Appendix 3 – Checklist for Viability Assessment Review, Indicative Information Requirements

(1)A3.1 The council has produced this viability appraisal review checklist to provide advice to applicants on the information the council expect to be submitted if an applicant wishes to pursue a case of non-viability. This following information is expected from the applicant if a development is proposed which does not provide the amount or type of affordable housing and/or financial contributions expected through Cambridge City Council’s local plan policies. This is not exhaustive, but provides a basic guide as to what to include within a viability assessment:

A3.2 Viability Assessment Reports & Appraisals – general points:

  • The applicant should provide a brief covering report providing an overview of why the viability case is being made. This should detail the viability case being made - what the issue is – it should be clear on the request / offer that is being made (i.e. the extent of departure from Policy compliance considered necessary) and the reasons why in the applicant’s view this should be considered;
  • The report should be accompanied by the supporting information / evidence associated with the viability assessment and appraisal(s) / sensitivity tests;
  • Homes and Communities Agency (HCA) Development Appraisal Tool (DAT) or similar agreed toolkit to be used;
  • The appraisals content and summaries to be supplied in PDF and also “live” (functional) appraisal version(s) to aid the review process;
  • Appraisal(s) should be consistent with and clearly linked to (explained by) the written submission / covering report;
  • Appraisals should show the optimum planning obligations position that can be reached in the opinion of the applicant based on their viability assessment;
  • Applicants should provide a policy compliant assumptions version to illustrate the differences / viability issues;
  • If sensitivity analysis carried out – provide an explanation of sensitivity assumptions.

A3.3 Scheme Details and Context – the report/appraisal(s) should include / provide the following:

  • An Ordnance Survey based site plan and overview layout plan
    • To include indication of the location and extent of any adjoining highways works or similar.
  • Scheme description/details to include
    • Site areas (ha) - gross and net (developable)
      • land areas for any other non-residential / ancillary / other uses
    • Confirmation of resulting development density
    • Total residential unit numbers; both market and affordable (with percentage of affordable housing)
    • Residential unit schedules (market and affordable housing) with:
      • type of units
      • number of bedrooms
      • floor areas (usually GIA)
      • any non-saleable floor areas / net : gross ratio
    • Any commercial / other / mixed use development details – equivalent information (to include gross and net internal floor areas).
  • Details of timings and any phasing
    • Include numbers and types of units in each phase)
    • Assumed project / phase start and end dates
    • Construction start and period
    • Sales period, rate of sale and any post construction sales period
    • affordable housing timing
      • construction period
      • payments / handover / receipts.

A3.4 Site Value – the report/appraisal(s) should include / provide the following:

  • Details of current use(s) of the site and planning context / status (with any relevant supporting information)
  • Value of site / premises at the assessment (current) date – include supporting evidence
    • Full explanation with valuation and other supporting details where relevant
    • Details of any special assumptions and planning risk adjustment being made with respect to alternative use value assessment as a basis for site value
    • Clear approach on whether site value being used as an appraisal input or as a benchmark against which a RLV is being compared (i.e. is the viability benchmark based on land value or profit)
    • Land purchase and timing details may be relevant – including background, basis / planning assumption, any conditions, etc.
  • Land purchase related costs / fees
    • Stamp duty, legal and any agent’s fees plus supporting information if necessary.

A3.5 Gross Development Value (GDV) – the report/appraisal(s) should include / provide the following:

  • Assumed sales values
    • Provide sales values both as £ per unit and £/m²
    • Ground rents
    • Total revenue summarised
    • Provide supporting evidence including analysis of any comparables research / agents advice / other justification.
    • Service charges or any other deductions / incentives that may impact on value
  • Affordable housing revenue assumptions
    • Provide revenue assumptions both as £ per unit and £/m² (where based on offer(s) from Registered Providers please indicate offer and provide supporting evidence)
    • Indicate tenure assumptions - by unit type and overall mix (e.g. affordable rent / shared ownership or similar ratio)
    • Affordable and/or social rent assumptions
      • Rent assumptions
      • Percentage of market rent assumed
      • Other financial criteria used to calculate affordable housing revenue where applicable
    • Assumptions for shared ownership revenue
      • Percentage initial equity share and percentage rent on retained equity;
    • Equivalent information / explanation on any other affordable housing models / variation.
  • Commercial / Non-Residential Values (where applicable):
    • Rental values
    • Yields
    • Void rates
    • Rent free periods
    • Tenant incentives
    • Any other area that impacts on value (e.g. purchaser’s costs).

Above to be provided with supporting evidence.

A3.6 Development Costs – the report /appraisal(s) should include / provide the following:

  • Build Costs
    • Basis and source of build cost assumptions / estimates – e.g. all-in / unit costs plus external / site works; contingency percentage and any other costs additions.
    • £/m² rates for each element (if separated) and totals provided.
  • Other
    • E.g. abnormals (provide supporting evidence)
    • Site or other works
    • Infrastructure or services related costs etc. not otherwise allowed-for.
  • Build cost related fees
    • Details and basis / percentage (of build costs). E.g. professional fees (architect, planning, surveyors etc.).
  • Survey / investigation or similar costs
    • Provide details and supporting evidence.
  • Sustainability standards
    • Provide details and supporting evidence for costs relating to:
    • Sustainable design and construction costs (Code for Sustainable Homes / renewable energy or equivalent for both market and affordable
    • Any additional measures and costs.
  • S.106 obligations and contributions
    • Provide details and costs including explanation and any Council / formulaic calculations
    • Anticipated CIL liability and any relevant assumptions where applicable.
  • Finance costs
    • Finance rates assumed (negative and positive cashflow balance)
    • Related fees
    • The appraisal cash flow should be provided.
  • Development Profit
    • Clear statement on target return / assumed fixed appraisal input and basis (percentage of value / percentage of cost or other) including:
      • Profit assumptions on private / affordable housing and commercial / other non-residential elements of the scheme where applicable.
  • Sale & marketing costs
    • Usually expressed as a percentage of value with details of any separate elements provided.
  • Legal fees on sale
    • Provide details and supporting evidence where applicable. Generally expressed as a rate per unit or percentage of value.

A3.7 Please note: Documents and accompanying evidence should be provided by the applicant / their agent(s) as a package with an explanatory note of the components / appendices in electronic format where possible. Depending on scale of plans and size of reports, printed copies of some elements may be requested to aid the review.

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