CIL VIABILITY ASSESSMENT - Monmouthshire County Council

Monmouthshire County Council – Community Infrastructure Levy Viability Assessment

MONMOUTHSHIRECOUNTY COUNCIL –CIL VIABILITYASSESSMENT

Updated viabilityevidence fordevelopment of aCommunityInfrastructure LevyCharging Schedule

Three Dragons

March 2016

Final Report


This report is not a formal land valuation or scheme appraisal and should not be relied upon as such. The reporthas been prepared using the Three Dragons residential toolkit and is based on local authority level data suppliedby Monmouthshire County Council, consultations and quoted published data sources. The models used providea review of the development economics of illustrative schemes and the results depend on the data inputsprovided. This analysis should not be used for individual scheme appraisal. No responsibility whatsoever isaccepted to any third party who may seek to rely on the content of the report unless previously agreed.


CONTENTS

EXECUTIVE SUMMARY......................................................................................................................................... 1

1 Introduction ................................................................................................................................................. 3

2 Viability testing – residential development................................................................................................. 12

3 Viability Testing – notional 1 ha tile............................................................................................................ 21

4 Residential viability testing – Case Study Sites ............................................................................................ 24

5 Residential Viability Conclusions................................................................................................................. 44

ANNEXES1. Benchmark Land Values2. Testing Assumptions3. Case study profiles4. Development Industry Workshops 18th March – notes5. 1 ha Notional Sites Results6. Case Study Results


March 2016 1

EXECUTIVE SUMMARY

1. The Monmouthshire County Council Viability Assessment update provides the Council withevidence to assist it in drawing up a draft Community Infrastructure Levy (CIL) chargingschedule for examination. This update builds upon the July 2014 Viability Study used to informthe CIL Preliminary Draft Charging Schedule (PDCS) published in February 2015 and takesaccount of the changes in costs and values affecting development in Monmouthshire generally,as well as changes to specific infrastructure requirements for strategic sites. It also undertakesthe viability testing on the affordable housing components on the same basis as the November2014 Monmouthshire Affordable Housing SPG, which has been published in draft since the lastviability study was undertaken.

2. This report should be read in conjunction with the separate viability testing update for non-residential uses undertaken by Peter Brett Associates.

3. Residential development has been tested through notional 1 ha tiles and through case studiesrepresentative of the development planned to take place in Monmouthshire. The notional 1 hatiles are used to test development on a common basis, which allows the effects of differentmarket areas and different densities to become apparent. The case studies include the sevenstrategic sites identified in the Local Development Plan as well as other sites, including thoseplanned to provide high proportions of affordable housing.

4. Including a 30% ‘buffer’, the potential residential development CIL rates that the Council maynow like to consider are:

• A standard CIL charge of £80/sq m for strategic sites plus non-strategic development of 3 or

more dwellings in Severnside, except for:

• Deri Farm, with a CIL charge of £60/sq m;

• Fairfield Mabey, single dwelling and two dwelling sites, sites with over 35% affordable

housing and retirement housing which are all £0 rated;

• Other non-strategic development of 3 or more dwellings in Monmouth, which will have aCIL charge of £100/sq m;

• And other non-strategic development of 3 or more dwellings elsewhere in Monmouthshire

which will have a CIL charge of £120/sq m.

5. These rates provide a simple framework of charges and preserve a substantial buffer for themajority of strategic sites, which will help to ensure delivery. The proposed rates mean themajority of development will be able to proceed.

6. On a ‘typical’ 85 sq m market 3 bed semi the proposed charges would be £6,800 where the£80/sq m rate applies and £10,200 where the £120/sq m rate applies. The equivalents will be£10,400 and £15,600 respectively for a 130 sq m four bed detached house. This would be inaddition to the typical £1,000/dwelling residual s106 and any of the obligations affectingdevelopment on the strategic sites. This compares to the current typical s106 payments of£6,000-£7,000 per dwelling, indicating much of the development in Monmouthshire will be


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paying more under CIL than s106, particularly non-strategic development in higher value areas.Sites of less than 3 dwellings will be unaffected by CIL.

7. CIL will remain a small part of the development costs and value – e.g. Case study 67 with 10dwellings in Abergavenny will have a CIL of £120/sq m totalling approximately £85,320 which is5.2% of total scheme development cost (excluding land purchase) and 4.3% of grossdevelopment value.


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1 INTRODUCTION

1.1 Three Dragons was commissioned by Monmouthshire County Council in 2015 to produce thisupdated CIL Viability Assessment. This document should be read in conjunction with theCouncil's forthcoming Infrastructure Plan Addendum and regulation 123 list, which will specifythe funding gap that CIL will go towards and the type of infrastructure to be funded by CIL. Theforthcoming planning obligations SPG will provide further detail on the residual s106/278requirements.

1.2 This report should also be read with the separate Peter Brett Associates report on non-residential viability, which provides recommendations for non-residential CIL rates1.

Purpose of the Economic Viability Assessment

1.3 The viability evidence provided in this report is to assist Monmouthshire County Council indetermining a proposed Community Infrastructure Levy (CIL) charging schedule for residentialand non-residential uses.

1.4 The viability testing for this report has been designed to assess:

• The amount of CIL that residential development can afford.

• Whether there are differences in viability across the county, sufficient to justifydifferent CIL rates.

1.5 The current viability assessment builds on a suite of earlier viability studies. There was anAffordable Housing/Strategic Viability Study in 2010, with additional analysis of the thenidentified strategic sites in 2011 and a further update in 2012. These formed part of theevidence base in setting the housing policies in the Local Development Plan and have beenthrough the examination process. In July 2014, Three Dragons and Peter Brett Associatesundertook residential and non-residential viability testing2 and this was used to inform theMonmouthshire Preliminary Draft Charging Schedule (PDCS).

1.6 This updated viability evidence takes account of changes in values and costs since 2014 as wellas the draft Affordable Housing SPG, which provides direction about the value of affordablehousing to mixed tenure schemes.

The Community Infrastructure Levy (CIL)

1.7 The CIL regulations allow charging authorities to set different rates set out in £s per sq metre(or £/sq m) of net additional floorspace for different uses and for different zones – providedthese can be clearly identified geographically3. CIL is set out as £s /sq m for developments of 1

1 PBA, 2015, Monmouthshire County Council Community Infrastructure Levy Viability Assessment Addendum – Update ofNon-residential Viability Assessment.2 Three Dragons and Peter Brett Associates, 2014, Viability Evidence for development of a Community Infrastructure LevyCharging Schedule3 Regulation 13


March 2016 4

dwelling or more, or over 100 sq m additional non-residential floorspace. Exemptions includeaffordable housing, self-build and charities.

