New economic appraisal tool helps development partners to coordinate investment and deliver more housing
Online guidance to help local authorities and developers establish the economic viability of housing and mixed-use regeneration schemes has been updated and re-issued by the Homes and Communities Agency (HCA).
The Economic Appraisal Tool (EAT) allows local authorities to establish effective but realistic affordable housing targets in order to meet national planning policy requirements, based on a calculation of residual land value. The tool is designed to be site specific, but can also be used to inform viability modelling to test affordable housing targets in Local Development Frameworks.
The HCA encourages bids for grant funding to be accompanied by an EAT submission, which it then uses to help determine grant levels, as well as demonstrate the added value social housing grant can bring to a scheme. Local authorities are able to estimate a saleable value for land as well as negotiate s106 and other planning obligation agreements; and developers can use the EAT to estimate how much they should pay for land as well as to inform their own s106 negotiations.
Richard Hill, director of investment and renewal at the HCA, said: 'This is a really useful planning tool which we’re re-launching at a time when the economic viability of schemes has been brought more sharply into focus because of current market conditions.'
The HCA’s economic appraisal tool helps development partners demonstrate how grants from the National Affordable Housing Programme (NAHP) will help them deliver more affordable housing over and above the level that can be supported from planning obligations alone. The tool can also assist Local Planning Authorities and developers negotiate and agree the viability of planning obligations generally.
Aligning our investment with planning obligations
Under national planning policy guidance (PPS3) local authorities are expected to maximise affordable housing delivery through the use of developer contributions. Such contributions require a developer to provide affordable housing at a discounted price to an affordable housing provider – usually a housing association. The HCA looks to ensure that grants it provides through the NAHP will deliver affordable housing over and above above that which can be supported from developer contributions alone.
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