporate flats as well as houses, and are brownfield sites within 0.5km of the town centre. The other four schemes generate between 25-42 dwellings/hectare.
B.2.3 Densities in the rural settlements vary markedly from a low of 5 dwellings/hectare to a high of 80 dwellings/hectare. In general the three lowest density schemes are affected by site specific circumstances. All are brownfield sites for houses only. The majority of the higher density schemes are 100% or partly flatted, including the scheme approved for 80 dwellings/hectare and are on brownfield land. However, even taking this into consideration, there is a greater variation in density between schemes in the rural settlements, although the edge of settlement, greenfield sites tend to be predominantly for houses/bungalows, whereas the sites closer to a village centre have a mix of flats and houses and are generally brownfield sites.
B.2.4 Figure B2 shows the average densities per hectare on sites of ten or more dwellings that have received planning consent in the last nine years in South Holland District Council area.
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Figure B2 Average density of housing on large schemes approved in South Holland District
Source: Draft Annual monitoring report 2013-2014
B.2.5 Developer contributions towards infrastructure and affordable housing There are a number of Local Plan policies that relate to the delivery of S106 contributions; this precedes the recent legislation on planning obligations. The requirements relevant to this study are outlined below and an assessment of the typical contributions made for recent planning applications is also noted below and outlined in table B2 below.
B.2.6 Transport – only one scheme has secured contributions for transport; the S106 agreement relating to Holland Park secures a subsidised bus service for 3 years, new bus, footpath and cycle path provision, highways works, including the first phase of the Spalding Western Relief Road, with bridge crossings, as well as traffic calming measures across the wider development. In most other cases transport costs are absorbed as part of opening a site up for development.
B.2.7 Education – current contribution applies to 10 or more dwellings, excluding 1 bedroom properties and homes for older people. Cost per primary school pupil ranges between £11,276-£12,000 and for secondary pupils £16,991-£18,021. Where education contributions have been secured, the contributions range from £1,700 to £2,700 per dwelling. Most of these have been in addition to open space and affordable housing provision. The larger Holland Park scheme secured a new primary school in addition to on site provision of affordable housing, open space, sports facilities, children’s play, flood mitigation measures and transport measures identified above.
B.2.8 Open Space – current policy requires on site open space provision of not less than 14% of the gross site area. In the majority of cases open space and children’s play is provided on site within the development and is secured via a planning condition. But where provision is unable to be provided on site, or where the development is adjacent to or in close proximity to a sufficient sized area of existing open space, financial contributions for off site provision or enhancement of existing open space may be accepted. Three schemes made contributions in lieu of on site provision; an assessment of recent planning applications indicated that the average contribution made for open space purposes is approximately £350 per dwelling with
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the smallest scheme necessitating a contribution being 8 dwellings. In most cases open space is secured alongside affordable housing. A brownfield site to the rear of Winsover Road in Spalding, secured an open space contribution as well as affordable housing provision and an education contribution.
B.2.9 Affordable housing Table B2 shows that a number of schemes have secured the policy compliant 33% affordable housing. In some instances, the scale of affordable housing contributions has fallen when S106 developer contribution requirements are introduced. However, the urban extensions Holland Park and at Manor Farm include 33% affordable housing and wider site specific and off site infrastructure requirements.
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Table B2 Developer contributions in South Holland Borough Council area
Site Site Location Approved Year Total Number of Units on Development Housing Affordable Secured Units Housing Affordable Under Units Construction Comments Developer s106 Contributions Developer s106 Contributions/Unit 5 North Street (former Bank) and site adjacent/rear 7 North 2 - Street Crowland 05/06 7 1 - Land off The Hayfields, 7 - Wygate Park 12 - 11 2 05/06 316 39 10 Old Library West Street Long Sutton 06/07 5 1 - The Chapel Emporium London Road Long Sutton 07/08 7 2 2 29% affordable Site outside development limits so 100% affordable required 6 Station Road Tydd St Mary 08/09 2 2 2 as stipulated in Local Plan policy. Priory House The Crescent Spalding 08/09 4 2 - Former Jewsons Builders Merchants Roman Bank Spalding 09/10 63 21 - 33% affordable Former Fire Station Double Street Spalding 10/11 3 1 1 33% affordable 9 and 9a St John's Road Condition 7 of the original outline planning permission (H16- Spalding 0531-05) required the provision of a minimum of 1/3 of the dwellings to to be affordable. Reserved Matters (H16-1600- 05) for 25 dwellings was subsequently approved. The 10/11 2 - - permission concerned here is to subsitute a single dwelling £9,315 from the original outline planning permission with a pair of dwellings. As per Local Plan Policy HS8 this net increase in housing numbers on the site required the affordable housing £18,630 Affordable Housing contribution. Contribution Holland Park £100,000 Town Centre Contribution to the Council for external improvements to the fabric to Spalding's town centre and which 12/13 2,250 1/3 - improvements are to accommodate £321 the influx of people visiting the town centre due to the Development. The developer will also be required to pay a bus contribution, layout traffic calming measures and provide a bridge over the railway. 49 Hawthorn Bank Spalding 12/13 8 - - £2,797 Open Space Contribution £350 Adj. 13 Bridge Road Long Site outside development limits so 100% affordable required Sutton 12/13 1 1 1 as stipulated in Local Plan policy. Land off Pennytoft Lane, Site outside development limits so 100% affordable required Pinchbeck 12/13 35 35 11 as stipulated in Local Plan policy.
Full planning permission was granted subject to a condition requiring 18 affordable homes. In view of concerns about the financial viability of the development, the owner submitted an amended application. Consequently, planning permission was granted as a result of the s106 agreement which Lefley's Garage, Holbeach 13/14 55 9 secures the provision of 9 affordable homes and will ensure that the viability of the development will be reassessed prior to the completion of the development with a view to assessing whether an Affordable Housing Contribution shall be made. - £237,881 Education Contribution towards the cost of providing or expanding educational capacity at Little London Long Sutton 13/14 87 17 - 20% affordable the Peele School, Long Sutton or at £2,734 any other secondary education establishment within the town of Long Sutton. Site outside development limits so 100% affordable required Flaxmill Lane Pinchbeck 13/14 14 14 - as stipulated in Local Plan policy. Site outside development limits so 100% affordable required Main Road Surfleet 13/14 8 8 - as stipulated in Local Plan policy. 1 Delgate Avenue Weston 13/14 3 1 - Land off Kirkgate/Cross Street 13/14 11 4 - 36% affordable £354 Whaplode £3,890 Open Space Contribution £45,259 Education Contribution towards the cost of providing additional permanent education capacity at Spalding Primary School and/or Spalding Monkshouse Land at 15-21 Winsover Road Primary School and/or Spalding St £1,676 (Education) 14/15 27 1/3 - Spalding Johns Primary School and/or £356 (Open Space) Spalding Sir John Gleed School or any replacement school which serves the Development. £9,600 Open Space Contribution.
