30/06/2016
PAS – the new approach
CIL (and viability)- The Future?
RTPI NW –
Gilian Macinnes
Twitter:@gilianPAS
Date: July 2016
www.pas.gov.uk
Where are we?
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CIL progress
As of early April there are:
121 Charging Authorities
Just under 100 authorities working towards
adopting a CIL.
Impact
• What has been the impact of CIL where
introduced?
Raised over £100,000,000 nationally in
14/15
• Is it delivering infrastructure?
Funding between 5%-20% of infrastructure
• How is it affecting development?
New homes up 25% over the last year
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CIL and Viability - Delivery
Source: DCLG
What does this mean?
Source: ‘Financial Viability in Planning’, RICS
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The Residual Valuation based approach
Why does it matter?
Step 1:
Gross Development Value
(The combined value of the complete development)
LESS
Cost of creating the asset, including a profit
margin
(Construction + fees + finance charges + Developer’s Profit,
CIL, s106, CfSH etc.)
=
RESIDUAL VALUE
Step 2:
• evidence has been provided that shows the proposed rate (or
rates) would not threaten delivery of the relevant Plan as a
whole.
• Charging authorities need to demonstrate that their proposed
levy rate or rates are informed by ‘appropriate available’
evidence and consistent with that evidence across their area
as a whole …
• The authority will need to be able to show why they consider
that the proposed levy rate or rates set an appropriate
balance between the need to fund infrastructure and the
potential implications for the economic viability of
development across their area.
Residual Value v Existing Use Value
Virtuous Circle of loveliness
The big question
• For a site to be viable, by how much must the
Residual Value exceed the EUV?
• The ‘cushion’?
• What does ‘competitive return’ mean?
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charging authorities should be able to show and explain how their
proposed levy rate (or rates) will contribute towards the
implementation of their relevant plan and support development
across their area.
(ID: 25-009-20140612)
NPPF 174
“Local planning authorities…should assess the likely
cumulative impacts on development in their area of
all existing and proposed local standards,
supplementary planning documents and policies that
support the development plan, when added to
nationally required standards. In order to be
appropriate, the cumulative impact of these standards
and policies should not put implementation of the plan
at serious risk, and should facilitate development
throughout the economic cycle. Evidence supporting
the assessment should be proportionate, using only
appropriate available evidence.”
You must understand the model, be able to
interrogate the assumptions, be able to follow
the calculation and challenge the ‘test'. The
‘cushion’ is central to developer behaviour. The
Residual Method is very sensitive to inputs and
assumptions.
PPG: Land Value
Central to the consideration of viability is the
assessment of land or site value. Land value should:
• reflect emerging policy requirements and planning
obligations and, where applicable, any CIL charge;
• provide a competitive return to willing developers
and land owners; and
• be informed by comparable, market-based evidence
wherever possible. Where transacted bids are
significantly above the market norm, they should
not be used as part of this exercise.
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Read the Guidance!
Viability assessment - Proxy
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How does this play out? - the real
world view
Is it too easy to manipulate?
Every developer/applicant is different
-different finance - opportunity cost
-different purchasing
Focus - It is all about delivery
• Know your viability
• Not just the sums
• Can you deliver plan led growth?
Source: ‘Financial Viability in Planning’, RICS
What happened to all the other
uses?
What is limiting growth & impacting
on viability and therefore CIL?
• What pays CIL – housing?
• Can other uses pay nothing?
• Monopoly of House builders
• Monopoly of Land owners - unrealistic
expectations
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CIL Review Panel
Busy Summer/Autumn
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Housing and Planning Act
Neighbourhood planning and infrastructure Bill
NPPF changes
Local Plan Panel report
CIL panel report
What next .. For me
[email protected]
0771 4394046
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