assessing development viability in difficult times: the local authority perspective
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Assessing Development Viability In Difficult Times: The Local Authority Perspective. Anthony Hodge & Victoria Carr Cheshire West and Chester Council. Demand/Supply. Forecast population increase by 11% (ONS) - PowerPoint PPT PresentationTRANSCRIPT
Assessing Development Viability In Difficult Times: The Local Authority
Perspective
Anthony Hodge & Victoria CarrCheshire West and Chester Council
Demand/Supply
• Forecast population increase by 11% (ONS)• SHMA concluded an annual shortfall of circa 2,700
market dwellings and 1,300 affordable dwellings pa • 2010/11 - 654 new homes completed, of which 306
were affordable homes which benefited from public sector subsidy. As a consequence, in 2010/11 only 348 market homes were completed
Affordability
December 2006
December 2007
December 2008
December 2009
December 2010
December 2011
1 bed Prices (Flat) £94,203 £102,967 £92,789 £94,672 £82,566 £87,722
2 bed Prices (Flat) £139,378 £139,760 £137,001 £128,731 £134,764 £124,578
2 bed Prices (House) £136,967 £141,759 £137,785 £136,243 £140,121 £132,343
3 bed Prices (House) £174,504 £177,937 £180,126 £177,379 £180,307 £170,809
4 bed Prices (House) £301,609 £322,208 £306,409 £311,571 £304,973 £302,033
Source: Hometrack
Average Property Prices in Cheshire West and Chester
Affordability
Median Income
1-bed Flat 2-bed Flat 2-bed House 3-bed House 4-bed House0
50000
100000
150000
200000
250000
300000
350000
0
2
4
6
8
10
12
14
1.00
3.35
4.75 5.05
6.52
11.52Average price
Ratio of Price to Median Income
Pro
perty
Val
ue
Inco
me
Mul
tiplie
r
A Developers View
• Affordable housing requirements too onerous• Viability assessments – local authority in the dark• Commercially sensitive information• Timescale• Members
Fixing the Process
• Appointed in-house resource (MRICS)• Introduction of service to key teams • Lead on viability negotiations and assessments• Provides direct advice to Development Management• Development of Viability Checklist, Values and
Costings Database, Use of viability software• One point of contact, one consistent approach
Handling AssessmentsHow can we ensure that we are in a strong negotiating
position?• Build a strong evidence base of local costs and
values• Talk to the market• Keep track of approved developments (did they
achieve the values anticipated?)• Strong Market Knowledge = Strong Negotiating
Position
Handling Assessments
• Internal note - initial guidance to Development Management
• Seek specialist advice where necessary
Site Issues
Long-term developments & Marginal Sites• Use of software to ‘build in’ uplift• Use of overage clauses in sc106-some reluctance
Some ExamplesRural Housing Sites, Cheshire (affordable housing)• Costs for historic building-sourced from generic
reportCommercial Site, Northwich (sc106)• Evidence provided in relation to abnormal costs• Checked with site-owner at time of purchase, some
of these were known abnormals at time of site purchase
• Worked with Agents to negotiate value inputs• All third party cost quotes provided
……..but is it just about viability
• 6,000 units with planning approval• Schemes for 3,000 units coming into the system