Holland House and Government Offices Junction 14/15 23 - - £2,458 of High Street and Holland £56,536 Affordable Housing Road Spalding Contribution Approved but no s106 formally agreed £200,000 Education Contribution £1 million Highways Contribution £222 (Education) Manor Farm, Holbeach - 900 1/3 - £75,000 contribution towards £1,111 (Highways) sustainable transport £83 (sustainable Primary school on site transport) Source: South Holland District Council Summer 2015
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B.3 South Holland District area sales values
Table B3 South Holland house sales values
South Holland District Council Column Labels Land Registry average price 2014 - 15 New build Secondhand stock CLAYLAKE £163,000 COWBIT £207,930 CROWLAND £131,560 £183,903 DEEPING ST NICHOLAS £485,000 £191,500 DONINGTON £154,519 FLEET £168,256 FLEET HARGATE £165,200 GEDNEY £151,933 GEDNEY DROVE END £129,333 GEDNEY DYKE £186,625 GEDNEY HILL £191,020 GOSBERTON £173,600 GOSBERTON CLOUGH £182,700 GOSBERTON RISEGATE £189,500 GOSBERTON WESTHORPE £180,000 GUTHRAM £225,000 HOLBEACH £128,703 £145,752 HOLBEACH BANK £153,182 HOLBEACH CLOUGH £182,290 HOLBEACH DROVE £215,375 HOLBEACH FEN £189,500 HOLBEACH HURN £188,571 HOLBEACH ST JOHNS £206,416 HOLBEACH ST MARKS £151,244 HOP POLE £298,500 LITTLE SUTTON £98,750 LONG SUTTON £131,833 £160,001 LOW FULNEY £110,000 LUTTON £171,309 LUTTON MARSH £253,667 MOULTON £210,606 MOULTON CHAPEL £171,579 MOULTON EAUGATE £207,725 MOULTON MARSH £125,000 MOULTON SEAS END £172,269 PINCHBECK £144,010 £161,894 PODE HOLE £126,375 QUADRING £191,381 QUADRING FEN £183,833 SARACENS HEAD £179,950 £165,231 SHEPEAU STOW £177,250 SPALDING MARSH £122,500 SURFLEET £164,515 SUTTON BRIDGE £116,707 £128,906 SUTTON ST EDMUND £229,494 SUTTON ST JAMES £163,550 TERRINGTON ST CLEMENT £137,300 THROCKENHOLT £152,833 TONGUE END £154,090 TYDD £695,500 TYDD GOTE £111,125 TYDD ST MARY £215,857 WALPOLE ST ANDREW £178,000 WEST PINCHBECK £166,277 WESTON £105,000 £159,185 WESTON HILLS £172,818 WHAPLODE £122,500 £145,812 WHAPLODE DROVE £168,499 WHAPLODE ST CATHERINE £145,983 WHAPLODE ST CATHERINES £173,940 WINGLAND £122,475 WRAGG MARSH £125,000 WYKEHAM £239,000 (blank) £160,172 £153,615 Grand Total £153,643 £161,443 Source: Land Registry of properties (2015)
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B.3.1 Table B3 above is a snapshot of sales values recorded by the Land Registry for new build and second hand property sales in South Holland.
B.4 South Holland new properties sales values per square meter
B.4.1 Table B4 shows an analysis of properties on the market in South Holland during May 2015 and includes an estimation of the per sq.m sales value. This shows that salves values range from £1,580 to £2,600 per sq.m. The common size for a three bed unit is 70 Sq.m.
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Table B4 New property sales value analysis
South Holland Post code Type Bedrooms Area (sq.m) Price Price per sq.m Spalding PE11 Detached 5 190 £300,000 £1,579 Spalding PE11 Detached 4 125 £255,000 £2,040 Spalding PE11 Detached 4 125 £245,000 £1,960 4 110 £229,995 £2,091 Spalding PE11 Detached Spalding PE11 Detached 4 105 £227,995 £2,171 Spalding PE11 Detached 4 105 £227,995 £2,171 Spalding PE11 Detached 4 110 £225,000 £2,045 Spalding PE11 Detached 3 95 £194,995 £2,053 Spalding PE11 Detached 4 90 £187,995 £2,089 Spalding PE11 Terraced 3 70 £184,995 £2,637 Spalding PE11 Terraced 3 70 £184,995 £2,637 Spalding PE11 Terraced 3 70 £184,995 £2,637 3 70 £183,995 £2,629 Spalding PE11 Semi Detached 3 70 £183,995 £2,629 Spalding PE11 Semi Detached 3 70 £183,995 £2,629 Spalding PE11 Semi Detached Spalding PE11 Terraced 3 70 £179,995 £2,571 Spalding PE11 Terraced 3 70 £176,995 £2,529 Spalding PE11 Terraced 3 70 £174,995 £2,500 Spalding PE11 Terraced 3 70 £172,500 £2,464 Spalding PE11 Terraced 3 70 £171,995 £2,457 Spalding PE11 Terraced 3 70 £171,995 £2,457 Spalding PE11 Terraced 3 70 £171,995 £2,457 Spalding PE11 Terraced 3 70 £170,995 £2,443 Spalding PE11 Semi Detached 4 105 £172,500 £1,643 3 75 £169,995 £2,279 Spalding PE11 Terraced 3 65 £159,995 £2,461 Spalding PE11 Semi Detached Holbeach PE12 Town House 4 120 £285,950 £2,383 Holbeach PE12 Town House 3 90 £209,950 £2,333 Holbeach PE12 Cottage 3 85 £170,000 £2,000 Holbeach PE12 Cottage 2 70 £160,000 £2,286 Holbeach PE12 Cottage 2 70 £160,000 £2,286 Holbeach PE12 Cottage 2 70 £159,950 £2,285 Holbeach PE12 Cottage 2 70 £159,950 £2,285 Holbeach PE12 Cottage 2 70 £152,500 £2,179 Holbeach PE12 Cottage 2 70 £145,000 £2,071 Holbeach PE12 Cottage 2 70 £145,000 £2,071 Holbeach PE12 Terraced 2 65 £123,950 £1,907 Holbeach PE13 Terraced 2 65 £123,950 £1,907 3 109 £210,000 £1,927 Sutton St James PE12 Bungalow Average price £187,208 £2,261
Source: Rightmove May 2015
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B.5 Boston average prices paid
Table B5 Boston house sales values
