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APPENDIX 1

Contents
1.0
Introduction
2.0
Policy and Guidelines
3.0
Implementation / Development Programme
4.0
Conclusion
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1.0
Introduction
1.1
Planning Permission is being sought for a hybrid planning application for the Phase 1 development of the Norwich Road site, North Walsham. This consists of a full planning application for a residential development of 176 dwellings and 50 space
Station Car Park with outline application for the commercial elements including access as part of the full planning application but with all other matters reserved.
1.2
It is hereby stated that based upon the current planning policy obligations, in the current climate and based upon current revenues and costs the development of this land is economically unviable and as such is prevented from coming forward for development for the foreseeable future. Therefore as outlined in the report a relaxation is sought with regard to the provision of affordable housing, Code for Sustainable
Homes, Renewable Energy and S106 financial requirements.
1.3
The land forms part of a larger area that benefits from an allocation for residential led mixed use development under Policy NW01 of the North Norfolk Local Development
Framework (LDF) Site Allocations Document, formally adopted by the Council on 23 rd
February 2011.
1.4
Policy HO2 of the Councils Adopted Core Strategy, Development Control Policies, requires that on all schemes of 10 or more dwellings or sites of more than 0.33 hectares in Principal and Secondary Settlements, not less than 45% of the total number of dwellings proposed are to be Affordable dwellings.
1.5
Policy EN6 of the Councils Adopted Core Strategy, Development Control Policies, outlines that all new dwellings by 2013 will be required to achieve at least a four star rating. Furthermore, development proposals over 100 dwellings will be required to include on-site renewable energy technology to provide for at least 30% of predicted total energy usage. By 2013 this requirement will rise to at least 20%.
1.6
On 15 th
July 2013 Cabinet approved and recommended to Full Council the proposed
Housing Incentives Scheme to encourage higher levels of house building in the District
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and help address the identified shortfall in new house completions. This was approved by Full Council on 24 th
July 2013. The schemes proposes:
1.6.1
Lowering the proportion of AH to a target figure of 20% - but still where viable;
1.6.2
Temporarily suspending or relaxing the requirement for Code 3 CfSH if development is delivered quickly.
1.6.3
Removal of on-site energy generation if development is delivered quickly.
1.7
The requirement of policies HO2 and EN6 together with the requirement for S106 financial obligations currently renders the development of this land economically unviable. The application submitted therefore proposes zero affordable housing, no
Code or Renewables obligations and no S106 financial obligations. It is proposed however that there will still be S106 agreement to cover the provision and adoption of the on-site Public Open Space and the provision of a Car Park.
1.8
There are significant benefits that would result from the development coming forward as outlined later in this report.
1.9
The report is provided to assess the viability of the proposed application to which it accompanies, and its financial ability to contribute the Section 106 payments,
Affordable Housing and other Policy provisions sought by the Local Authority. The report uses inputs from Hopkins Homes cost database and development appraisal model, and having regard to expected revenues and costs. This report has been prepared to provide clarity to the viability assumptions which will form the basis of determining policy compliance and Section 106 obligations to both Hopkins Homes and the Local Planning Authority.
1.10
The report provides a financial assessment of the project based upon the current planning application and proposed S106 obligations. A financial assessment of the project based upon full policy compliance is not included as it is clear from the former that any further cost implications renders the scheme unviable.
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2.0
Policy and Guidelines
2.1
The Growth and Infrastructure Act inserts a new Section 106BA, BB and BC into the
1990 Town and Country Planning Act. These sections introduce a new application and appeal procedure for the review of planning obligations on planning permissions which relate to the provision of affordable housing. Under this provision, if the affordable housing requirement means that the development is not economically viable, Local
Planning Authorities would be required to deal with the application in accordance with the Act to enable the development to become economically viable.
2.2
The NPPF seeks to ensure that plans for development “should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable”.
2.3
Paragraphs 204 and 205 of the NPPF state: “Planning obligations should only be sought where they meet all of the following tests:
2.3.1
necessary to make the development acceptable in planning terms;
2.3.2
directly related to the development; and
2.3.3
fairly and reasonably related in scale and kind to the development.
Where obligations are being sought or revised, local planning authorities should take account of changes in market conditions over time and, wherever appropriate, be sufficiently flexible to prevent planned development being stalled.”
2.4
The “Planning for Growth – Ministerial Statement” of 31 st
March 2011 invited Local
Authorities to “ensure that they do not impose unnecessary burdens on development”.
It states: “To further ensure that development can go ahead, all local authorities should reconsider, at developers' request, existing section 106 agreements that currently render schemes unviable, and where possible modify those obligations to allow development to proceed; provided this continues to ensure that the development remains acceptable
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in planning terms” the statement continues … “Understanding the impact of planning obligations on the viability of development will be an important consideration when obligations are reviewed, particularly where they were reached in different economic circumstances. An appropriate review of obligations, which takes account of local planning priorities, could allow development to proceed on stalled schemes.”