1.8 DCLG has provided Guidance for the Community Infrastructure Levy4, which was added toPlanning Practice Guidance in June 2014. This guidance is applicable in Wales and England andexplains that charging authorities should not set the rate at the margins of viability. A chargingauthority’s proposed rate or rates should be reasonable, but there is no requirement for aproposed rate to exactly mirror the evidence (para 19). The Guidance has formalised theconcept of a viability ‘buffer’ although it is not quantified (para 19).

1.9 The Guidance requires an area-based approach using a ‘broad test of viability’ using‘appropriate available’ evidence (para 19). The testing should include an appropriate range oftypes of sites across its area, including strategic sites (para 19), with appropriate costs (para 20).

1.10 The CIL Guidance explains that the regulations allow charging authorities to apply differentialrates for the Levy by geographic zones, development type and scale of development, providedthis is justified by the viability evidence (para 21). Undue complexity and state aid should beavoided (para 21)

1.11 There will still be s106 contributions in order to make the development acceptable in planningterms. These will have to meet the three tests:

• Necessary to make the development acceptable in planning terms

• Directly related to the development

• Fairly and reasonably related in scale and kind to the development

1.12 An allowance for residual s106 contributions has been included within the viabilityassessments.

Guidance on plan viability testing

1.13 Guidance has also been published to assist practitioners in undertaking viability studies forpolicy making purposes – “Viability Testing Local Plans - Advice for planning practitioners”5 (theHarman Guide). The approach to viability testing in the Viability Assessment follows theprinciples set out in the advice. The advice re-iterates that:

“The approach to assessing plan viability should recognise that it can only provide high levelassurance.”

1.14 The Advice also comments on how viability testing should deal with potential future changes inmarket conditions and other costs and values and states that:

“The most straightforward way to assess plan policies for the first five years is to work on thebasis of current costs and values”. (page 26) but that:

4 Department for Communities and Local Government (DCLG) , February 2014, Community Infrastructure Levy Guidance,5 The guide was published in June 2012 and is the work of the Local Housing Delivery Group, which is a cross-industrygroup, supported by the Local Government Association and the Home Builders Federation.


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“The one exception to the use of current costs and current values should be recognition ofsignificant national regulatory changes to be implemented………” (page 26)

1.15 This viability assessment has been undertaken in compliance with the CIL regulations andguidance.

Local Plan Policies

1.16 The Council adopted the Local Development Plan in 2014. This will guide the futuredevelopment of Monmouthshire up to 2021. This plan was examined in 2013 and containscurrent information which is pertinent to this viability assessment and policies that may affectviability. These policies have been reviewed as part of this work and taken into account as partof the viability assessments.

1.17 The relevant policies are described in brief in this section of the report. The adjustments to theviability testing in response to the policies are set out in the testing assumptions section.

• Policy S1 sets out the spatial distribution of new housing provision. This has been used toinform the case studies used for the viability testing.

• Policy S4 states that the affordable housing requirement is 35% except in Severnside where

25% is required; main villages where 60% is required for 3 or more dwellings; minor villages

where 75% is required for 4 dwellings and 66% is required for 3 dwellings. Theserequirements have been included within the testing. In the locations where 25% and 35%

affordable housing is required, developments of below 5 dwellings may provide a

commuted sum for offsite provision; and for developments of 5 or more dwellings the on-site affordable housing is rounded to the nearest unit6.

• Policy S7 describes the obligation for development to make appropriate on or offsite

provision of infrastructure; and that if there are viability issues, provision of affordable

housing will generally take precedence over other infrastructure obligations. The narrativefollowing Policy S7 states that “It is considered that the LDP strategic sites can be delivered

without the need for CIL as each site has specific infrastructure requirements that can be

dealt with through a standard Section 106 Legal Agreement.” Viability testing has thereforeused policy compliant affordable housing proportions and has included known site-specific

infrastructure requirements as well as a more general allowance for bringing the strategic

sites forward for development.

• Policy S12 requires new development to demonstrate sustainable and efficient resourceuse. We have used build costs that will include current requirements.

• Policy CRF2 Outdoor Recreation/Public Open Space/Allotments describes the standards

sought by the Council: outdoor playing space of 2.4 hectares per 1,000 population and 0.4hectares of public open space per 1,000 population; 0.25 hectares of allotment space per

1,000 population (strategic sites and 50+ dwellings only) – i.e. 3.05 ha/1,000 people for

larger sites and 2.8 ha/1,000 for smaller sites. With an average household size of 2.35 in

6 0.5 of a unit and above round up.


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Monmouthshire, 1,000 people is equivalent to 425 households – indicating that

approximately 0.7 ha of open space is required per 100 dwellings.

• Policy SD4 states that development will include Sustainable Urban Drainage Systems

(SUDS). This is part of normal development good practice.

• Policy MV1 states that development that is likely to have a significant transport impact must

have a Transport Assessment with a Transport Implementation Strategy. If there will be a

significant additional traffic then highway improvements or traffic mitigation will be

required.

• Policy MV2 states that development will include appropriate sustainable transport links,including public transport, walking and cycling.

• Allocated sites – there are seven strategic sites in the County, which are planned to take

approximately 2,000 dwellings out of the 3,349 planned dwellings yet to be completed. Theimportance of these sites to delivery of the Plan means that they will need to be specifically

included within any viability modelling. They are described in detail in the following policies:

o Policy SAH1 deals with the Deri Farm strategic site and requires that electricity pylons

are removed and lines undergrounded; sustainable transport links are provided toAbergavenny centre and that there is a landscape buffer along the northern edge of the

site. This is accounted for in the site specific costs and the gross to net developable land

area.

o Policy SAH2 deals with the Crick Road strategic site and requires that 1 hectare of

employment land is provided and that there is pedestrian access to Portskewett andCaldicot.

o Policy SAH3 deals with the Fairfield Mabey strategic site and requires that 3 hectares of

employment land is provided (with four starter units financed by an adjacent

development), that necessary offsite highway and pedestrian works are undertaken,that there will be a riverside path and that there will be a buffer strip along the River

Wye.

o Policy SAH4 deals with the Wonastow Road strategic site and requires that 6.5 hectares

of employment land is provided and that necessary offsite highway works areundertaken.

o Policy SAH5 deals with the Rockfield Farm strategic site and requires that 2 hectares of

employment land is provided, that the masterplan takes account of the SINC on site,

that necessary offsite highway works through Magor and Undy are undertaken and thatthere are contributions to community facilities.

o Policy SAH6 deals with the Vinegar Hill strategic site and requires that necessary offsite

highway works are undertaken and that there are contributions to community facilities.

o Policy SAH7 Sudbrook Paper Mill deals with the Sudbrook strategic site. There are no

specific requirements beyond the housing numbers.


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1.18 In addition to these policies, the Council has advised that Rockfield Farm and Vinegar Hill maybe required to provide sections of the Magor-Undy bypass (subject to the M4 relief road) andthis has been included as part of the assessment.