Boston Borough Council Land Registry average prices 2014 -New 15 build Secondhand stock ALGARKIRK £218,340 AMBER HILL £216,700 BENINGTON £122,488 BICKER £180,720 BROTHERTOFT £225,000 BUTTERWICK £47,500 £155,998 COWBRIDGE £102,000 FISHTOFT £130,905 FOSDYKE £157,556 FRAMPTON £193,950 FRAMPTON FEN £134,833 FRAMPTON WEST £198,736 FREISTON £152,433 FRITHVILLE £190,000 HOLLAND FEN £105,167 HUBBERTS BRIDGE £166,400 KIRTON £78,125 £138,705 KIRTON END £182,833 KIRTON HOLME £186,250 LEVERTON £138,650 MOULTON MARSH £40,000 NORTH HYKEHAM £166,000 OLD LEAKE £153,500 £164,925 SUTTERTON £171,113 SWINESHEAD £152,295 WIGTOFT £143,454 WRANGLE £120,000 £175,187 WYBERTON £138,292 WYBERTON FEN £259,475 (blank) £166,322 £132,046 Grand Total £160,329 £141,829 Source: Land Registry (2015)
B.5.1 Table B5 above is a snapshot of sales values recorded by the Land Registry for new build and second hand property sales in Boston District.
B.6 Boston borough new properties sales values per square meter
B.6.1 Table B6 shows an analysis of properties on the market in Boston Borough during 2015 and an estimation of the per sq.m sales value. This shows that sales values range from £1,610 to £2,190 per sq.m. The common size for the three bed units is 95 sq.m.
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South East Lincolnshire Whole Plan Viability Study
Table B6: New property sales value analysis
Town Post code Type Bedrooms Area (sq.m) Price (£) Price per sq.m Boston PE21 Detached 5 155 £340,000 £2,194 Boston Detached 4 220 £298,000 £1,355 Boston PE21 Detached 4 130 £270,000 £2,077 Boston PE21 Detached 4 130 £235,000 £1,808 Boston PE21 7SG Detached 4 125 £225,000 £1,800 Boston PE21 Detached 4 110 £220,000 £2,000 Boston PE21 Detached 4 110 £190,000 £1,727 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £154,950 £1,631 Boston PE21 Terraced 3 95 £152,950 £1,610 Boston PE21 Terraced 3 95 £152,950 £1,610 Boston PE21 Terraced 3 95 £152,950 £1,610 Boston PE21 Terraced 3 95 £152,950 £1,610 Boston PE21 Terraced 3 95 £152,950 £1,610 Boston PE21 Terraced 3 95 £152,950 £1,610 Freiston PE22 Detached 5 200 £350,000 £1,751 Aver. values 115 £196,683 £1,704
Source: Rightmove May 2015
B.7 Longer term sales value forecasts
B.7.1 Research by Savills on longer term house price forecasts informs sensitivity testing.
Figure B3
Source Saville Research - Spotlight-key themes for UK real estate 2016
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South East Lincolnshire Whole Plan Viability Study
B.8 Land values
B.8.1 There is very little published data on land values. In our approach we have derived land value from market evidence adjusted for policy and existing value plus landowner premium. Existing use value calculation has looked at employment land value and agricultural land values.
Table B7 Study threshold land values
Scenario net developable ha Price per plot
Greenfield - Spalding Houses £680,000 £19,500 Houses Greenfield - Boston £555,000 £16,000 Houses Brownfield - Spalding £385,000 £11,000 Houses Brownfield - Boston £385,000 £11,000
Brownfield - Spalding Flats £300,000
Brownfield - Boston Flats £240,000 gross Scenario net developable ha Gross to net developable ha Houses Strategic Site Spalding £300,000 70% £210,000 Strategic Site Boston Houses (Q2) £262,500 80% £210,000
B.9 Employment land values
B.9.1 The Harman report recommends existing use value plus premium. As set out in table B8 below, employment land value range between £74,000 and £396,000 per ha.
B.9.2 It is generally accepted in the market that a premium is required to incentivise land to come forward for development. Adopting an uplift of say between 20% over existing use generates a threshold value range of between £88,000 and £475,000 per ha over existing use value for employment. It should also be noted that many of the comparisons in employment land value table related to prime employment sites and we do not expect prime employment land to come forward for residential development.
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South East Lincolnshire Whole Plan Viability Study
Table B8 Quoted employment land value sites on the market
Address Site Area (Ha) Lease Notes Price/ Ha Various plots available Gilbert Design and build options are £199,738 - Drive, Boston, PE21 7TR 0.22 – 1.75 available. £336,962 The available site comprises approximately 6 acres of land suitable for development. The site Riverside Industrial Estate benefits from B1 planning Marsh LaneBostonPE21 7SJ 2.43 permission. £113,257 Holbeach Technology Park, Park Road, Holbeach, PE12 7PT 0.71 Suitable for B1 use. £282,406 Spalding Road, Boston, PE20 2ET 0.82 £396,000
Sutterton Roundabout, Boston, PE20 2LG 3.04 £74,132 Various plots, The Business Park, Waldentree Lane, £308,881 - Spalding, PE11 3UF 0.81- 1.26 £397,253 The available space comprises a plot of vacant land with B1, B2 Various plots, Wash Road, and B8 use class within the Kirton £186,423 - Boston, PE20 1QG 0.57 Distribution Park. £247,105 Average including high quality employment sites £277,464 Source: PBA web research summer 2015
B.10 Agricultural land values
B.10.1 Savills Research quotes the following in relation to agricultural land values ‘forecasting future values for the farmland sales market is far from easy, particularly following a year when a wide range of sale prices were achieved. Agricultural incomes are under pressure. Debt may increase the number of farms coming to the market’.
