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Back to basics: a reminder on viability appeals

By Roy Pinnock

We have previously noted the outcome of the viability appeals beginning to trickle through under the new section 106BA/BC provisions as part of the Growth and Infrastructure Act 2013 regime for speeding up planning decisions and delivery. In a recent Inspectorate decision, at Manor Road, South Norwood, the inspector dealing with the section 106BC appeal refused to accept that a commuted sum for affordable housing should be reduced. It is a reminder to get the basics right in an appeal on viability grounds and where the burden of proof lies.

The scheme was intended to be 100 per cent affordable and it was agreed with the LPA that 50 per cent had become the viable level of on-site provision and, furthermore, that it would be not be feasible (for non-financial reasons) to deliver the scheme as a 50/50 affordable/private sale development. The commuted sum in the section 106 agreement therefore kicked in and the appeal was made in relation to the council’s refusal to accept that the amount could not be afforded.

In addition to disputed construction costs, a key issue was the benchmark land value to be used as a development cost. Like the Holsworthy Showground appeal, the Manor Road decision confirms that price paid will not be accepted as a development cost where it represents an excessive bid against existing use value (EUV) (i.e. where it includes hope value associated with future redevelopment). The developer sought a 25 per cent uplift in land value above EUV but this threshold was not accepted and the council’s 20 per cent value was adopted. As a result, the appraisals confirmed that a commuted sum was still achievable…

Click on the link below to read the rest of the Dentons briefing.

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