Viability Toolkit for Neighbourhood Planning

Author Locality

This toolkit from Locality helps neighbourhood planning groups who are preparing Neighbourhood Plans and Neighbourhood Development Orders (NDOs) engage with viability issues.

Date added 6 October 2021
Last updated 6 October 2021

The toolkit by Locality helps neighbourhood planning groups who are preparing Neighbourhood Plans and Neighbourhood Development Orders (NDOs) engage with viability issues. It covers how viability testing can be broken down into four keys stages.

Stage 1. Is Viability testing required?

The first stage explores whether viability evidence may or may not be required and helps groups establish if existing evidence is already sufficient to support their proposals. It is very likely that your Local Planning Authority will already hold some form of viability evidence that has informed plan making and/or Community Infrastructure Levy.

As such, it is advisable to speak with your Local Planning Authority before producing your own viability evidence to gauge what is already available and to understand how applicable the existing evidence is to your area/site(s). Equally, some Local Planning Authorities may be willing to assist you on ma8ers of viability under their ’duty to support’ role for neighbourhood planning.

Stage 2. Evidence Collection

The second stage describes the data needed to test for viability, which may include researching the local property market and investigating construction and infrastructure costs. It is good practice to speak with your local authority, local agents and developers to see if they can share any data with you. Developers and agents in particular may also be forthcoming if they are promoting a site for inclusion in your plan or the Local Plan. If you having to source your own data, the toolkit provides some helpful suggestions depending on type of data you are looking to evidence. For example, if you are interested in determining residential values for new-build property in the neighbourhood, it suggests looking at the websites of estate agent or large house builder websites. If you are looking for information about the second-hand market, sites like Rightmove and Zoopla can help to build up an accurate picture of values. Price paid data for residential property is also available for free on the Land Registry website.

Stage 3. Consultation

The third stage outlines the importance of consulting with landowners, developers, the Local Authority and other key stakeholders. It is the responsibility of plan makers in collaboration with these stakeholders, to create realistic, deliverable policies through an iterative process which is informed by engagement with the wider community, as well as infrastructure and affordable housing providers.

Stage 4. Modelling and Results

The fourth, and final stage, sets out the mechanics of viability testing and how to use the results. It goes into specific detail about the various valuation methods to test viability in plan making. The essential balance in viability testing is whether the land value is sufficient to induce a landowner to release their land for development. The point at which a landowner will likely be induced to sell their land is named the Benchmark Land Value (BLV).

Once all income and cost data is compiled and key assumptions, such as the developers profit and Benchmark Land Value are broadly agreed (or tested via consultation), viability modelling can then take place. The models available for running the testing can vary and are set up to provide a Residual Land Value. The sites or typology of sites you test will be based on actual sites coming forward or on a typology of site likely to come forward.

Detailed appraisal results for all the sites tested should be provided in an appendix. The results can then be summarised in the main body using a simple table that sets out the using a red, amber and green system. Viability assessments should be capable of showing whether or not the scale of obligations and/or policy burdens would make the plan undeliverable.

Furthermore, the study should show that the cumulative impact of the policies will not put implementation of the Local Plan and strategic policies at serious risk and will in fact help to facilitate development.