Affordable Housing SPG

1.19 Monmouthshire County Council produced a draft Affordable Housing SPG in November 2014.This includes requirements that affordable housing floor areas meet DQR standards and thatthe provision of affordable housing through s106 on mixed schemes is undertaken at 42% ofthe Welsh Governments Acceptable Cost Guidance (ACG) values7. The viability testing takesthis into account:

• Although there are no explicit space standards for DQR, Monmouthshire County Council has

provided floor areas for DQR-compliant affordable housing; and these floor areas have beenused in the testing.

• The affordable housing values used in the testing use 42% of the values set out in the 2015

ACG, based on the appropriate ACG geography band. The ACG bands are not coterminous

with the value zones used in the rest of the testing and so where a value zone spans morethan one ACG band, the lower ACG band is used.

Preliminary Draft Charging Schedule

1.20 The Monmouth CIL Preliminary Draft Charging Schedule was published in September 2014. Thisproposed the following CIL rates.

Category Geographical Area

CIL rate per

square

metre

(1)

Strategic LDP Sites*

• Deri Farm, Abergavenny (SAH1)

• Crick Road, Portskewett (SAH2)

• Fairfield Mabey, Chepstow (SAH3)

• Wonastow Road, Monmouth (SAH4)

• Rockfield Road, Undy (SAH5)

• Vinegar Hill, Undy (SAH6)

£60

(2)Non-strategic sites in the Main Towns of Abergavenny, Chepstow

and Monmouth and the Rural Rest of Monmouthshire** except for

Category (5) sites.

£110

(3) Non-strategic sites in Severnside settlements*** £60

(4) Sudbrook Paper Mill Strategic Site (SAH7) £0

7 http://gov.wales/docs/desh/publications/150401-acceptable-cost-guidance-en.pdf


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(5)Sites in Main and Minor Villages, including those identified in

Policy SAH11, that are required to provide above 35%

affordable housing

£0

(6) Retirement Housing £0

Preliminary Draft Charging Schedule Representations

1.21 Monmouthshire County Council consulted on the CIL Preliminary Draft Charging Schedule in2015. Representations mainly focused on aspects of the viability evidence and included:

• Concern that land value benchmarks are inconsistent or too low.

• Agreement with a 30% viability buffer.

• Viability testing inconsistent with the affordable housing value requirements in the

Affordable Housing SPG.

• Concern that CIL rates are too high, with strategic sites and Severnside highlighted.

• Questioning the premium value attached to riverside housing in Chepstow.

• The need to include circulation space for flats and garages for houses.

• Opening up costs should be increased.

• Developer profit should be higher and internal rate of return (IRR) used as the profit

measure.

• Use of the strategic site specific costs within the testing.

• Residual s106/278 of £1,000/dwelling is too low.

• CIL exemptions and lack of detail in the draft Regulation 123 list

1.22 This updated Viability Study responds to these representations as follows.

Land Value Benchmarks

1.23 The viability assessment continues to use a premium over existing use as the basis forestablishing land value benchmarks, set within the context of appropriate comparables wherethese are available. It is important to note that the benchmarks represent the lowest price thatland owners will release land for development, not the highest price (which is typicallyrepresented by unfiltered market values). Representations provide evidence of land values inNewport and for schemes with no affordable housing which we do not consider provide moreappropriate evidence than that provided by Land Registry for Monmouthshire. Furtherdiscussion about the issues around setting a land value benchmark and the evidence used canbe found in Section 2 of this report and in Annex 1.

Viability Buffer

1.24 The comment is noted and the buffer retained.


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Affordable Housing SPG

1.25 The implications of the new SPG have been discussed with the Council and the updated testingincludes values at 42% of ACG and DQR compliant affordable housing space standards, as in theSPG.

CIL rate recommendations

1.26 The basis of the comments about recommended CIL rates included some confusion about grossand net development areas, as well as an emphasis on whether a limited set of developmenttypologies were viable in Severnside. However, the comments about CIL rates are noted andconsidered in the updated viability appraisals.

Waterside Premium in Chepstow

1.27 Further work has been undertaken in relation to asking prices on the Severn Quays watersidesite. This indicates that there is a premium over ‘standard’ Chepstow values. Therefore theappraisals have continued to use a conservative uplift assumption (equivalent to a 6% uplift) forthe Chepstow strategic waterside site (SAH3).

Circulation Space for Flats, and Garages

1.28 Updated testing includes 10% circulation for 1-2 story flats.

1.29 In relation to garages it should be noted that there is no policy requirement for garages andthat there is an expressed preference for car ports instead (MCC, 2013, Domestic Garages SPG).However, the relatively generous build costs provided by BCIS together with the allowance forexternal works will encompass the cost of providing garages on a proportion of dwellings ifdevelopers choose to make this provision. Therefore no changes have been made in theappraisals in relation to garages.

Opening Up Costs

1.30 The allowances used for opening up costs are based on experience and review of scheme costselsewhere, and discussed as part of the 2014 developer workshop. It is clear that the openingup costs referred to in the representations have a broader definition and also include costsalready allowed for in the viability testing, such as external works, residual s106 and sitespecific infrastructure allowances. Taken together, these allowances are more generous thanthe amounts suggested in the representations. Therefore no changes have been made in theappraisals for opening up costs (except for some updated information on site specificinfrastructure received from some scheme promoters).

Developer Return

1.31 In the representations Savills have argued for higher developer returns including a 20% returnfor affordable housing. The developer returns of 20% for market housing and 6% for affordablehousing were discussed in the developer workshop in March 2014. This discussion also notedthat Savills had agreed 20% for market housing and 6% return for affordable housing as astatement of common ground for the Caerphilly CIL and it is unclear why this should bedifferent in Monmouthshire.


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1.32 A 20% return for market housing and 6% return are commonly accepted at recent CILexaminations8. The issue for profit benchmarks is determining an acceptable return for thelikely risk, which is why a higher rate is required for market housing than the affordablehousing, with lower risks resulting from sale agreed before construction. This required returnagainst risk should not be conflated with the justifiable but entirely separate consideration ofdevelopers maximising returns for investors.

1.33 It should be noted that BCIS figures for build cost also include a contractor return, which ineffect pushes up the overall return beyond the 20% and 6% used here. We note that the housebuilders’ operating returns have generally been below 20% since before the recession.

1.34 The use of IRR9 as a measure instead of profit on GDV (as put forward in one representation onthe PDCS) may have been discussed informally by practitioners forums but has not beenaccepted as the preferred measure either in the Local Housing Delivery Group Guidance, thePlanning Practice Guidance, or in relation to CIL nor at recent examinations we are aware of.

