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PPG Viability: update May 9 2019

Key industry takeaways

Government has, this afternoon, updated its national Planning Practice Guidance for Viability (‘PPGV’). So, what are the key takeaways for the industry?

To my mind, in order of importance:

  • A tightening of the definition of EUV (para. 015) to remove from this the ability to include within the benchmark ‘the right to implement any development for which there are policy compliant extant planning consents, including realistic deemed consents’, which taken as read would now be expected to represent alternative use values (AUVs). This is a clarification, but will firmly suppress EUVs to reflect the land solely ‘in its existing use’ as it stands, by negating the ability for extant permissions to benefit from an additional ‘premium’ (via their reclassification as AUVs).
  • Removal of the previously stated requirement (para. 017) for the application of AUVs to be restricted solely to uses with an existing implementable permission. This restriction had become a particular issue in agreeing benchmark land values (BLVs) during viability assessment of specific sites at the application stage. Acceptance of AUVs, without necessitating developers seeking spurious permissions, is pragmatic and reflective of the value benchmarking considerations both landowners and developers will make in arriving at preferred option(s) for site development. Safeguards remain with the decision taker to limit misuse, but their interpretation and use should be measured to avoid overly onerous demands on developers in providing evidence to justify the validity of an AUV benchmark.
  • The necessity for meaningful engagement between plan-makers and the industry is strengthened (para. 004).  Plan-makers are now encouraged to revise proposed policy requirements, in an iterative process, should evidence gleaned via engagement and the obtaining of market evidence confirm this as necessary.  This supports a reinforcement of Government’s requirement that plan-making should result in ‘realistic and deliverable’ plan policies that facilitate the scale and types of development sought over the plan period (and hence reduce the need for site-specific viability at the application stage). Put plainly, poor quality viability evidence with weak industry engagement in plan-making will not produce realistic and deliverable plans. Plan-makers and Inspectors must place weight on this requirement.
  • A new paragraph 029 provides guidance on how viability for education provision should be addressed. Specifically, it confirms that the starting assumption will be that development will provide funding for construction and land for new schools required onsite, commensurate with the level of education need generated by the development. It will be important for LPAs to determine the level of prioritisation to award to education provision (and contributions) alongside competing calls for affordable housing, CIL and other planning obligations, with PPGV adding a reminder that the cumulative policy costs should not render development unviable.
  • Clarification (paras. 006-009) that to qualify as ‘policy compliant’ (and avoid viability assessment), development must fully comply with up to date plan policies, plus a decision maker (i.e. the Local Planning Authority or Inspector) can also give weight to emerging policies in determining whether development is policy compliant or otherwise.

There are a series of more minor ‘tweaks’ and additions. For example, expansion of Government’s view on the use of market evidence in setting BLVs (paras. 14 and 16), and links to drafted formats for local authorities in monitoring and report on developer contributions (paras. 21; 23-26).

In summary, this is a minor set of adjustments rather than another fundamental overhaul. Importantly, there are useful practical clarifications and amendments, which demonstrate Government has its finger on the pulse and is listening to experience of application ‘in the field’.

However, PPGV remains a work in progress. It is expected that a further review will occur early in 2020. This will be important, as experience in ‘from the field’ suggests Government has more to do to ensure guidance is applied effectively, efficiently and consistently in both plan-making and decision-taking across all sectors to ensure supply of land and development is maintained and delivery accelerated.

For more information on changes to PPGV and to explore the implications for your developments please contact Matt Spilsbury MRICS MRTPI, Head of Development Viability at Turley.

9 May 2019