B.10.2 As shown in figure B4, in 2015, Savills research recorded falls in arable land values in the eastern counties of England, where values have been highest.
Figure B4 Savills farmland value forecasts
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South East Lincolnshire Whole Plan Viability Study
B.10.3 Savills Research forecasts for the short to medium term for farmland values to be much more varied. Exceptional prices may be achieved if all the right factors come together, but conversely it is very likely that there will be more farms where potential sale prices fail to reach expectations or they fail to sell as illustrated in the figure above.
B.10.4 Multipliers on agricultural values are higher in comparison to commercial values as the base value is lower. Existing agricultural value for premium sites in SE Lincolnshire is assumed at around £20,000 per gross hectare. As set out in the table B9 below, when we apply a multiplier to the agricultural land value and make an allowance for gross to net and opening up costs (which will vary depending on the type and size of site). This provides a site value of between £572,000 - £683,000 per net hectare for a fully serviced site, or a price per plot range of £16,000 to £19,000 based on a 35 dph density.
Table B9 Agricultural value and uplift
Description Existing use value per Gross to net 60%- Opening up costs, Fully serviced Price per plot gross ha plus premium 90% say £10,000 per greenfield of x10 unit @ 35 dph value per net ha Agricultural values £200,000 £222,000 - £350,000 £572,222 - £16,000 - plus uplift and £333,000 £683,000 £19,500 adjusted for site servicing
B.11 Residential land values
B.11.1 Evidence of residential land values is very limited in South East Lincolnshire. Evidence of advertised sites (set out in the table B10 below) provides a wide range of values of between £400,000 and £933,000 per gross hectare (plot price of £16,000 to £70,000), depending on site size. Note that the majority of sites on the market are below the existing policy thresholds of just one or two units.
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South East Lincolnshire Whole Plan Viability Study
Table B10 Residential land values vary considerably
Site Sale Price Price per Address Area (Ha) Notes (£) gross Ha Site which comprises land and buildings which were formerly the Butterfly and Wildlife Park Approved Planning for 87 low density scheme of high energy Little London, Long efficient homes to with Sutton, Spalding 6.27 energy renewable systems. £2,500,000 £398,597 The property comprises a Workshop to the disused two storey workshop Rear of 72 Granville with full planning consent for Street, Boston, its demolition and re- Lincolnshire, PE21 construction as a two 8PF 0.08 bedroomed house. £33,000 £423,077 MILESTONE LANE, PINCHBECK, Two building plots with SPALDING, planning consent granted for LINCOLNSHIRE 2 x 3 bedroomed detached PE11 3XR 0.15 houses with garages. £140,000 £933,333
The site benefits from outline consent for 6 affordable Water Gate, PE11 0.19 homes. £95,000 £510,753 Average 1.67 £566,440 Source: PBA web research during summer 2015
B.12 Examples of residential viability summaries and appraisals
B.12.1 Table B11 shows 30% affordable housing when density is at 38 dph which is in line with past density assessments, however, for the larger schemes some flexibility maybe needed depending on site specific circumstances and also on the scale of developer contributions needed in the form of S106.
B.12.2 Table B12 to B19 provide examples of viability appraisals for the various typologies.
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South East Lincolnshire Whole Plan Viability Study
Table B11 South Holland @ 30% affordable housing
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South East Lincolnshire Whole Plan Viability Study
Table B12 Spalding generic greenfield scenario for 30 dwellings with 30% affordable housing policy
Greenfield scenarios (including rural): Houses – 30 Units Spalding
ITEM Residual value Net Site Area 0.86 £709,227 per ha
Total No. of units No. of market units No. of affordable units
30 21.00 9.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 21.00 90 1,890 £2,000 £3,780,000 21.00 1890
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 9.00 70 630 £1,100 £693,000 9.00 630
Gross Development Value 30.00 2520 £4,473,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £644,996
Less Purchaser Costs 5.75%
Net residual land value £607,909 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 21.00 90 1,890 £911 £1,722,263 21.00 1890
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 9.00 70 630 £911 £574,088 9.00 630
30.00 2520 £2,296,350
2.4 Externals
2.4.1 Plot external 10% £229,635
2.4.2 Brownfield remediation £0 per net developable ha £0
£229,635 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £183,708
£183,708 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £114,818
£114,818
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £1,000 per unit £30,000
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£30,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £113,400.00
£113,400
TOTAL DEVELOPMENT COSTS 3,612,907 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £661,500
3.2 Profit on affordable units 6% affordable GDV £41,580
£703,080
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £4,315,987
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £157,013
4.00 Finance Costs APR PCM 7.00% 0.565% -£157,013
TOTAL PROJECT COSTS [INCLUDING INTEREST] £4,473,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B13 South Holland Borough generic rural scenario for 10 dwellings with 30% affordable housing policy
Rural scenario Houses – 10 Units Spalding
ITEM Residual value Net Site Area 0.33 £1,133,490 per ha
Total No. of units No. of market units No. of affordable units
10 10.00 0.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 10.00 100 1,000 £2,000 £2,000,000 10.00 1000
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 0.00 70 0 £1,100 £0 0.00 0
Gross Development Value 10.00 1000 £2,000,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £396,672
Less Purchaser Costs 4.75%
Net residual land value £377,830 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 10.00 100 1,000 £911 £911,250 10.00 1000
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 0.00 70 0 £911 £0 0.00 0
10.00 1000 £911,250
2.4 Externals
2.4.1 Plot external 10% £91,125
2.4.2 Brownfield remediation £0 per net developable ha £0
£91,125 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £72,900
