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Why viability assessments must be scrapped

Viability calculation

"Smoke and mirror" viiability assessments offer a way for developers to shirk affordable housing commitments, says Bob Colenutt

Bob ColenuttBBC1’s Sunday Politics on 22 March discussed viability assessment (VA) and the loss of affordable housing this has led to. As an expert witness at Freedom of Information (FOI) tribunals on VAs, I was in the studio to put the community view on this iniquity.

The show highlighted their lack of transparency.Detail is often redacted so the public (and councillors) are unable to interrogate the assessment model and its outputs.

The show edited out my allegation that developers are engaged in a fraud against the public purse by disguising the value of their schemes to renege on affordable housing obligations in local plans.

Examination by local community groups and our team at the Collaborative Centre for the Built Environment at the University of Northampton of schemes at Elephant and Castle, Greenwich Peninsula and the Shell Centre on the South Bank in London suggests they are deliberately undervalued. We found this has led to the loss of 572 affordable housing units at Greenwich Peninsula and 303 at Heygate in Southwark, with a total value near £250 million.

The cheek of it is that developers are accepting government grants for affordable housing (£50 million for Greenwich Peninsula), yet reducing the quantity provided. They get away with it because councils lack the skills to interrogate VAs.

"We cannot rely on developers to build affordable housing because they will always say it takes away from their profits"

They could start by consulting community experts in VAs, such as the 35 per cent Campaign in Southwark. VA methodology 
is simple, but assumptions are often shrouded in smoke-and-mirrors valuations.

For example: accepting 20 per cent developer profit as a convention (as a cost, thus reducing scheme value); putting in current house prices rather than projections to estimate scheme valuation; neglecting to mention that affordable housing also makes a profit for developers.

Communities have successfully challenged redactions on FOI grounds, but such victories are Pyrrhic as cuts in affordable units have already been agreed. It is almost impossible to win the FOI argument and stop the planning consent process as they are separate procedures.

The NPPF started this nightmare by requiring VAs for local plans, CIL and planning obligations. This part of the NPPF must be withdrawn by the new government. We cannot rely on developers to build affordable housing because they will always say it takes away from their profits and land value. The answer is for the state and communities to build such housing and take out viability as a planning consideration altogether.

Bob Colenutt is a senior lecturer in the Northampton Institute for Urban Affairs at the University of Northampton


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