Financial viability appraisals for site-specific planning decisions in England

Abstract

In England, appraisals of the financial viability of development schemes have become an integral part of planning policy-making, initially in determining the amount of planning obligations that might be obtained via legal agreements (known as Section 106 agreements) and latterly as a basis for establishing charging schedules for the Community Infrastructure Levy. Local planning authorities set these policies on an area-wide basis but ultimately development proposals require consent on a site-by-site basis. It is at this site-specific level that issues of viability are hotly contested. This paper examines case documents, proofs of evidence and decisions from a sample of planning disputes in order to address two research issues within development viability; the veracity and extent of the knowledge base underpinning development appraisal modelling and the distribution of the development gain between the developer, landowner and community. The paper finds that development viability appraisal is being practiced within a poorly specified and misunderstood modelling framework that compromises the equitable distribution of development land value. It also finds that the use of either market value or price paid as a basis for determining the allocation of development gain to landowners within the modelling framework allows them to maximise their return at the expense of the community by introducing an element of circularity into viability appraisal.