Planning matters

The two previous blogs covered changes to viability assessments proposed in the recent draft National Planning Policy Framework and accompanying guidance [i], and how these changes present a shift towards greater levels of prescription, in a bid to increase certainty over developer contributions.

Whilst the second blog in this series highlighted that we are still some way away from a zonal-approach to planning, recent events show signs that the Government’s subtle zoning moves are being taken seriously, with many in the industry paying close attention to a recent case in the High Court, already known simply as ‘Parkhurst’.

In April, a High Court judge ruled in favour of the London Borough of Islington over a long and drawn out dispute between the council and developer Parkhurst Road Ltd., over the levels of affordable housing which would be provided on a new-build development on the site of a former territorial army base [ii].

The appellant’s claim involved a challenge to an Inspector's refusal of an appeal against the decision the council took to refuse planning permission for a residential scheme, they claimed could only viably support 10% of affordable housing on-site.

The appellant attempted to justify this based on the purchase price of the land and comparable transactions on other schemes in the area, claiming that delivering any more affordable housing would make the scheme unviable. However, using the EUV + method, the council argued that the benchmark land value was much lower than the figure reached by the developer.

Whilst finding some fault with the council’s calculations, the Judge ruled the Inspector had validly rejected the evidence of the Claimant, as the appellant had failed to adjust the market evidence in order to ensure that it took account of local policy requirements.

In a post-script to the ruling, the judge advised that the guidance on viability assessments by the Royal Institution of Chartered Surveyors should be revised “in order to address any misunderstandings about market valuation concepts and techniques, the ‘circularity’ issue and any other problems encountered in practice over the last six years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making”.

This has of course caused a stir in the development industry, especially from those with sites already in the pipeline. But the case is being viewed by many as a landmark decision, potentially becoming an important piece of case law on land valuation, viability and the funding of affordable housing.

But there is a very clear down-side already in evidence. There is the risk that landowners will not bring forward sites, in the hope that policy will one day change in their favour. Of course, local authorities could use compulsory purchase orders, but interference in private property rights is politically unpopular and rare, especially when the money used could arguably better subsidise social and affordable housing.

With cross-party consensus on the issue of land value, viability and developer contributions, and a suitable return for landowners factored into any new guidance on all three, the chance of this hiatus happening could be curbed – especially if there were to be clear transitional arrangements and no sudden change in approach. The government will still need to think hard about how to manage the transition period, as sites will not be built out if there is no feasible return for the developer and landowner.

Whilst it seems likely (and necessary to some extent) that viability assessments will continue to be deployed at the application stage because almost no development project is fully policy-compliant, having a defined approach which is publicly accessible will hopefully reduce appeals, speed up the planning process and increase transparency.

Increasing certainty has been a long-term aim for planning professionals, and repeatedly called for by developers and the public. Achieving this through prescriptive zoning-type measures seems like a dramatic step; however, when considering that development pressure and the scarcity of land are only likely to increase, it seems likely that the Government will continue to explore routes which have proven successful elsewhere.