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180504 Report Template Final Plan Viability & CIL Review Study Regulation 19 Stage Babergh & Mid Suffolk District Councils October 2020 Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Quality Assurance Date of Report 29 October 2020 Version Client Issue Filename and path S:\_Client Projects\2003 Babergh & Mid Suffolk WPV Stage 2_B&MS District Councils\_Reports\Main report\201029_Babergh Mid Suffolk WPV CIL report_draft_client issue_Final.docx Prepared by Stuart Cook, Director James Bullough, Principal Lawrence Owho, Consultant Checked by Stuart Cook, Director Date 29 October 2020 Authorised by Stuart Cook, Director Date 29 October 2020 Limitation This report has been prepared on behalf of and for the exclusive use of Aspinall Verdi Limited’s Client and it is subject to and issued in connection with the provisions of the agreement between Aspinall Verdi Limited and its Client. Aspinall Verdi Limited accepts no liability or responsibility whatsoever for or in respect of any use of or reliance upon this report by any third party. Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Contents Executive Summary Report 1 Introduction 1 Impact of Covid-19 3 MHCLG – planning system reform consultations 4 2 National planning policy context 6 National Planning Policy Framework (NPPF) (February 2019) 6 PPG for CIL 10 PPG for housing for older & disabled people 15 3 Methodology 17 Viability modelling best practice 17 What to test? 18 Development appraisal inputs 19 Benchmark (threshold) land value 20 Viability modelling approach 23 Stakeholder engagement 25 4 Local Plan context 26 Babergh & Mid Suffolk CILs 33 5 Developing viability scenarios 37 Residential typologies 37 Elderly accommodation typology 48 Non-residential typologies 49 6 Appraisal inputs & assumptions 51 Value inputs 51 Build costs inputs & assumptions 53 Timescales 59 Land value assessment 62 7 Viability testing results 71 Assessment of draft Local Plan policies 71 Assessment of potential CIL charges 77 8 Recommendations 81 Introduction 81 Residential 81 Older persons accommodation 82 Non-residential 82 CIL charging schedule 82 Tables & Figures Table ES- 1 Example Appraisal Viability Summary ii Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Table ES- 2 Example 1 of development appraisal sensitivity tables iii Table ES- 3 Example 2 of development appraisal sensitivity tables iii Table ES- 4 Generic scenarios iv Table ES- 5 Proposed new CIL rates vii Figure 3-1 Elements required for a viability assessment 17 Figure 3-2 Balance between RLV and TLV 18 Table 3-1 Example appraisal viability summary 24 Table 3-2 Example 1 of development appraisal sensitivity tables 25 Table 3-3 Example 2 of development appraisal sensitivity tables 25 Table 4-1 Policy costs inputs & assumptions 27 Figure 4-1 Babergh CIL charging schedule 33 Figure 4-2 Babergh charging zones 34 Figure 4-3 Mid Suffolk CIL charging schedule 34 Figure 4-4 Mid Suffolk CIL charging schedule zones 35 Figure 4-5 Babergh - regulation 123 list 36 Figure 4-6 Mid Suffolk – regulation 123 list 36 Figure 5-1 Value heatmap 38 Table 5-1 Proposed sale values in viability testing 39 Figure 5-2 New build residential minimum space standards 40 Table 5-2 Analysis of unit sizes of consented schemes 40 Figure 5-3 Distribution of residential development growth 41 Table 5-3 Greenfield SHELAA sites 42 Table 5-4 Brownfield SHELAA sites 42 Table 5-5 Generic scenarios 43 Table 5-6 Larger scenarios 44 Figure 5-4 Size of new owner-occupied accommodation required in Babergh over the next 18 years (number of households) 45 Figure 5-5 Size of new owner-occupied accommodation required in Mid Suffolk over the next 18 years (number of households) 45 Table 5-7 Blended market unit requirements 45 Figure 5-6 Babergh affordable housing mix, and all other Affordable housing variables (number of units) 46 Figure 5-7 Mid Suffolk affordable housing mix, and all other Affordable housing variables (number of units) 46 Table 5-8 Total number of affordable units per annum by tenure 46 Table 5-9 Blended affordable housing requirements 47 Table 5-10 Affordable housing tenure mix 48 Table 5-11 Elderly accommodation scenario 49 Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Table 6-1 Market value appraisal inputs 51 Table 6-2 Elderly accommodation value inputs 52 Table 6-3 Non-residential rents and yields appraisal inputs 52 Table 6-4 Appraisal build cost inputs & assumptions 54 Figure 6-1 Lead-in and build rates 59 Table 6-5 Appraisal timing assumptions 60 Table 6-6 Convenience retail scenarios timescales 61 Table 6-7 No. of planned greenfield and brownfield sites 62 Table 6-8 Agricultural land sold prices – Suffolk 62 Table 6-9 Agricultural land asking prices 63 Table 6-10 Employment land - brownfield achieved prices 64 Table 6-11 Employment land quoting prices 65 Table 6-12 Suffolk development land values 65 Table 6-13 Suffolk development land quoting prices 66 Table 6-14 Greenfield land value development appraisal inputs – S106 @ £1,500 per dwelling 67 Table 6-15 Greenfield land value development appraisal inputs – S106 @ £10,100 per dwelling ..... 