Stevenage Borough Council, Whole Plan Viability Study Including
Total Page:16
File Type:pdf, Size:1020Kb
Whole Plan Viability Study including Community Infrastructure Levy (CIL) September 2015 Stevenage Borough Council Whole Plan Viability Study, including CIL – September 2015 Important Notice HDH Planning & Development Ltd (with AECOM as sub-contractors) has prepared this report for the sole use of Stevenage Borough Council in accordance with the instructions under which our services were performed. No other warranty, expressed or implied, is made as to the professional advice included in this report or any other services provided by us. This report may not be relied upon by any other party without the prior and express written agreement of HDH Planning & Development Ltd. Some of the conclusions and recommendations contained in this report are based upon information provided by others (including the Council and consultees) and upon the assumption that all relevant information has been provided by those parties from whom it has been requested. Information obtained from third parties has not been independently verified by HDH Planning & Development Ltd, unless otherwise stated in the report. The conclusions and recommendations contained in this report are concerned with policy requirement, guidance and regulations which may be subject to change. They reflect a Chartered Surveyor’s perspective and do not reflect or constitute legal advice and the Council should seek legal advice before implementing any of the recommendations. No part of this report constitutes a valuation and the report should not be relied on in that regard. Certain statements made in the report may constitute estimates, projections or other forward-looking statements and even though they are based on reasonable assumptions as of the date of the report, such forward-looking statements by their nature involve risks and uncertainties that could cause actual results to differ materially from the results predicted. HDH Planning & Development Ltd specifically does not guarantee or warrant any estimate or projections contained in this report. RS Drummond-Hay MRICS ACIH HDH Planning & Development Ltd Clapham Woods Farm Keasden, Nr Clapham Lancaster. LA2 8ET [email protected] 015242 51831 / 07989 975 977 Registered in England Company Number 08555548 Issued 26th September 2015 COPYRIGHT © This report is the copyright of HDH Planning & Development Ltd. Any unauthorised reproduction or usage by any person other than the addressee is strictly prohibited. 2 Stevenage Borough Council Whole Plan Viability Study, including CIL – September 2015 Table of Contents 1. Introduction .................................................................................................................. 7 Scope ................................................................................................................................. 7 Metric or imperial ................................................................................................................ 8 HDH Planning and Development ....................................................................................... 8 Report Structure ................................................................................................................. 9 2. Viability Testing ......................................................................................................... 11 NPPF Viability Testing ...................................................................................................... 11 CIL Economic Viability Assessment ................................................................................. 13 Differential Rates ......................................................................................................... 15 Payments in kind ......................................................................................................... 16 Planning Practice Guidance (PPG) .................................................................................. 17 Viability Guidance ............................................................................................................. 19 3. Viability Methodology ................................................................................................ 23 Viability Testing – Outline Methodology ........................................................................... 23 Limitations of viability testing in the context of CIL and the NPPF ................................... 24 The meaning of ‘competitive return’ ................................................................................. 24 Existing Available Evidence ............................................................................................. 26 Stakeholder Engagement ................................................................................................. 27 Viability Process ............................................................................................................... 28 Development Types ......................................................................................................... 30 4. Residential Property Market ..................................................................................... 31 Stevenage’s Residential Market ....................................................................................... 31 Newbuild Sales Prices ...................................................................................................... 39 New Data ..................................................................................................................... 43 Price Assumptions for Financial Appraisals ..................................................................... 44 Affordable Housing ........................................................................................................... 46 Social Rent .................................................................................................................. 47 Affordable Rent ............................................................................................................ 49 Intermediate Products for Sale .................................................................................... 52 Grant Funding .............................................................................................................. 54 Older People’s Housing .................................................................................................... 54 5. Non-Residential Property Market ............................................................................. 57 Stevenage Overview ........................................................................................................ 57 Employment Uses. ........................................................................................................... 57 Offices .......................................................................................................................... 59 Industrial and Distribution ............................................................................................ 60 Retail ................................................................................................................................ 60 Hotels ............................................................................................................................... 61 Appraisal Assumptions ..................................................................................................... 61 6. Land Prices ................................................................................................................ 63 Current and Alternative Use Values ................................................................................. 63 Residential Land ............................................................................................................... 64 Industrial Land .................................................................................................................. 66 Agricultural and Paddocks ................................................................................................ 66 Use of Alternative Use Benchmarks ................................................................................. 66 3 Stevenage Borough Council Whole Plan Viability Study, including CIL – September 2015 7. Appraisal Assumptions – Development Costs ....................................................... 73 Development Costs .......................................................................................................... 73 Construction costs: baseline costs .............................................................................. 73 Construction costs: site specific adjustments .............................................................. 74 Construction costs: affordable dwellings ..................................................................... 74 Other normal development costs ................................................................................. 75 Abnormal development costs ...................................................................................... 75 Fees ............................................................................................................................. 76 Contingencies .............................................................................................................. 76 S106 Contributions and the costs of infrastructure ...................................................... 76 Financial and Other Appraisal Assumptions ...................................................................