The viabilty of viability models

A very good programme on Radio Four this week on the use of viability models to reduce affordable housing provision.  Well, worth a listen – http://www.bbc.co.uk/programmes/b05vzysp
Covers a lot of the issues.

A group at University of Reading and myself have been writing lots about the use of development viability assessment in the planning system. It’s a fairly hot topic raising lots of issues concerning technical points about development appraisal techniques, very contestable underlying assumptions in the models, transparency and accountability in the planning system, how the gains from granting planning permissions are split between the community, developers and land owners. I’m sure they’re many others. In the absence of strong government guidance, it’s been interesting to watch various organisations and individuals within organisations have tried and are trying to manipulate the process in their own interests. Developers and their advisers seem to have been pretty successful in this respect. Recent guidance from Islington BC is probably the best that I’ve come across.

An interesting, but fairly peripheral issue, has been how difficult it is for anyone to claim to be an expert in development appraisal. Given that I’m an academic and not ‘in the market’, it was pretty clear to me right away that I didn’t have the specialist knowledge of development costs and values needed to undertake development appraisals. Who does? It seems to me that actually it’s pretty rare that a single individual does. Brokers/agents tend to have the detailed knowledge of current selling prices and rental levels in a local market. Quantity surveyors are specialists in construction costs, professional fees, development timescales etc. However, if a site is contaminated, needs flood protection, major infrastructure works, etc. then even more specialists may be involved. Planning consultants tend to be best placed to advise on levels of planning obligations. There are also specialists in the values of affordable housing. All of the above may have to be forecasted! Establishing the normal profit or return for a project seems quite a murky area. So, what does a specialist development appraiser do? Well, like a specialist investment appraiser (who may need to consult brokers, forecasters, building surveyors etc.), development appraisers pull all this information together. Development appraisers’ specialist expertise seems to be in aggregating and processing information from other specialists.

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