2.5
Housing and Growth (September 2012) - On 6 September 2012 the Secretary of State for Communities and Local Government made a further announcement confirming that the No.1 priority for Government is to get the economy growing. He stated that the need for new homes is acute, but supply remains constrained, noting that housing schemes in areas of high demand could provide a real benefit to the local community once delivered.
2.6
Where Regulation 122 of the Community Infrastructure Levy (CIL) Regulations was not the legal basis for the planning decision and the Government intends to plan for growth and remove policy burdens to unlock stalled development sites, these are circumstances which warrant a review.
2.7
In general there, there is significant weight and supporting legislation from the DCLG that not only seeks to deliver new housing but also ensures that it is viable for the developer to do so.
3.0
Implementation/Development Programme
3.1
The following programme has been assumed within the appraisal;
3.1.1
Submission of planning application – August 2013
3.1.2
Issue of Planning Permission – November 2013
3.1.3
Commencement of Infrastructure works – June 2014
3.1.4
Commencement of housing build – Aug 2014
3.1.5
First occupation – May 2015
3.2
Appraisal based upon the planning application;
3.2.1
Private sales rate per annum – 30 per annum
3.2.2
Overall build period– approximately 73 months
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3.3
The phasing and development period is critical to assessing revenue streams and interest payments. The costs and revenues have been spread through the development period and hence interest charges have been calculated based upon the timescales given in the implementation program.
3.4
We consider the development period given to be a realistic program given the size and nature of the proposed development and anticipated market conditions.
4.0
Conclusion & Summary
4.1
It is felt that the information and figures adopted within the report are comfortably in line with the costs and revenues we would expect for a development of this nature.
4.2
Property developments are carried out for profit, and the normal measure of the viability or otherwise of any development, is the profit margin produced expressed as either a percentage of the total development cost, gross development value or other measure.
4.3
The financial viability based upon non-compliance with HO2, EN6 and reduction in
S106 obligations produces a significantly low profit level that is considerably below the market norm. It is therefore clear that the inclusion of any of the above mentioned obligations would severely reduce this further and as such make matters unacceptable and result in the site not being brought forward for development for the foreseeable future.
4.4
The proposal and submission should be considered against the recently adopted
Councils Housing Incentives Scheme.
4.5
The land value used provides for a significant write-down in value of the original purchase price of the HL Foods site and the appraisal does not include any holding cost interest for the land acquired in 2006.
4.6
Whilst the projected net profit would not normally be sufficient to justify the risk to commence the development, in this case, due to the considerations as listed below
Hopkins Homes would look to progress with the development in accordance with the
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programme outlined, thus hopefully delivering the first completed dwellings during
2015.
4.6.1
Maintaining turnover and retaining financial stability of the Company -
It is imperative that the Company remains active both in terms of financial accountability and Company profile perspectives to ensure the soundness of the Company is retained.
4.6.2
Retention and creation of jobs within Hopkins Homes - The development of the site would result in the creation and retention of a significant number of jobs, with a large number of these being based locally. Hopkins Homes would directly employ a Site Manager,
Assistant Site Manager, Forklift Driver and Labourer together with a
Sales Executive (Possibly full and part-time).
4.6.3
Retention and creation of other jobs – With regard to subcontractors and suppliers, it is likely that this development would generate a notable number of jobs as a result of the building process. With regard to the subcontractors, it is anticipated that the majority of the companies that would be used would be sourced locally within the region. With regard to the material suppliers, again it is envisaged that a significant number of local suppliers that would benefit from the development of this site. It is important to recognise the employment opportunities generated by the development itself in the construction and manufacturing sectors. During the construction phase of the development it is estimated that for every new home 1.5 jobs are directly created, plus up to four times that many people indirectly in the wider supply chain (Professor M Ball, The Labour Needs of Extra
Housing Output (HBF and Construction Skills) March 2005).
4.7
In addition there are further significant benefits that would arise from the development of this site, namely:
4.7.1
Local economy – Financial and social benefits that the additional 176 households and other uses would bring with expenditure to the local economy, facilities and services in North Walsham and North Norfolk.
4.7.2
New Homes Bonus of up to approximately £1,090,914 (April 2012).
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4.8
The report therefore duly indicates that based upon „policy compliance‟ with regard to
HO2, EN6 and other Planning Obligations, the development in unviable to commence.
4.9
The development will however still deliver:
4.9.1
The development of an allocated housing site within the District.
4.9.2
Despite there being no ‘Affordable Housing’, there are a significant amount of smaller, hence more ‘affordable’ dwellings included within the proposal i.e. 12 No. 1 beds, 33 No. 2beds, 50
No. 3 beds (below 900 sqft) – total 54% to total dwellings.
further employment land).
4.10
It is therefore requested that the Local Planning Authority accept the viabilities as submitted and duly approve the application as per the submission basis.
4.9.3
A new Station Car Park
4.9.4
A significant area of on-site open space and play area.
4.9.5
Employment opportunities.
4.9.6
The delivery of 176 high quality new homes to assist with the
LPA’s housing delivery programme Given this is phase 1 of a larger allocation, it would hopefully provide the catalyst for the delivery of the remainder of the allocation (250 plus dwellings and
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