£72,900 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £45,563
£45,563 2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £0 per unit £0
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£0
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £60,000.00
£60,000
TOTAL DEVELOPMENT COSTS 1,577,509 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £350,000
3.2 Profit on affordable units 6% affordable GDV £0
£350,000
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £1,927,509
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £72,491
4.00 Finance Costs APR PCM 7.00% 0.565% -£72,491
TOTAL PROJECT COSTS [INCLUDING INTEREST] £2,000,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B14 South Holland Borough generic brownfield scenario for 30 dwellings with 30% affordable housing policy
Brownfield scenarios Houses – 30 Units Spalding Brownfield
ITEM Residual value Net Site Area 0.86 £501,430 per ha
Total No. of units No. of market units No. of affordable units
30 21.00 9.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 21.00 90 1,890 £2,000 £3,780,000 21.00 1890
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 9.00 70 630 £1,100 £693,000 9.00 630
Gross Development Value 30.00 2520 £4,473,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £451,231
Less Purchaser Costs 4.75%
Net residual land value £429,797 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 21.00 90 1,890 £911 £1,722,263 21.00 1890
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 9.00 70 630 £911 £574,088 9.00 630
30.00 2520 £2,296,350
2.4 Externals
2.4.1 Plot external 10% £229,635
2.4.2 Brownfield remediation £250,000 per net developable ha £214,286
£443,921 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £183,708
£183,708 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £114,818
£114,818 2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £1,000 per unit £30,000
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£30,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £113,400.00
£113,400
TOTAL DEVELOPMENT COSTS 3,633,427 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £661,500
3.2 Profit on affordable units 6% affordable GDV £41,580
£703,080
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £4,336,507
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £136,493
4.00 Finance Costs APR PCM 7.00% 0.565% -£136,493
TOTAL PROJECT COSTS [INCLUDING INTEREST] £4,473,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B15 Boston District rural scenario for 30 dwellings with 15% affordable housing policy and no allowance for flood measures
Rural scenario Houses – 30 Units Boston
ITEM Residual value Net Site Area 1.00 £609,432 per ha
Total No. of units No. of market units No. of affordable units
30 25.50 4.50
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 25.50 100 2,550 £1,850 £4,717,500 25.50 2550
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 4.50 70 315 £1,018 £320,513 4.50 315
Gross Development Value 30.00 2865 £5,038,013 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £646,612
Less Purchaser Costs 5.75%
Net residual land value £609,432 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 25.50 100 2,550 £911 £2,323,688 25.50 2550
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 4.50 70 315 £911 £287,044 4.50 315
30.00 2865 £2,610,731
2.4 Externals
2.4.1 Plot external 10% £261,073
2.4.2 Brownfield remediation £0 per net developable ha £0
£261,073 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £208,859
£208,859 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £130,537
£130,537 2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £1,000 per unit £30,000
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£30,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £141,525.00
£141,525
TOTAL DEVELOPMENT COSTS 4,029,337 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £825,563
3.2 Profit on affordable units 6% affordable GDV £19,231
£844,793
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £4,874,130
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £163,883
4.00 Finance Costs APR PCM 7.00% 0.565% -£163,883
TOTAL PROJECT COSTS [INCLUDING INTEREST] £5,038,013
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B16 Boston brownfield scenario for 30 dwellings with 15% affordable housing policy and no allowance for flood measures
Brownfield scenarios Houses – 30 Units Boston
ITEM Residual value Net Site Area 0.86 £421,996 per ha
Total No. of units No. of market units No. of affordable units
30 25.50 4.50
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 25.50 90 2,295 £1,850 £4,245,750 25.50 2295
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 4.50 70 315 £1,018 £320,513 4.50 315
Gross Development Value 30.00 2610 £4,566,263 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £379,749
Less Purchaser Costs 4.75%
Net residual land value £361,711 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 25.50 90 2,295 £911 £2,091,319 25.50 2295
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 4.50 70 315 £911 £287,044 4.50 315
30.00 2610 £2,378,363
2.4 Externals
2.4.1 Plot external 10% £237,836
2.4.2 Brownfield remediation £250,000 per net developable ha £214,286
£452,122 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £190,269
£190,269 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £118,918
£118,918
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £1,000 per unit £30,000
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£30,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £127,372.50
£127,373
TOTAL DEVELOPMENT COSTS 3,676,793 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £743,006
3.2 Profit on affordable units 6% affordable GDV £19,231
£762,237
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £4,439,030
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £127,232
4.00 Finance Costs APR PCM 7.00% 0.565% -£127,232
TOTAL PROJECT COSTS [INCLUDING INTEREST] £4,566,263
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B17 Boston greenfield scenario for 30 dwellings @40 dph 5% affordable housing policy and allowance for flood measures
Greenfield scenarios (including rural): Houses – 30 Units Boston
ITEM Residual value Net Site Area 0.75 £642,487 per ha
Total No. of units No. of market units No. of affordable units
30 28.50 1.50
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 28.50 90 2,565 £1,850 £4,745,250 28.50 2565
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 1.50 70 105 £1,018 £106,838 1.50 105
Gross Development Value 30.00 2670 £4,852,088 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £511,263
