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Published on: Development

When Viability Appraisals Are Simply Not Enough – Barter!

Sometimes, the agreement of planning contributions through viability is not technical. Although we are happy to engage in deep discussion on development inputs, planning policy, national policy and interpretation of case law, sometimes agreement comes down to good old-fashioned barter.

A good example of this is a recent viability study we undertook on behalf of long-term clients Westleigh Developments. They were proposing the re-development of an existing industrial unit on the outskirts of Lutterworth, Leicestershire to provide a 57 unit residential scheme on a 3 acre site.

Local policy required that a minimum of 30% (17) of the new houses should be for affordable, but two key issues affected the viability of the scheme namely:

  • The requirement of the local council for alternative access arrangements to those originally planned, which added significant infrastructure costs to the scheme
  • The removal of Vacant Building Credit following the West Berkshire case.

As usual, we prepared a cogent and justifiable Viability Statement which concluded that, due to these two key issues, the scheme could not meet the required level of affordable housing.

Unusually, we could not reach agreement with either the council or their professional representatives on the viability of the scheme. The disagreement revolved around the interpretation of the policy environment in which the agreement to purchase the land was made and how that impacted on viability.

Very unusually, we reached an impasse in our discussions. The Council simply refused to accept our fully supported and (in our view) reasonable assumptions to arrive at the viability conclusion.

Our client therefore had a choice of either appealing the imminent refusal or engaging with the council to see if there was any way of reaching a mutually acceptable agreement.

After much detailed discussion between the applicant and the council, the affordable provision was eventually agreed. This required the provision of five starter homes to be sold at 80% of open market value with a further provision that all of the starter homes had to be provided before 60% of the remaining market dwellings were occupied. (see Beware Conditional Section 106 Agreements)

The significant reduction in the number of affordable units justifies our assertion that the scheme was not viable. It no doubt informed the basis of much of the discussion between the parties and assisted in reaching the eventual agreement.

It is doubtful that we would have reached the same agreement by negotiating with the council’s representative. Our positions were simply too far apart for agreement to be reached.

But as both the applicant and council were keen to see this development come forward, they were able to reach a mutually satisfactory settlement.

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