68 Table 6-16 Brownfield land value development appraisal inputs – all scenarios 68 Table 7-1 Greenfield generic viability testing results – S106 @ £1,500 per dwelling 72 Table 7-2 Greenfield generic viability testing results – S106 @ £10,100 per dwelling 72 Table 7-3 Greenfield larger sites viability testing results – S106 @ £1,500 per dwelling 73 Table 7-4 Greenfield larger sites viability testing results – S106 @ £10,100 per dwelling 73 Table 7-5 Brownfield generic viability testing results – S106 @ £1,500 per dwelling 73 Table 7-6 Brownfield generic viability testing results – S106 @ £10,100 per dwelling 74 Table 7-7 Brownfield flats viability testing results – S106 @ £1,500 per dwelling 74 Table 7-8 Smaller sites viability testing results – S106 @ £1,500 per dwelling 75 Table 7-9 Smaller sites viability testing results – S106 @ £10,100 per dwelling 75 Table 7-10 Smaller sites viability testing results – S106 @ £1,500 per dwelling 76 Table 7-11 Smaller sites viability testing results – S106 @ £10,100 per dwelling 76 Table 7-12 Elderly accommodation - viability testing results 76 Table 7-13 Greenfield - summary of surplus viability for CIL 77 Table 7-14 Brownfield - summary of surplus viability for CIL with 15% affordable housing 78 Table 7-15 Greenfield housing GDV tipping point with 35% affordable housing and CIL at £200 psm 79 Table 7-16 Brownfield housing GDV tipping point with 15% affordable housing and CIL at £45 psm 80 Table 7-17 Change in market values example 80 Table 8-1 Proposed new CIL rates 82 Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Appendices Appendix 1 – Policy Review Appendix 2 – Property Market Report Appendix 3 – BCIS Build Costs Appendix 4 – Residential Appraisals for S106 @ £1,500 per dwelling Appendix 5 – Residential Appraisals for S106 @ £10,100 per dwelling Appendix 6 – Rural Exception Sites Appraisals Appendix 7 – Elderly Accommodation Appraisals Appendix 8 – Retail Appraisals Appendix 9 – Employment Appraisals Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 Executive Summary ES 1 The main objective in this viability assessment is to provide Babergh District Council & Mid Suffolk District Council, (the ‘Districts’) with an evidence base to assist in identifying the viability impacts of emerging planning policies in its Joint Local Plan. This report builds on our previous Plan Viability & CIL Review report dated, June 2019 for Regulation 18 Stage. ES 2 The viability testing has been an evidenced based approach and followed best practice set out in the revised National Planning Policy Framework (NPPF), CIL Regulations and revised Planning Practice Guidance (PPG). Approach to Study ES 3 As best practice recommends that it is not appropriate to test every site planned, a typology approach has been undertaken. These typologies are based on the planned development identified in the Councils emerging Joint Local Plan, including greenfield and brownfield development and residential and commercial uses. Development appraisals have been undertaken to test the viability of proposed allocations against the Councils proposed policies. A bespoke viability model has been created in Microsoft Excel. The model calculates the Residual Land Value (RLV) for each scenario with results displayed in a series of tables. Figure ES-1 illustrates the principles of a RLV appraisal. Figure ES-1 Elements required for a viability assessment Source: Harman Report1 ES 4 In order to advise on the ability of the proposed uses/scheme to support affordable housing and, other policy obligations. The residual land values in the appraisals have been assessed against 1 Harman report, 2012, Viability Testing Local Plans, Advice for planning practitioners, page 30 Babergh & Mid Suffolk District Councils Plan Viability & CIL Review Study Regulation 19 Stage October 2020 suitable benchmark land value. The benchmark land values have been calculated on the Existing Use Value plus Premium method as recommended in the PPG. How to interpret the viability appraisals ES 5 The results of the appraisals are interpreted as follows: • If the ‘balance’ is positive (i.e. the residual land values equals or exceeds the benchmark land value), then the policy is viable. We describe this as being ‘viable for plan making purposes herein’. • If the ‘balance’ is negative, then the policy is not viable for plan making purposes and the affordable housing targets should be reviewed. ES 6 This is illustrated in Table ES-1 of a hypothetical appraisal. In this case the RLV at £1.528 million is £128,000 higher than the assumed threshold land value of £1.4 million meaning the balance is positive.
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