Less Purchaser Costs 5.75%
Net residual land value £481,866 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 28.50 90 2,565 £911 £2,337,356 28.50 2565
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 1.50 70 105 £911 £95,681 1.50 105
30.00 2670 £2,433,038
2.4 Externals
2.4.1 Plot external 10% £243,304
2.4.2 Brownfield remediation £0 per net developable ha £0
£243,304 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £194,643
£194,643 2.6 Contingency including flood mitigation
2.6.1 Based upon percentage of build costs 13% £316,295
£316,295
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £1,000 per unit £30,000
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£30,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £142,357.50
£142,358
TOTAL DEVELOPMENT COSTS 3,870,900 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £830,419
3.2 Profit on affordable units 6% affordable GDV £6,410
£836,829
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £4,707,729
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £144,359
4.00 Finance Costs APR PCM 7.00% 0.565% -£144,359
TOTAL PROJECT COSTS [INCLUDING INTEREST] £4,852,088
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B18 Boston Borough rural one dwelling @33 dph 5% affordable housing policy and allowance for flood measures
Rural scenario Houses – 1 Units Boston
ITEM Residual value Net Site Area 0.03 £805,369 per ha
Total No. of units No. of market units No. of affordable units
1 1.00 0.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 1.00 100 100 £1,850 £185,000 1.00 100
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 0.00 70 0 £1,018 £0 0.00 0
Gross Development Value 1.00 100 £185,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £24,840
Less Purchaser Costs 1.75%
Net residual land value £24,405 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 1.00 100 100 £911 £91,125 1.00 100
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 0.00 70 0 £911 £0 0.00 0
1.00 100 £91,125
2.4 Externals
2.4.1 Plot external 10% £9,113
2.4.2 Brownfield remediation £0 per net developable ha £0
£9,113 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £7,290.00
£7,290 2.6 Contingency including flood measures
2.6.1 Based upon percentage of build costs 13% £11,846
£11,846
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £0 per unit £0
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£0
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £5,550.00
£5,550
TOTAL DEVELOPMENT COSTS 149,764 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £32,375
3.2 Profit on affordable units 6% affordable GDV £0
£32,375
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £182,139
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £2,861
4.00 Finance Costs APR PCM 7.00% 0.565% -£2,861
TOTAL PROJECT COSTS [INCLUDING INTEREST] £185,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B19 Boston Borough rural one dwelling @30 dph 15% affordable housing policy and no allowance for flood measures
Rural scenario Houses – 1 Units Boston
ITEM Residual value Net Site Area 0.03 £937,556 per ha
Total No. of units No. of market units No. of affordable units
1 1.00 0.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 1.00 100 100 £1,850 £185,000 1.00 100
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 0.00 70 0 £1,018 £0 0.00 0
Gross Development Value 1.00 100 £185,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £31,809
Less Purchaser Costs 1.75%
Net residual land value £31,252 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 1.00 100 100 £911 £91,125 1.00 100
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 0.00 70 0 £911 £0 0.00 0
1.00 100 £91,125
2.4 Externals
2.4.1 Plot external 10% £9,113
2.4.2 Brownfield remediation £0 per net developable ha £0
£9,113 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £7,290.00
£7,290 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £4,556
£4,556
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £0 per unit £0
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£0
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £5,550.00
£5,550
TOTAL DEVELOPMENT COSTS 149,442 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £32,375
3.2 Profit on affordable units 6% affordable GDV £0
£32,375
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £181,817
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £3,183
4.00 Finance Costs APR PCM 7.00% 0.565% -£3,183
TOTAL PROJECT COSTS [INCLUDING INTEREST] £185,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B20 Boston urban extension sensitivity testing appraisal
CIL No of Net site Total Floor Chargeable dwellings area ha Space per Floor Space Strategic sites Density sq.m per sq.m Residual land value Benchmark CIL Surplus Q.2 Boston 1,800 51.43 35 156,600 137,700 £418,485 £137 £262,500 £86 £155,985 £58
B.12.3 Table B20 summarises the appraisal findings for the Boston urban extension based on sensitivity testing adopting S106 @ £4,000, affordable at 15%, SV increase by 15% and build costs increase by 5% and finance at 4%
Table B21 Spalding urban extension sensitivity testing
CIL No of Net site Total Floor Chargeable dwellings area ha Space per Floor Space Strategic sites Density sq.m per sq.m Residual land value Benchmark CIL Surplus Spalding 3,750 107.14 35 322,500 270,000 £534,279 £178 £300,000 £100 £234,279 £93
B.12.4 Table B21 summarises the appraisal findings for the Spalding urban extension based on sensitivity testing adopting Spalding sales value increase by 10% and build costs increase by 5%, affordable housing at 20% and S106 @ £4,000
B.12.5 Table B22 and B23 provide the appraisals for the two urban extensions set out above.
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South East Lincolnshire Whole Plan Viability Study
Table B22 Boston urban extension sensitivity testing
Greenfield scenarios (including rural): Houses – 1800 Units Q.2 Boston
ITEM Residual value Net Site Area 51.43 £418,485 per ha
Total No. of units No. of market units No. of affordable units
1,800 1,530.00 270.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 1530.00 90 137,700 £2,130 £293,301,000 1530.00 137700
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 270.00 70 18,900 £1,018 £19,230,750 270.00 18900
Gross Development Value 1800.00 156600 £312,531,750 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £22,835,096
Less Purchaser Costs 5.75%
Net residual land value £21,522,078 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 1530.00 90 137,700 £957 £131,753,081 1530.00 137700
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 270.00 70 18,900 £957 £18,083,756 270.00 18900
