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Area Wide Viability Model

Under the National Planning Policy Framework (NPPF) launched on 27 March 2012 there is a requirement for all local planning authorities to ensure that planning policy is deliverable on most housing development land within their area. The cross industry Harman Review offers guidance as to how viability and deliverability can be tested for this purpose, looking at methodology suggestions and sources for assumption data.

The HCA’s Area Wide Viability Model (AWVM) is one of a number of tools available to the industry, which can be used to support local planning authorities in the viability testing of strategic planning policy. This could be during the development of a local plan, establishing an affordable housing policy or gathering evidence to support a Community Infrastructure Levy (CIL) charging structure.

How does it work?

The AWVM user establishes a range of different residential development typologies across a local area. The model then tests the deliverability of proposed planning obligations across this range of site types within a range of differing sub markets, typically drawing on Strategic Housing Land Availability Assessment (SHLAA) data. 

It allows the user to balance the mix of s106 planning obligations, CIL, affordable housing percentage and affordable tenure mix which the market might viably deliver on a nil-grant basis, as well as assessing added value from public investment.

The model

The model can be downloaded free of charge. It consists of an Excel spreadsheet and associated user manual:

The Excel file should not be opened in your browser, please save it to your computer and open in Excel.

Using the model

The model can be used by local authorities using in-house local knowledge to gather evidence and populate the assumptions and typologies – this has the benefit that the local authority team owns and controls the data. They will be able to make future updates and will have gained essential skills and knowledge to inform future site by site negotiations. The evidence gathering can be supported by external consultancy as this could give an independent validation to the process. Alternatively the process could be outsourced entirely to a consultancy with the use of the AWVM embedded into the consultants brief to ensure that modelling is carried out using this free to use tool and which can then be adopted internally for future updates.

For more information local authorities should contact their HCA area team to discuss potential use of the tool and available support from the HCA. In the first instance please send any technical questions about the model to AWVMenquiries@hca.gsi.gov.uk.

Case study

As one of the Government’s Community Infrastructure Levy (CIL) front runners, Chelmsford City Council’s preliminary draft charging schedule has been out for public consultation, with further consultation planned and aiming to adopt the levy in late 2013. The Council took the decision to take overall ownership of the process, supplementing their in-house knowledge with specific consultancy advice where appropriate. They have used the HCA’s Area Wide Viability Model as the basis for their viability assessments.

Download the Local Authority’s Residential Evidence Base report.

This report explains the principles they have used, the methodology employed, details the appraisal itself, and identifies the results. In the methodology section 5 they have set out how they have used the AWVM. Officers responsible for the process have drawn some conclusion from their experiences to date:

  1. The sourcing and evidencing of assumptions for the data input has been a much bigger issue than the operation of the model itself. The use of paid for indices were invaluable.

  2. Operating a developer forum has been crucial as it has allowed local industry contacts to feed into the process as it evolved. It was felt that the forum gave a reality check offering challenge at every stage. Productive relationships have been established, which have benefited the outcome.

  3. Defining a relevant selection of typologies of schemes was vital to get a firm foundation for the study. One way of doing this was to examine proposals against the housing trajectory to ensure the most significant types of scheme were substantially covered. Conversely it was not found helpful to use individual sites to build up the typologies because this ‘bogged down’ progress in consideration of site specifics, and tended to create adversarial debate.

  4. In terms of human resources, on just the residential viability aspects of the overall CIL process, the workload was lower than anticipated. They currently expect that by the time they introduce the Levy they will have expended a maximum of 40 person days.

  5. In addition to this a total of approximately five consultant days is anticipated to be required. Two of these have already been used in the production of the draft schedule. Primarily this consultancy support acts as a quasi-independent advisor on values for key assumptions. This is considered invaluable, particularly as the results become subject to public scrutiny.

  6. Chelmsford feel that carrying out the primary compilation of the study using in-house Council resource, and using a public domain model (the AWVM), has led to a degree of ownership and up skilling that is confidently expected to pay future dividends in term of maintaining the CIL schedule and future individual site negotiations.

  7. During the public consultation responses received have debated the level of the assumptions made as is to be expected, but they have not had any challenges about the methodology used or the model itself.

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