1.35 Importantly, the Three Dragons Toolkit used for undertaking the viability appraisals inMonmouthshire includes a discounted cash flow function, and this is already used for thetesting of the larger case studies. This explicitly takes account of investment and returns overtime within the framework of a residual land appraisal.

Residual s106/278

1.36 The £1,000/dwelling estimate of the residual s106/278 has been provided by the Council asbeing a typical sum used to provide on-site children’s’ play and other minor requirements. Thisis based upon recent experience. Other items (such as education and sustainable transport)will be funded through CIL and therefore will not form part of s106/278.

Exemptions and R123 List

1.37 The decision to offer exemptions from CIL is up to the Council. The R123 list is outside thescope of this report and is being addressed separately by the Council.

Research evidence

1.38 The research which underpins the original and updated viability assessments includes:

• An analysis of publicly available data to identify the range of values and costs neededfor the viability assessment. This includes land registry price data up to April 2015 andbuild costs from BCIS in September 2015;

8 e.g. Wigan August 2015, Southend on Sea April 20159 Generally, IRR is a corporate finance tool used to compare the attractiveness of different projects with different timings ofinvestment and return. In its standard form it does not produce a useful output for a residual land value appraisal, partly asthe amount available to pay for land is an input, not an output. Issues with IRR include no accepted benchmarks foracceptable IRR, sensitivity to small changes in assumed inputs, lack of agreed information on inputs, lack of transparencyand therefore an impression of spurious accuracy when applied as part of an area wide viability analysis. Three Dragons hasundertaken separate consultation with housebuilders in 2012/13 about the use of IRR as a measure and this failed to showany compelling case to use it against the more widely understood return on value.


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• Discussions with council officers from planning, estates and housing departments;

• Analysis of information held by the authority, including a review of historic planningpermissions, land sales and information on the strategic sites for development;

• A workshop held in March 2014 with developers, land owners, their agents andrepresentatives from a selection of registered providers in the area. 13 organisationswere invited and seven organisations were represented at the workshop, in addition tothe Council. A follow on note regarding land values and house prices was thencirculated to the 13 organisations originally invited, with one comment received. Annex5 provides a note of the workshop;

• Subsequent communication via the Council with landowners, developers and theiragents of the strategic sites in Monmouthshire, used to collect information aboutspecific costs associated with the sites;

• Further consultation on house prices in August/September 2015. March 2014workshop attendees were contacted with updated house prices and telephoneinterviews were undertaken with estate agents active in Monmouthshire.

• Use of the Three Dragons Toolkit, adapted for Monmouthshire to analyse scheme viability

for residential development.


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2 VIABILITY TESTING – RESIDENTIAL DEVELOPMENT

Principles

2.1 The viability testing uses a residual value approach, the principles of which are set out in thefigure below.

Figure 2.1 Residual Value Approach

2.2 To assess viability, the residual value generated by a scheme is compared with a benchmarkvalue, which reflects a competitive return for a landowner. If the residual value is higher thanthe benchmark land value, the scheme is considered viable. This is considered through thetesting of notional 1 ha tiles (used to test development on a common basis, which allows theeffects of different market areas and different densities to become apparent) and through casestudies representative of the development planned to take place in Monmouthshire.

2.3 Establishing suitable land value benchmarks is an important part of any viability testing. WelshGovernment guidance10states that viability is a key factor in striking the balance betweencollecting revenue and not setting rates too high (para 2.2); and that viability studies shouldconcentrate on sites where the imposition of CIL may have an impact on viability (para 2.18). Itis noted that land values across an area may already result in development becoming unviableor marginal and this needs to be considered (para 2.20). Land value benchmarks used in thisstudy take account of the benchmarks used in the Local Development Plan evidence base,existing use values, Land Registry transaction evidence of local land transactions, recenttransactions and the development industry feedback.

2.4 The setting of benchmark land values in Monmouthshire takes account of the existing or formeruses of the sites. Where the notional site is within an urban area or on a brownfield siteoutside an urban area the threshold land value uses a premium over industrial land values (asthis is the likely former or alternative use) and where the site is a greenfield allocation the

10 Welsh Government, 2011, Community Infrastructure Levy Preparation of a Charging Schedule,

Total development value (market and affordable)

Minus

Development costs (incl. build costs and return todeveloper)

=

Gross residual value

Minus

CIL + planning obligations (including AH)

=

Net residual value (available to pay for land)


March 2016 13

threshold land value use a premium over agricultural land values. The benchmark land valuesused in this study are:

• £650,000 per gross ha for urban sites. This figure is 60% over the estimated industrial land

value (a premium of 30% is normally considered a suitable incentive), has been discussed at

the development industry workshop and is in line with the evidence base for the recentlyadopted Local Development Plan. This benchmark is also supported by the land transaction

evidence although it is noted sale prices are either side of this value. This benchmark is

above the comparables in lower value Caerphilly and Merthyr Tydfil11 (up to £500,000/haused in the CIL viability assessments).

• £250,000 per gross ha for strategic greenfield sites. This is 15-20 times agricultural values,

which is in the higher end of the range expected to incentivise greenfield land owners. In

addition we assess the impact of a slightly higher benchmark at £300,000 per hectare.

2.5 The benchmarks are applicable across Monmouthshire as there is no clear evidence to varythem by location and the development industry indicated that a single set of benchmarks wasappropriate.

2.6 Further detail on the information used to set the benchmark land values can be found inAnnex 1.

Testing Assumptions

2.7 The key assumptions used in the analysis of residual values for both the 1 hectare and casestudy sites are presented below. These have been discussed as part of the developmentindustry workshop in March 2014, with more recent discussion about house prices inAugust/September 2015 as part of the updating process. The updating process has also takeninto account further information now available for the strategic sites, as well updated buildcosts based on BCIS.

Table 2-1 Development Costs

Item Rate Notes

Build costs - Flats (1-2storeys)

£1,097/sq m Includes 15% for external works. BCIS withGwent location weighting12, 5 year median

Build costs - Houses (2storeys)

£981/sq m Includes 15% for external works. BCIS withGwent location weighting, 5 year median

Build costs - Bungalows £1,125/sq m Includes 15% for external works. BCIS withGwent location weighting, 5 year median

11 DCLG Live Table 581 states q3 2013 average house prices in Monmouthshire were £208,610 compared to £117,596 inCaerphilly and £103,066 in Merthyr Tydfil.12 Building Cost Information Service (BCIS) applies weightings to reflect varying build costs in different parts of the UK andcontinues to use Gwent as a defined area. The development industry workshop agreed that Gwent costs were suitable forMonmouthshire and other parts of South Wales


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Item Rate Notes

Small sites build cost13 Single dwelling development costs based onthe BCIS values for ‘one-off developments’; 2and 3 dwelling developments based onstandard BCIS build costs + 10%. A 15%allowance for external works has beenadded.