1800.00 156600 £149,836,838
2.4 Externals
2.4.1 Plot external 10% £14,983,684
2.4.2 Abnormals/Opening up costs £350,000 per net developable ha £18,000,000
£32,983,684 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £11,986,947
£11,986,947 2.6 Contingency
2.6.1 Based upon percentage of build costs 13% £19,478,789
£19,478,789
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £0 per unit £0
2.7.2 Strategic Site Spalding £0 per unit £0
2.7.3 Strategic Site Boston (Q2) £4,000 per unit £7,200,000
£7,200,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £8,799,030.00
£8,799,030
TOTAL DEVELOPMENT COSTS 253,120,383 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £51,327,675
3.2 Profit on affordable units 6% affordable GDV £1,153,845
£52,481,520
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £305,601,903
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £6,929,847
4.00 Finance Costs APR PCM 4.00% 0.327% -£6,929,847
TOTAL PROJECT COSTS [INCLUDING INTEREST] £312,531,750
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table B23 Spalding urban extension sensitivity testing appraisal
Greenfield scenarios (including rural): Houses – 3750 Units Spalding
ITEM Residual value Net Site Area 107.14 £534,279 per ha
Total No. of units No. of market units No. of affordable units
3,750 3,000.00 750.00
1.0 Development Value
1.1 Private Units No. of units Size sq.m Total sq.m £psm Total Value Houses – 3000.00 90 270,000 £2,200 £594,000,000 3000.00 270000
1.2 Affordable housing % No. of units Size sq.m Total sq.m £psm Total Value Houses – 750.00 70 52,500 £1,100 £57,750,000 750.00 52500
Gross Development Value 3750.00 322500 £651,750,000 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Gross residual land value £60,736,476
Less Purchaser Costs 5.75%
Net residual land value £57,244,128 2.3 Build Costs
2.3.1 Private units No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 3000.00 90 270,000 £957 £258,339,375 3000.00 270000
2.3.2 Affordable housing % No. of units Size sq.m Total sq.m Cost per sq.m Total Costs Houses – 750.00 70 52,500 £957 £50,232,656 750.00 52500
3750.00 322500 £308,572,031
2.4 Externals
2.4.1 Plot external 10% £30,857,203
2.4.2 Strategic Site Spalding £350,000 per net developable ha £37,500,000
£68,357,203 2.5 Professional Fees
2.5.1 as percentage of build costs 8% £24,685,763
£24,685,763 2.6 Contingency
2.6.1 Based upon percentage of build costs 5% £15,428,602
£15,428,602
2.7 Developer contributions
2.7.1 S.106 generic sites 11 units or more £0 per unit £0
2.7.2 Strategic Site Spalding £4,000 per unit £15,000,000
2.7.3 Strategic Site Boston (Q2) £0 per unit £0
£15,000,000
2.8 Sale cost
2.8.1 Sales and marketing fees 3% open market units £17,820,000.00
£17,820,000
TOTAL DEVELOPMENT COSTS 510,600,074 3.0 Developers' Profit
3.1 Profit on market units 17.5% market GDV £103,950,000
3.2 Profit on affordable units 6% affordable GDV £3,465,000
£107,415,000
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £618,015,074
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £33,734,926
4.00 Finance Costs APR PCM 7.00% 0.565% -£33,734,926
TOTAL PROJECT COSTS [INCLUDING INTEREST] £651,750,000
This appraisal has been prepared by Peter Brett Associates on behalf of South Holland District Council and Boston Borough Council. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform South Holland District Council and Boston Borough Council the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Appendix C Commercial viability market research and appraisals
Table C1 Boston industrial rents
Building Name Street Name Town Use Class Rent Sq M Days on Market Fen Road Depot Fen Road Boston B2 (general Industrial) £18.84 634 Fen Road Depot Fen Road Boston B2 (general Industrial) £18.84 634 Field Street Boston Not Specified NQ 980 Fishtoft Road Boston B2 (general Industrial) £13.67 882 Fishtoft Road Boston B2 (general Industrial) £45.10 874 Engineering Workshop Fishtoft Road Boston B1 (business) £22.50 1810 Ind Unit Great Fen Road Boston Not Specified n/a 780 The Old Smithy Highgate Boston Not Specified n/a 438 Hurns End Road Boston B2 (general Industrial) £25.62 2938 Lealand Way Boston Not Specified n/a 836 Food Manufacturing Complex London Road Boston Not Specified n/a 1204 Food Manufacturing Complex London Road Kirton B2 (general Industrial) £20.45 1090 Ingleborough Farm Main Road Boston B2 (general Industrial) £16.02 1753 Industrial Complex Marsh Lane Boston B2 (general Industrial) NQ 769 Norfolk Street Boston B2 (general Industrial) £43.05 2401 Norfolk Street Boston Not Specified £45.74 1412 Norfolk Street Boston B2 (general Industrial) £42.73 110 Norfolk Street Boston B2 (general Industrial) £45.85 257 Norfolk Street Boston B2 (general Industrial) £33.26 1412 Norfolk Street Boston B2 (general Industrial) £43.05 838 Norfolk Street Boston B2 (general Industrial) £37.67 2762 Redstone Road Boston B1 (business) £32.18 651 Redstone Industrial Estate Redstone Road Boston B2 (general Industrial) £34.44 126 North End Business Park Station Road Boston Not Specified n/a 111 Station Road Boston B2 (general Industrial) £45.74 284 Jackson Building Centres Tattershall Road Boston B2 (general Industrial) £10.76 1256 Tulip Factory West End Road Boston Not Specified n/a 704
Source: Co Star Focus report June 2015
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South East Lincolnshire Whole Plan Viability Study
Table C2 Spalding industrial rents
Building Name Street Name Town Use Class Rent Sq M Days on Market Benner Road Spalding B2 (general Industrial) NQ 235 Benner Road Spalding B2 (general Industrial) NQ 235 Bars Bridge Bourne Road Spalding Not Specified £35 1425 Edison Court Spalding Not Specified n/a 157 Fleet Road Industrial Estate Spalding B2 (general Industrial) £45 241 Hawthorn Road Spalding B2 (general Industrial) NQ 1132 Hawthorn Road Skegness B2 (general Industrial) NQ 1132 Hawthorn Road Spalding B2 (general Industrial) NQ 1132 Hawthorn Road Spalding Not Specified n/a 1046 Hawthorn Road Spalding Not Specified n/a 1046 Hawthorn Road Skegness Not Specified n/a 1046 Hawthorn Road Spalding Not Specified n/a 1046 Hawthorn Road Spalding B2 (general Industrial) NQ 1132 Park Lane Spalding Not Specified n/a 194 Plover Court Spalding B2 (general Industrial) £48 12 Browns Yard Seas End Road Spalding B2 (general Industrial) £47 18 Millfield NurserySpalding Common Spalding B2 (general Industrial) £26 145 St James Road Spalding B8 (storage And Distribution) £24 497 Whitaker Court Wardentree Lane Spalding Not Specified n/a 1095 Whitaker Court Wardentree Lane Spalding Not Specified n/a 1095 Whitaker Court Wardentree Lane Spalding Not Specified NQ 1676 Whitaker Court Wardentree Lane Spalding Not Specified NQ 1676 Whitaker Court Wardentree Lane Spalding Not Specified n/a 1095 Whitaker Court Wardentree Lane Spalding Not Specified NQ 1676 Travis Perkins Wardentree Lane Spalding Not Specified NQ 117 Whitaker Court Wardentree Lane Spalding Not Specified n/a 1095 Whitaker Court Wardentree Lane Spalding Not Specified NQ 1676 Mayden House Wardentree Lane Spalding B2 (general Industrial) £123 381
