Affordable Housing Viability Assessment
64 South Street, Romford, Essex
About this project
Our client owned a property where a planning application for the redevelopment into 29 residential units had already been refused, partly as a result of not proposing any affordable housing. A new application was being submitted for a slightly smaller scale scheme which included 22 residential units and retaining the ground floor commercial space.
We were instructed by our developer client to provide viability appraisals and a report, as part of the planning application, showing the level of affordable housing that can be supported within the proposed scheme based on viability.
In order to assess the viability, we initially carried out a Market Valuation of the site, to provide a base value on which to assess the scheme. This reflected its existing use as a bar / nightclub and a previous bank valuation was used as further support of our opinion of the Market Value.
We then carried out appraisals of the proposed scheme including the following:
- Assessing the Gross Development Value for each residential unit
- Assessing the Gross Development Value for the commercial space
- Considering the build costs based on an initial Quantity Surveyor’s assessment
- Factoring in any professional fees and planning costs
- Allowing for the London Mayor’s Community Infrastructure Levy (CIL)
- Producing a Residual Site Value of the scheme
We carried out two initial appraisals, one based on 0% affordable housing and the other based on 50% affordable housing, which was the Planning Authority’s policy, to help determine at which proportion of affordable housing the scheme would become viable. We then compared the Residual Site Values to the Market Value which confirmed that on both bases, the proposed housing scheme would not be viable.
We completed our report, in support of the planning application, and successfully proved that the inclusion of affordable housing would render the scheme unviable.
Since the Local Authority were keen to promote viable residential development, in accordance with Government Planning Policy, Planning Consent was approved on the basis of 0% affordable housing, although the Section 106 Agreement was drafted such that the scheme could be reassessed if it was not implemented before a certain date.