Assessing the Viability of Affordable Housing Delivery in the North West

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Assessing the Viability of Affordable
HousingDelivery in the North West
Sarah Bull Associate Director, DTZ 24th
February 2009

• Establishing the Principles

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The downturn has affected residential development
-How will key players respond?

• The local authority
• The developer
• The housing association
• The landowner
• New behaviour

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Context Housing Delivery In a Downturn

• Going Down
• Prices
• Sales rates and starts
• Availability of finance
• Planning permissions
• Ability of RSLs to deliver
• Going Up
• Need for affordable housing waiting lists
• Cost of finance
• Impact of AH on viability
• Renegotiated S106 agreements
• Time before recovery

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The Developer
Annual House Price Change Dec 07-Dec
08 Source Land Registry

• Prices
• Sales rates
• Finance cost
• HA contribution
• Risk

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The Housing Association

• Prices
• Sales rates
• Finance cost
• Risk
• Grant?

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The Landowner

• 10 in prices C. 20-30 in land value
• Affordable Housing Requirements
• Non AH Section 106/ CIL costs
• Environmental standards
• Incentive to bring forward land

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New Behaviour

• Cash, not profit
• Small sites, not large
• Houses, not flats
• Greenfield, not urban?
• Intermediate rent, not shared ownership
• Public land, not private?

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Context The Challenge for Policy Makers

• 4NWs regional strategic planning role
• Indicative AH in SHMA
• LAs developing LDFs with AH targets (pre
  downturn)
• Challenges on Core Strategies/scheme by scheme
• 4NW keen to develop best practice/consistent
  approach

• What level of AH/S106 can realistically be
  delivered?
• How else can AH be delivered?
• How can we develop long term policies?

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Purpose of this Work

• Thought Piece to
• Understand influences on viability
• and implications for AH provision
• In the context of the current and future market
• Identify policy challenges
• Explore the need for a region wide viability
  study
• Understand need for a common approach to
  viability assessments
• Your input is key

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Key Questions for Debate

• Do we need a region wide study/assessment?
• What would the assessment need to address?
• What challenges are there in undertaking a region
  wide study?
• How would it support local assessments and policy
  development?

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DTZ Experience
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The Detail/Practical Considerations

• What is viability?
• Methodology?
• Data availability?
• Land Values?
• AH/Scheme type, size, mix?
• Brownfield/Greenfield?
• Subsidy?
• Future Proofing?
• Application at local level?
• Impact of specific AH requirements?
• Methods of delivery (not S106)?
• Impact of other standards?
• How to monitor and assess viability?

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Questions?