The advice outlines a number of key principles for assessing the viability of a Local Plan and its policies. It states that "successful implementation of the National Planning Policy Framework (NPPF) is entirely reliant on the skills, competence and resources in local government and the development community".
The final report (53-Pages / 7.43MB PDF) has the backing of the Planning Inspectorate (PINS), the Planning Officers' Society (POS), as well as the Department for Communities and Local Government (DCLG) and the key stakeholders and so is likely to be seen as definitive at Local Plan examinations.
The LHDG advice contains a definition of "viability", which differs from that contained in the NPPF.
“An individual development can be said to be viable if, after taking account of all costs, including central and local government policy and regulatory costs and the cost and availability of development finance, the scheme provides a competitive return to the developer to ensure that development takes place and generates a land value sufficient to persuade the land owner to sell the land for the development proposed," it said. "If these conditions are not met, a scheme will not be delivered.”
The document has been developed to cover the core principles of Local Plan viability testing; guidance on how sound assumptions can be made, and; what sort of process would be most effective in carrying out an assessment of this kind, the LHDG said.
The advice is focussed on residential development, but the approach and principles should apply to any form of development that the Local Plan seeks to deliver, the LHDG said.
The document promotes the preparation of a Community Infrastructure Levy (CIL) Charging Schedule alongside the development of a Local Plan, which is in line with the guidance in the NPPF.
CIL charges should be worked up and tested alongside the Local Plan, the advice said. Because a local authority’s CIL will be one of the policy costs on development, the approach to viability testing outlined in this advice should also assist the local authority in drawing up its CIL Charging Schedule, it said, which is in line with the NPPF.
One of the "key principles" when assessing the viability of a Local Plan and its policies is to consider the "cumulative impact" of the plan policies, rather than treating policies in isolation or overlooking the potential impact of policies on the delivery of planned development, the advice said.
There must also be a balance between the policy requirements for sustainable development and the realities of economic viability, it said. There should be both "clear local justification" for the adoption of local standards and policies, and reasonable returns for landowners and developers.
"Making an informed and explicit choice about the risks to delivery is a key outcome of the assessment of Local Plan viability," the LHDG said.
When preparing a Local Plan, a "collaborative approach" must be taken to avoid making "poorly founded assumptions" that can lead to plans being contested, it said. "Viability assessments of Local Plans should therefore be seen as part of the wider collaborative approach to planning and a tool that can assist with the development of plan policies, rather than a separate exercise."
The document includes a step by step guide to testing viability and the appendices to the advice cover technical recommendations for practitioners as well as on how to avoid certain pitfalls. A standard checklist for potential sites is also included.