- 2-3 dwellings – houses £1,079/sq m

- 2-3 dwellings – flats £1,208/sq m (2storey)

- 2-3 dwellings -bungalows

£1,238/sq m

- Single dwellings -house

£1,607/sq m

Retirement housing £1,168 Based on BCIS 5 year median 2 storeysheltered housing; includes 15% for externalworks.

Professional fees 12% of build costsfor 1-3 dwellings;10% of build costsfor 4-50 dwellings8% of build costsfor 51+ dwellings

Finance 6% ofdevelopmentcosts

Marketing fees 3% of market GDV

Developer return (market) 20% of marketGDV

For market housing

Contractor return (AH) 6% of build costs For affordable housing

Stamp Duty Land Tax Variable Depends on land value

Agents/legal costs 2.5% of residualvalue

Sprinklers £3,075 houses,£879 flats

Source Welsh Government. Not requireduntil Jan 2016

Base residual s106 £1,000 perdwelling

To cover play only, based on the MCCInterim Policy Guidance costs of public openspace and children’s’ play.

2.8 In addition to these costs, an additional allowance has been made for development on thelarger sites to reflect additional costs for site specific infrastructure (opening up costs). Asdiscussed at the development industry workshop, this is £100,000 per hectare. This is inaddition to the 15% allowance for external works to cover standard site preparation and theprovision of services within the site to the build plots, frontage roads, landscaping etc.

13 FSB published a report on build costs for small sites (BCIS, 2015, Housing development: the economics of small sites).Three Dragons has reviewed this work and has agreed with BCIS that the build cost issues with smaller sites primarily relateto single dwelling developments and that 2-5 dwelling developments have costs close to the overall average build costs.Therefore single dwelling build costs are based upon the ‘One off development’ build costs provided by BCIS while 2 and 3dwelling developments use 10% above standard build costs, which is the approach used in the 2014 Viability Study.


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2.9 Expressed on a per dwelling basis, for a 'typical' 95 sq m dwelling the external works isc.£11,88014, and at 30 dph the opening up costs are £3,300 per dwelling15, producing acombined total of £15,180/dwelling for costs on larger sites. Added to this will be the sitespecific infrastructure costs for development on the strategic sites. This will vary depending onthe information made available about the sites.

2.10 The costs in Table 2.1 above refer to a base residual s106 payment of £1,000 per dwelling,which will be for onsite open space and children’s play (and is in addition to the build costs,external works and, where applicable, opening up costs). This compares to the current typicals106 contribution of £6,000-£7,000 per dwelling, which also includes contributions for adultrecreation, sustainable transport and education. While the Council has yet to formallydetermine its approach to the use of CIL through a regulation 123 list, the Council has advisedthat the current intention is for adult recreation, strategic highways and education to be fundedthrough CIL and that the £1,000 per dwelling will be the typical post-CIL s106 requirement foreach household. In addition to this base residual s106 payment, the different strategic siteshave their own specific s106 requirements and the cost of these16 have been included withinthe modelling for each of the sites.

2.11 In the analysis of the case studies (see chapter 4), we include additional costs for certain sitesthat the Council expects to be directly funded by the development through a s106 agreement.

2.12 In addition to having a separate build cost, retirement housing has 6% marketing costs and£120,000 empty property costs, sales are spread over three years and 25% of the GIA iscommunal space (i.e. non saleable). Affordable housing assumptions are the same as forgeneral housing i.e. 42% of ACG. Retirement housing is assumed to have 18 months until firstsale, with sales then spread over the next three years.

2.13 The general build cost figures from BCIS have decreased slightly since the 2014 viability testing(except for the single dwelling sites). This confirms anecdotal evidence from around Englandand Wales that the immediate peak in build costs has passed.

Development Values

Market Housing Values

2.14 House prices vary within Monmouthshire and this viability study uses the value areas identifiedas part of the 2010 Affordable Housing Viability Study (AHVS) and accepted as being robust atthe examination into the Council’s Local Development Plan. These value areas were againdiscussed as part of the development industry workshop held in March 2014 and the houseprice analysis undertaken in 2014 and now in 2015 confirms that there are value variationsbetween these areas.

14 The external works allowance is £125/dwelling sq m, multiplied by 95 sq m15 £100,000 divided by 3016 Estimates based upon contact with developers, discussions with Council Officers and reference to the costs used in theSchedule of Infrastructure Provision for Strategic Sites appended to the Local Development Plan.


March 2016 16

Figure 2.2 House Price Areas in Monmouthshire

Contains Ordinance Survey data © Crown copyright and database right 2014

Severnside settlements are identified in Local Development Plan Policy S1 – Caerwent, Caldicot, Magor, Portskewett,Rogiet, Sudbrook and Undy. The ‘Rural Rest of Monmouthshire’ includes the main and minor villages and the ruralsecondary settlements (identified in Local Development Plan Policy S1) and open countryside.


March 2016 17

2.15 The house prices used for this 2015 update take into account the values used in 2014 andassess recent data to determine whether they need to change. The process included thefollowing tasks:

• Review of Land Registry price paid data for new build development in 2014 and 2015, plus

2013 for some locations where there was a particular paucity of data. The values were

reviewed both at their original values and taking into account subsequent changes in themarket (Land Registry’s House price index records an increase of 7% between January 2013

and June 2015, and an increase of 3% from June 2014 to June 2015).

• The Land Registry data was also assessed on a £/sq m basis in order to ensure that

difference in dwelling sizes did not skew the estimates.

• House prices for new build dwellings currently for sale in Monmouthshire were reviewed

against the data from Land Registry. Taking into account a discount from asking to achieved

prices (estimated at 4%), this provides an up to date indication about prices as well asextending the range of data.

• The development industry was consulted about the proposed house prices to be used in the

assessments. This process included circulation of a briefing paper to attendees of the 2014

workshop and telephone interviews with agents active in Monmouthshire17. Adjustmentswere made to the prices in response to the feedback about new build values.

2.16 Therefore the house prices used in this viability study update are based upon professionaljudgement informed by recent achieved new build prices, current new build dwellings for saleand the views of property professionals active in the area. The house price estimates arepresented below. Clearly, individual dwellings may sell above or below these averagesdepending on their size and specific location.

Table 2-2a House prices for Monmouthshire Value Areas – per dwelling

RevisedDwelling Prices Abergavenny Chepstow Monmouth Severnside

Rural rest ofMonmouthshire

1 bed flat £115,000 £125,000 £125,000 £100,000 £115,000

2 bed flat £130,000 £146,000 £140,000 £120,000 £130,000

2 bed terrace £170,000 £175,000 £165,000 £140,000 £179,000

3 bed terrace £195,000 £210,000 £195,000 £170,000 £200,000

3 bed semi £210,000 £215,000 £200,000 £194,000 £210,000

3 bed detached £215,000 £220,000 £210,000 £200,000 £224,000

4 bed detached £310,000 £315,000 £302,000 £290,000 £343,000

5 bed detached £375,000 £380,000 £333,000 £325,000 £395,000Source Three Dragons analysis based on Land Registry Price Paid data for new build, current asking prices (withdiscount) price per sq m and industry consultation.

