South East Lincolnshire Whole Plan Viability Study Final report On behalf of South East Lincolnshire Joint Strategic Planning Committee Project Ref: 27119-002 | Date: January 2017 Office Address: Waterloo House, Victoria Square, Birmingham B2 5TB T: +44 (0)121 633 2900 E: [email protected] South East Lincolnshire Plan Viability Study Document Control Sheet Project Name: South East Lincolnshire Whole Plan Viability Study Report Title: Final Report Doc Ref: 27119-002 Date: 7th January 2017 Name Position Signature Date Prepared and Shilpa Rasaiah Consultant SR 07.02.2017 reviewed by: Approved by: Michael Parkinson Partner 24/03/17 For and on behalf of Peter Brett Associates LLP Revision Description Prepared Date 1 Clarification of SUE recommendations – Chapter 6 SR 20.02.2017 Amendments to grammar, clarification of past S106 2 MP 24/03/17 contributions 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 ii C:\Users\mparkinson\Desktop\South East Lincolnshire whole plan viability - Final Report - Feb 2017.docx South East Lincolnshire Plan Viability Study Contents Executive summary ............................................................................................................. 5 1 Introduction ................................................................................................................ 8 1.1 Study scope ................................................................................................................... 8 1.2 Study approach ............................................................................................................. 9 1.3 Study caveats .............................................................................................................. 11 1.4 Report structure ........................................................................................................... 11 2 National policy content .............................................................................................12 2.1 Introduction .................................................................................................................. 12 2.2 National policy and recent consultations on affordable housing ................................. 13 2.3 National policy on infrastructure .................................................................................. 14 2.4 National housing standards ......................................................................................... 14 2.5 Further planning documents should not introduce additional cost .............................. 15 2.6 National policy on community infrastructure levy ........................................................ 15 3 The local policy and development context ..............................................................17 3.1 Introduction .................................................................................................................. 17 3.2 Population growth and future spatial distribution policy .............................................. 17 3.3 Infrastructure policy ..................................................................................................... 18 3.4 Infrastructure delivery and approach to developer contributions ................................ 19 3.5 Infrastructure and S106 target assumptions ............................................................... 19 3.6 Approach to the delivery of the strategic road infrastructure ...................................... 20 3.8 A review of past delivery of affordable housing and infrastructure ............................. 21 4 Residential viability testing ......................................................................................24 4.1 Introduction .................................................................................................................. 24 4.2 Residual land value approach to viability appraisals ................................................... 24 4.3 Viability assumptions ................................................................................................... 24 4.4 Residential viability appraisal findings ......................................................................... 33 4.5 Deliverability assessment of the sustainable urban extensions .................................. 35 4.6 Starter Homes and implications on affordable housing delivery ................................. 37 4.7 Developer funding mechanisms and Community Infrastructure Levy ......................... 37 5 Commercial viability testing .....................................................................................38 5.1 Introduction .................................................................................................................. 38 5.2 The commercial development typologies .................................................................... 38 5.3 Cost assumptions ........................................................................................................ 39 5.4 Land value for non-residential uses ............................................................................ 39 5.5 Commercial viability appraisal findings ....................................................................... 40 6 CONCLUSIONS AND RECOMMENDATIONS ...........................................................41 6.1 Introduction .................................................................................................................. 41 6.2 An iterative process ..................................................................................................... 41 iii C:\Users\mparkinson\Desktop\South East Lincolnshire whole plan viability - Final Report - Feb 2017.docx South East Lincolnshire Plan Viability Study 6.3 Policy costs stemming from the Draft Local Plan ........................................................ 41 6.4 The development context ............................................................................................ 43 6.5 A deliverable plan ........................................................................................................ 43 6.6 A developable plan ...................................................................................................... 44 6.7 Study recommendations .............................................................................................. 45 6.8 Implications of Starter Homes legislation .................................................................... 48 6.9 Possible implication of the national review of CIL ....................................................... 48 Appendices Appendix A – Developer consultations Appendix B – Residential market research and appraisals Appendix C – Commercial market research and appraisals Appendix D – Starter Homes viability assessment Appendix E - CIL charge assessment iv C:\Users\mparkinson\Desktop\South East Lincolnshire whole plan viability - Final Report - Feb 2017.docx South East Lincolnshire Plan Viability Study Executive summary Study scope 1. This report prepared by Peter Brett Associates LLP on behalf of the South East Lincolnshire Joint Strategic Planning Committee (representing Boston Borough, South Holland District and Lincolnshire County Councils) sets out the viability assessment of the South East Lincolnshire Local Plan 2011-2036, Draft for Public Consultation - January 2016 (the Draft local Plan). This report also includes the affordable housing assessment and assessment of developer contributions to support the planned growth. 2. The National Planning Policy Framework (NPPF) states that plans should be deliverable and that the sites and scale of development identified in the plan should not be subject to such a scale of obligations or policy burdens that their ability to be developed viably is threatened. Approach to viability assessment 3. A plan level residual value approach to viability was undertaken for residential and commercial development to inform the study findings. The approach takes the difference between the development values and all development costs, and compares the ‘residual land value’ with a threshold land value to determine if the development is viable. 4. The appraisal undertaken uses appropriate available evidence, which has been informed by an assessment of market evidence, viability appraisals and stakeholder consultations. Appendices B and C set out the research that has informed the viability assumptions for this study. 5. An iterative process has been adopted. Work on the viability study commenced during summer 2015 and has been prepared alongside work on the South East Lincolnshire Infrastructure Delivery Plan 2016 (the IDP). The draft viability vtudy report was consulted on by the client team alongside the Draft f Local Plan in January 2016. Further viability evidence was provided by the two local authorities during 2016 - this has