Source: Co Star Focus report June 2015
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South East Lincolnshire Whole Plan Viability Study
Table C3 Boston retail rentals
Building Name/Park Address Town NextRent Review(pa) Pickwick Wine Bar Bridge Street Boston N/A The Ship Tavern Custom House Lane Boston N/A The Wheatsheaf Inn Drainside Boston N/A Emery Lane Boston £12,000 The New Castle Inn Fydell Street Boston N/A Retail Warehouse George Street Boston £125,000 Retail Warehouse George Street Boston N/A The Old Chapel Grove Street West Boston N/A The Old Chapel Grove Street West Boston £25,000 High Street Boston £25,000 High Street Boston £27,500 High Street Boston N/A High Street Boston N/A Boston Shopping Park, Unit 6a Horncastle Road Boston £60,900 The Duke Of York Lincoln Lane Boston N/A Proposed Trade Counter Unit, Unit 2 Lister Way Boston N/A Proposed Trade Counter Unit, Unit 1 Lister Way Boston N/A Golden Fleece Main Rd, Wigtoft Boston N/A Main Ridge Boston N/A Market Place Boston £27,500 Market Place Boston N/A Market Place Boston £20,000 Market Place Boston £45,000 The Exchange Buildings Market Place Boston £19,000 Market Place Boston N/A Pescod Hall Mitre Lane Boston £25,000 New Street Boston £27,500 Pescod Square Shopping Centre, Unit 13/14Pescod Square Boston Not Quoting Pescod Square Shopping Centre, Unit 16 Pescod Square Boston £27,500 School Lane Boston N/A Unit 4 Skirbeck Road Boston £17,500 Strait Bargate Boston £195,000 West Street Boston £6,500 West Street Boston N/A West Street Boston £25,000 West Street Boston N/A West Street Boston N/A West Street Boston N/A West Street Boston £7,800 Wide Bargate Boston N/A Wide Bargate Boston £12,500 Wide Bargate Boston £27,500 Wide Bargate Boston N/A Wide Bargate Boston N/A Wide Bargate Boston N/A Wide Bargate Boston N/A Wide Bargate Boston N/A The Merry Monk Willington Road Boston £28,500 Wormgate Boston N/A Wormgate Boston N/A Wormgate Boston £5,000
Source: Co Star Focus report June 2015
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South East Lincolnshire Whole Plan Viability Study
Table C4 Spalding retail rents
Source: Co Star Focus report June 2015
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South East Lincolnshire Whole Plan Viability Study
Table C5 Retail appraisal
Retail convenience
ITEM residual value Net site area 0.08 £2,370,843 per ha
1.0 Development Value
No. of units Size sq.m Rent Yield Value per Unit Total Value 1.1 Retail convenience 1 450 £200 6.00% £1,500,000 £1,500,000
Rent free period Adjusted for rent free No. of months 6 £1,456,928.79
Less Purchaser Costs £86,250.00
Adjusted cap value £1,370,679
1 450 £1,370,678.79 2.0 Development Cost
2.1 Site Acquisition
2.1 Site value (gross residual land value) £203,157
Less Purchaser Costs 2.75%
Net residual land value £197,570 2.2 Build Costs
No. of units Size sq.m Cost per sq m Total Costs 2.2.1 Retail convenience 1 500 £1,342 £671,000
£671,000
2.3 Externals
2.3.1 as percentage of build costs 15.0% £100,650
£100,650 2.4 Professional Fees
2.4.1 as percentage of build costs & externals 8% £61,732
£61,732 2.5 Contingency
2.5.1 Based upon percentage of construction costs 5% £41,669
£41,669 2.6 Section 106 Obligations convenience retail
2.6.1 psm £0
£0 2.7 Sale costs
2.7.1 Marketing costs £25,000 £25,000
2.7.2 Letting agent fee 10% of rent £9,000
2.7.3 Letting legal fees 5% of rent £4,500
£38,500
TOTAL DEVELOPMENT COSTS £1,116,708 3.0 Developers' Profit Rate 3.1 Based upon percentage of total development costs 20% £223,341.63
£223,342
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £1,340,050
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £30,629
4.00 Finance Costs APR PCM 7.00% 0.565% -£30,629
TOTAL PROJECT COSTS [INCLUDING INTEREST] £1,370,679
This appraisal has been prepared by Peter Brett Associates on behalf of the South East Lincolnshire Authorities. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform the South East Lincolnshire Authorities. as to the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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South East Lincolnshire Whole Plan Viability Study
Table C6 Light industrial appraisal
Light industrial Main land appriasal
ITEM residual value Net Site Area 0.25 -£1,888,473 per ha
1.0 Development Value
No. of units Size sq.m Rent Yield Value per Unit Total Value 1.1 Light industrial 1 1000 £45.00 8.0% £562,500 £562,500
Rent free period Adjusted for rent free No. of months 5 £544,748
Less Purchaser Costs £32,344
Adjusted cap value £512,405
1 1,000 £512,405 2.0 Development Cost
2.1 Site Acquisition
2.1.1 Site value (gross residual land value) -£480,527
Less Purchaser Costs 1.75%
Net residual land value -£472,118 2.2 Build Costs
No. of units Size sq.m Cost per sq m Total Costs 2.2.1 Light industrial 1 1,000 £549 £549,000
£549,000
2.3 Externals
2.3.1 External works as a percentage of build costs 15.0% £82,350
£82,350 2.4 Professional Fees
2.4.1 as percentage of build costs & externals 8% £50,508
£50,508 2.5 Contingency
2.5.1 Based upon percentage of construction costs 5% £34,093
£34,093 2.6 Sale costs
2.6.1 Marketing costs £25,000 £25,000
2.6.2 Letting agent fee 10% of rent £4,500
2.6.3 Letting legal fees 5% of rent £2,250
£31,750
TOTAL DEVELOPMENT COSTS £267,173 3.0 Developers' Profit Rate 3.1 Based upon percentage of total development costs 20% £53,435
£239,923
TOTAL PROJECT COSTS [EXCLUDING INTEREST] £507,097
TOTAL INCOME - TOTAL COSTS [EXCLUDING INTEREST] £5,308
4.00 Finance Costs APR PCM 7.00% 0.565% -£5,308
TOTAL PROJECT COSTS [INCLUDING INTEREST] £512,405
This appraisal has been prepared by Peter Brett Associates on behalf of the South East Lincolnshire Authorities. The appraisal has been prepared in line with the RICS valuation guidance. The purpose of the appraisal is to inform the South East Lincolnshire Authorities. as to the impact of planning policy has on viability at a strategic level. This appraisal is not a formal 'Red Book' (RICS Valuation – Professional Standards January 2014) valuation and should not be relied upon as such.
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