Table 2-2b House prices for Monmouthshire Value Areas – £/sq m

17 Responses were received from 7 agents active in Monmouthshire


March 2016 18

£/sq m Abergavenny Chepstow Monmouth SevernsideRural rest ofMonmouthshire

1 bed flat £2,556 £2,778 £2,778 £2,222 £2,556

2 bed flat £2,364 £2,655 £2,545 £2,182 £2,364

2 bed terrace £2,615 £2,692 £2,538 £2,154 £2,754

3 bed terrace £2,438 £2,625 £2,438 £2,125 £2,500

3 bed semi £2,471 £2,529 £2,353 £2,282 £2,471

3 bed detached £2,529 £2,588 £2,471 £2,353 £2,635

4 bed detached £2,385 £2,423 £2,323 £2,231 £2,638

5 bed detached £2,419 £2,452 £2,148 £2,097 £2,548Source Three Dragons analysis based on Land Registry Price Paid data for new build, current asking prices (withdiscount) price per sq m and industry consultation.

2.17 Compared to the values used in 2014, house prices have generally increased slightly, which alsoaccords with the rise in the overall Land Registry house price index for Monmouthshire. Theincrease is not uniform and will apply to different dwelling types in different areas. Somedwelling types have seen no change and a minority have decreased in price.

2.18 Waterfront developments are known to create higher than average values. 2012 research18

states that prime UK waterfront properties have a 56% premium over inland equivalents, withestuary locations providing 85% premium, harbour locations 78%, coastal locations 52%, riverlocations 47% and lakeside 28%. While it is unclear to what extent these prime property upliftswill apply in Monmouthshire, it is likely that there will be increased values in water front sites inlocations such as Chepstow. A conservative 25% premium (just under half of the average upliftsuggested in the research) has been applied to a subset (25%) of dwellings assumed to havegood river views for the Fairfield Mabey case study site, which is on the banks of the River Wyein Chepstow. The asking prices for the adjacent Severn Quays waterside site have beenreviewed and these also indicate a premium over ‘standard’ Chepstow values. The SudbrookPaper Mill case study site is also waterfront, but its location at the foot of the second SevernCrossing makes it a less likely candidate for this kind of uplift.

2.19 Small scale “one-off“ developments (up to three dwellings) are also known to support highervalues, related to the bespoke nature of this scale of development. While some one-offdevelopments with special design and space standards will produce very high values, thisviability assessment has sought to model dwellings that are similar to the types of dwellingsthat may also be built as part of larger developments. Based on experience, it has beenassumed that these dwellings will command a 10% premium over their estate counterparts.The single dwelling development has also been sensitivity tested at 20% premium, recognisingthat many single dwellings are bespoke developments able to benefit from a matureenvironment.

18 Knight Frank, 2012, How do waterfront locations affect prices?


March 2016 19

2.20 The values used for modelling the retirement housing are in Table 2.3 below. These have beenestimated using the guidance provided by the Retirement Housing Group19 as there is littlecurrent evidence.

Table 2.3 Retirement Housing Values

Abergavenny Chepstow Monmouth Severnside Rural rest of Monmouthshire

1 bed flat £157,500 £161,250 £150,000 £145,500 £157,500

2 bed flat £210,000 £215,000 £200,000 £194,000 £210,000

Affordable Housing

2.21 Policy S4 of the Local Development Plan sets out the requirement for affordable housing to beprovided. The policy provides targets for affordable housing for the main settlements and forvillages. The following extract shows the policy for the main settlements.

• In Main Towns and Rural Secondary Settlements as identified in Policy S1 development sites

with a capacity for 5 or more dwellings will make provision (subject to appropriate viability

assessment) for 35% of the total number of dwellings on the site to be affordable.

• In the Severnside settlements identified in Policy S1 development sites with a capacity for 5or more dwellings will make provision (subject to appropriate viability assessment) for 25%

of the total number of dwellings on the site to be affordable.

Source Policy S4 Local Development Plan

2.22 These affordable housing targets are used for testing the notional 1 ha tile (in chapter 3) andtesting a range of case study sites (in chapter 4). There are further policies for provision ofaffordable housing in the Main and Minor Villages which we deal with in detail through aselection of case studies in chapter 4.

2.23 The affordable housing is modelled using 42% of the values in the Welsh Government’sAcceptable Cost Guidance20, in line with Monmouthshire County Council’s draft AffordableHousing SPG. The Acceptable Cost Guidance figures used are presented in Table 2.4 below.

19 Retirement Housing Group, 2013, Community Infrastructure Levy and Sheltered Housing/Extra Care Developmentsbriefing note20 Welsh Government, 2015, Acceptable Cost Guidance/On Costs for use with Social Housing Grant Funded Housing inWales.


March 2016 20

Table 2-4 Acceptable Cost Guidance 2015.

Abergavenny,Severnside, Rural

Monmouth, Chepstow

Unit Type Band 4 Band 5

2P1B Flat £101,900 £108,000

3P2B Flat £126,600 £133,500

3P2B Bungalow £157,700 £174700

4P2B House £161,600 £175,500

5P3B House £179,400 £194,200

6P4B House £209,000 £226,000Source Welsh Government.

Types of testing

2.24 Two types of testing have been undertaken for the assessment:

• A notional 1 hectare site (at a range of densities from 30dph to 50dph); tested in thedifferent value areas in Monmouthshire. This is used to explore the differences in viability

between different locations and different densities of development, on a common basis.

• A series of 45 case studies ranging in size from 1 to 450 dwellings.

2.25 Results from the Notional 1 ha tile are reported in chapter 3 and results for the case studies, inchapter 4.


March 2016 21

3 VIABILITY TESTING – NOTIONAL 1 HA TILE

Introduction

3.1 This section of the report sets out the viability assessments for the 1 ha notional tiles, which areused to explore the underlying viability trends across the county.

3.2 The residual value of the notional 1 ha site is calculated using the Three Dragons Toolkit andthen compared with the benchmark land value for the area, to estimate the surplus residualvalue potentially available for CIL.

3.3 We model the 1 ha tile in each of the value areas i.e. Severnside, Monmouth, Chepstow,Abergavenny and rural rest of Monmouthshire. The tile is tested for three different densities ofdevelopment, as agreed with the Council and discussed at the industry development workshop.The three densities are 30 dwellings per hectare (dph), 40 dph and 50 dph. The dwelling mixesfor the market housing reflect feedback from the development industry workshop and ananalysis of development profiles from a sample of recent planning permissions provided by theCouncil.

