I’m in Bern this week at a conference on planning law and property rights presenting a paper that’s evaluating the policy (I use the word very loosely) of using viability calculations as a tool for setting planning obligations. It’s focused my mind on what a chaotic process making planning policies can be.
The purpose of the policy of applying viability calculations was never set out. Its applications in practice imply that the purpose has been to provide a rational basis for testing whether local authority planning policies on planning obligations (affordable housing etc.) can be implemented by market participants. There’s a number of major problems.
The calculations are prone to substantial intrinsic uncertainty in a large number of the model inputs. Whilst calculations might provide an impression of scientific precision, this is spurious. The key inputs into development viability appraisals are saturated with uncertainty. The result is a large degree of uncertainty in the outputs – the potential of a site to support affordable housing among other planning gains. Planning obligation calculations based on such outputs are, to some (also uncertain) extent, capricious.
This unavoidable viability model input uncertainty produces a contest over the calculations and, in turn, facilitates opportunistic behaviour by developers. This opportunistic behaviour is further facilitated by poor governance and competing guidance. Given the clear incentives for developers and land owners to bias viability calculations, the economic dependence of many viability consultants on developers and land owners, the lack of transparency, contested or ambiguous guidance and the opportunities created by input uncertainty for bias, it should not be surprising that land owners and developers tend to be able to demonstrate that they are unable to comply with policies on planning obligations. This tendency has been occurring in a city with some of the highest land values in the world. Of course, weaknesses in guidance and governance can be addressed – if there is a political will.
Given the broader planning policy context in which viability calculations have become so prevalent, it would be, in the words of planning theorist John Forester, a “rationalist’s fantasy” to ignore the power relations involved in viability calculations. Even if there is the political will to ‘standardise’, as the Autumn Budget statement suggested, the process of viability calculations, procedural guidance can be shaped to favour different interests. I can’t really imagine how the cosy social and political networks of the HBF, BPF, the RICS and other groups well-connected to the Conservative Party can get a sympathetic hearing from a Government that has been eager to stimulate the private housing market – but I suspect that prejudices are confirmed. Meanwhile, the concept of Benchmark or Threshold Land Value still remains destructively ambiguous – destructive that is if you’re trying to capture land value on behalf of the community.