17/05/2018
How a court ruling is likely to steer debate on scheme viability
by Bryan Johnston ,
Forthcoming revised guidance on development viability will need to steer a careful course between market values and planning policy demands, experts predict, in the wake of a key court ruling.
Disputed territory: the former Territorial Army centre site in Islington that was the subject of the High Court judgement
In an unusual departure, a High Court judge has urged professional bodies and ministers to rethink existing guidance on development viability in a bid to clear up "misunderstandings" over market valuation concepts and techniques. The aim, said Mr Justice Holgate, should be to avoid protracted land-value disputes, streamline decision-making and keep the judiciary out of arguments over "detailed valuation material".
The plea appeared in a lengthy "postscript" to Holgate’s ruling last month on a controversial appeal decision last June to refuse developer Parkhurst Road Ltd’s plans for 96 homes on a former Territorial Army centre site in north London. The judge backed inspector Michael Boniface’s conclusion (DCS Number 200-006-526) that the developer had not justified an affordable housing component of only ten per cent as the "maximum reasonable level", against a London-wide benchmark of 35 per cent and a borough target of 50 per cent, and that the viability review mechanism in its proposed unilateral undertaking was inadequate.
The appellants had sought to justify ten per cent affordable provision on the purchase price of £13.25 million and comparable transactions on other schemes in the area, arguing that a higher level would make their scheme unviable. Citing the site’s established use value (EUV), plus a premium, to reflect the developer’s profit aspirations, the council argued that the appropriate "benchmark land value" was £6.75 million and this justified 34 per cent affordable provision. The judge found it "clear" that the appeal proposal would not provide the maximum reasonable level of affordable homes sought by the council.