3.4 For the affordable housing, the Council advised on the type of dwelling for the differentaffordable tenures, based on the mix at a recent scheme. These do not vary with schemedensity. In practice the mix may vary depending on local circumstances.

Table 3.1a Dwelling mixes for the market units – at different development densities

30 dph 40 dph 50 dph

%s %s %s

1 bed flat

2 bed flat 5% 10%

2 bed terrace 10% 15%

3 bed terrace 10% 25% 40%

3 bed semi 15% 35% 15%

3 bed detached 5% 5%

4 bed detached 60% 20% 20%

5 bed detached 10%

Table 3.1b Dwelling mixes for the affordable housing – as %s of total Affordable units –same for all densities

Proportion of affordabledwellings

1 bed flat 22%

2 bed bungalow 3%

2 bed terrace 45%

3 bed terrace 25%

4 bed terrace 5%

Total 100%


March 2016 22

Results for the notional 1 hectare tile

3.5 We tested at affordable housing policy percentages i.e. 35% in all value areas exceptSevernside, which was tested at 25% affordable housing. All testing was undertaken with aresidual s106 requirement of £1,000 per dwelling, allowance for external works, and allowedfor the provision of sprinklers - £879/flat and £3,075 per house.

3.6 To arrive at the maximum potential CIL we:

• Identify the residual value of the scheme being tested;

• Deduct the land value benchmark to identify the ‘surplus’ value available for CIL;

• Divide the surplus by the area of the market dwellings (in £s per sq m)

3.7 Results for each value area are shown in chart 3.1 below, which assumes the standard urbansites land value benchmark of £650,000 per hectare (detailed results are shown in Annex 6).

3.8 Note that the figures presented are the theoretical maximum CIL that might be supported. Inpractice a buffer will need to be included, as required by the CIL guidance.

Chart 3-1: Maximum potential CIL for the 1 ha tile at 30 dph, 40 dph and 50 dph

3.9 Commentary:

• Residual values vary with the value area and density of development and hence there is

considerable variation in the potential for CIL.

• Chepstow and the rural rest of Monmouthshire value area have the strongest viability with

a CIL in excess of £300 per sq m potentially available for at least one development density.


March 2016 23

• The potential for CIL is lower in the Monmouth and Abergavenny value area but even here,

there is at least one development density in each value area that shows a potential CIL of

over £200 per sq m.

• Severnside value area (which already has a lower affordable housing requirement – at 25%)

shows a reduced potential for CIL. At most, this is £170 per sq m with the 30 dph

development mix.

3.10 The PDCS proposed CIL rates for non-strategic sites of £110/sq m in Abergavenny, Chepstowand Monmouth and the Rural Rest of Monmouthshire (with the exception of developmentproposing over 35% affordable housing or retirement housing). It also proposes a CIL rate of£60/sq m for non-strategic sites in Severnside settlements. On the basis of this updated 1hatile testing, both these rates remain sound and there is arguably some scope to increase them,subject to an appropriate buffer and the evidence of infrastructure funding requirements.However it is important to consider the other case studies before coming to a final view on thisissue.


March 2016 24

4 RESIDENTIAL VIABILITY TESTING – CASE STUDY SITES

Introduction

4.1 The Council has identified 87 case studies, varying in size from 1 to 450 dwellings, which reflecttypical sites likely to be brought forward in Monmouthshire over the plan period. The selectionof sites draws on the policies set out in the LDP.

4.2 Understanding the role of different site typologies is useful in assessing the importance of theviability results. The following is an extract from the LDP which highlights for dwellings yet tobe built or otherwise committed:

• The significant contribution from new site allocations (about 73% of total dwellings).

• That windfall sites will make a larger contribution in the main towns of Abergavenny,

Chepstow and Monmouth than in the Severnside settlements but in neither are they to bethe main source of future supply.

• Windfall sites are relatively important in the rural rest of Monmouthshire, particularly small

windfall sites of less than 10 dwellings (59% of total dwellings in Rural Secondary

Settlements and other rural areas excluding those built or with planning permission at 1April 2013).


March 2016 25

Table 4-1 Extract from Monmouthshire County Council Local Development Plan

4.3 We have divided the case studies into two groups – larger (allocated) strategic sites and smallcase studies and report on them separately below while Annexes 2 and 3 provide details of theassumptions used for the testing.

Larger strategic sites (Case Studies 1 to 7)

4.4 The larger strategic case studies mirror the strategic sites allocated in the LDP. They are:

i. SAH1 Deri Farm Abergavenny

ii. SAH2 Crick Road Portskewett

iii. SAH3 Fairfield Mabey Chepstow

iv. SAH4 Wonastow Road Monmouth

v. SAH5 Rockfield Farm Undy


March 2016 26

vi. SAH6 Vinegar Hill Undy

vii. SAH7 Paper Mill Sudbrook

4.5 In modelling larger schemes, there are a number of additional factors that have to be taken intoaccount (and are referred to in the Advice for Planning Practitioners):

• The Advice for Planning Practitioners indicates that large scale schemes incur additionaldevelopment costs that do not apply to smaller sites. We have already included a 15%uplift on build costs (identified by BCIS) for external works (local roads, pavements etc.).As discussed earlier this approximates to just over £12,000 per dwelling or in the orderof £360,000 per hectare for a 30 dph scheme. We make a further allowance to coveritems such as ground remodeling and bringing utilities to the site. We have made astandard allowance for these costs but recognise the figure used is an estimate andactual costs will vary from site to site. The additional costs are at £100,000 per nethectare. At a density of 30 dph this is about £3,300 per dwelling, which added to the£12,000 above takes the total cost per dwelling to well over £15,000.

• In other studies we have undertaken with strategic sites of 1,000 dwellings or more, weuse a higher cost but for strategic sites of this scale and location (in relation to existingservices), we consider the figure of £100,000 to be adequate. Two of the strategic sites(at SAH3 Fairfield Mabey and the SAH7 Paper Mill Sudbrook) are brownfield sites. Inthese cases the £100,000 per hectare is for site clearance etc. rather than bringing innew services etc.

• The developable area will sometimes be less than the gross area of the allocated site.The percentages used have been discussed with the Council and reflect sitecharacteristics and how requirements for open space will be met. For Rockfield Farmand Vinegar Hill an allowance has been made on the advice of the Council for the landtake for a Magor-Undy bypass.

• Completion of the schemes will take a number of years and this is reflected in themodeling process. Residual values have been calculated using the discounted cash flowfacility within the Three Dragons Toolkit, using an appropriate discount rate. Amongstother factors, this takes account of rates of sale and the timings of costs and revenues.

4.6 Each strategic site has a series of requirements set out in the LDP which are to be fundedthrough site-specific s106 agreements (and not through CIL). Where an issue is required bypolicy we have included it within the viability appraisal, such as the undergrounding of powercables in Deri Farm. Some sites have costs associated with making the site suitable fordevelopment (e.g. decontamination of brownfield land) and where these might reasonably bejudged to form part of any due diligence we have assumed that they will feature in anynegotiations about purchasing the land and the price adjusted accordingly – i.e. a cost to thelandowner not a cost to the development or the community. For example this would includedecontamination and site clearance costs for the brownfield strategic sites at Sudbrook Mill andFairfield Mabey.


March 2016 27

4.7 To obtain the best estimates for all these requirements we have consulted the Council who, inturn, wrote to all the scheme promoters following the development industry workshop in 2014and more recently as part of this update in 2015. Where we have not been provided with up todate information, we have used information from the previous report that assessed thestrategic sites (Affordable Housing/Strategic Viability Study – 2011 update) and our owninformation sources. Costs include items such as transport, community facilities, moving powercables, specific greenspace requirements etc. It is not possible to itemise costs as someinformation has been provided on a confidential basis. In all cases, the costs shown are bestestimates and will be subject to change when schemes are further advanced in design andplanning terms. This is important when considering the use of a buffer in setting the CIL rate.

4.8 The Council has advised on changes to the costs borne by some strategic sites:

• SAH1 Deri Farm requires undergrounding/moving the overhead power lines across the site.

Costs for undertaking this have increased from the £4m estimated in 2014 to £5m in thiswork.

• SAH3 Fairfield Mabey has been tested without and with the £1.7m cost of High Beech

roundabout improvements, in addition to the other LDP requirements. These are Scenario1 and Scenario 2 respectively. The Council has advised that it is probable that the

roundabout improvements will not be required and therefore this is a sensitivity test rather

than the anticipated outcome. The other site specific costs for Fairfield Mabey haveincreased to reflect the transfer of a cost item from CIL to s106 and increased cost

estimates for other items.

• SAH5 Rockfield Farm and the adjacent SAH6 Vinegar Hill continue to be tested with

different Magor bypass scenarios in addition to the other LDP requirements:

o Non-frontage distributor road – c.£1.3m for Rockfield Farm and c.£1.5m forVinegar Hill. This is Scenario 1 for both of these sites.

o By-pass standard road – c.£1.6m for Rock Field Farm and c.£1.9m for Vinegar

Hill. This is Scenario 2 for both of these sites.

o Route safeguarded – adjustment to gross to net only and no direct cost for road

construction. This is Scenario 3 for both of these sites.

The Council has advised that it is probable that a by-pass will not be required (as the M4relief road consultation is now taking place) and so a non-frontage road is the most likelyrequirement (Scenario 1).

• There have been minor changes to the cost of the ecology infrastructure required for SAH7

Sudbrook Mill.

4.9 SAH4 Wonastow Road is now partly consented. However it is not clear how the infrastructurecosts are split between the consented and unconsented sections of the site and so the wholesite is tested, with the assumption that the overall site will continue to provide the 450dwellings set out in the LDP.

4.10 The following table summarises the key information we have used for the larger case studies,all the other assumptions are as for the notional 1 hectare scheme.


March 2016 28

Table 4 – 2 Large Strategic Case Studies Characteristics

Name Dwgs grossha

netha

grossto net

dph Whatmix?

market valuearea

%AH

BLV deliverypa(starting2015/16

Opening upcosts

Strategic Sitesspecific costs

SAH1 Deri FarmAbergavenny

250 8.7 7.7 89% 32 30 dph Abergavenny 35% £250,000 20pa inyr 1, 40pa after

£100,000/netha

£5,250,000

SAH2 CrickRoad,Portskewett(Severnside)

285 9.95 7.7 77% 37 40 dph Severnside 25% £250,000 55pa £100,000/netha

£120,000

SAH3 FairfieldMabey,Chepstow

350 13.1 9.50 73% 37 40 dph Chepstow 35% £650,000 45pa inyr 1, 90pa after

£100,000/netha

Two scenarios£5.55m/£7.24m

SAH4WonastowRoad,Monmouth

450 19.61 16.46 84% 31 30 dph Monmouth 35% £250,000 62pa inyr 1, 100pa after

£100,000/netha

£420,000

SAH5 RockfieldFarm, Undy(Severnside)

270 9 8.20 91% 33 30 dph Severnside 25% £250,000 55pa £100,000/netha

Threescenarios

£1.7m/£1.97m/£0.4m

SAH6 VinegarHill, Undy(Severnside)


Threescenarios

£2.0m/£2.32m/£0.45m

SAH7 PaperMill, Sudbrook,(Severnside)


£34,200


March 2016 29

4.11 The testing results for the large strategic case studies are summarised below. The results showthe maximum potential CIL with the upper and lower benchmark land values for strategicgreenfield land, while the brownfield sites have a single standard benchmark land value. In allcases the modelling has taken into account a residual s106 allowance of £1,000 per dwellingand an allowance for sprinklers of £879 per flat and £3,075 per house.

4.12 Again we model sites in Severnside with a lower affordable housing requirement thanelsewhere (25% compared to 35%).

4.13 To calculate the maximum potential CIL, we take the residual value per gross hectare, deductthe upper or lower benchmark value and then divide by the market floor area per gross hectareof the scheme. The upper benchmark value will generate a lower potential CIL rate than thelower benchmark value. Where a scheme is located within an urban area, a benchmark of£650,000 per hectare is applied, whilst large greenfield sites are measured against an upperbenchmark of £300,000 and a lower benchmark of £250,000 per gross hectare. Again, it isimportant to note that the figures presented are the theoretical maximum CIL that might besupported.


March 2016 30

Figure 4-1 Large Strategic Case Studies –Maximum Potential CIL

4.14 All the strategic sites except SAH3 Fairfield Mabey produce a residual value above thebenchmark land value and therefore there is potential to charge a CIL but there are significantdifferences between the economic viability of the sites:

i. SAH4 Wonastow Road generates the highest potential CIL of £274/sq m against the highergreenfield land benchmark.


March 2016 31

ii. SAH2 Crick Road, SAH5 Rockfield Farm (scenario 1 – non-frontage road) and SAH6 VinegarHill (scenario 1 non-frontage road) all have a potential maximum CIL of between £216-£248/sq m against the higher land value.

iii. SAH3 Fairfield Mabey Chepstow is measured against the urban benchmark of £650,000 pergross hectare (because it has a previous use as an industrial site). The testing includessignificant additional costs and as a result the site is marginally viable and unable to supporta CIL (Scenario 1). If the development also has to fund High Beech Roundaboutimprovements (Scenario 2), then the residual value will fall significantly below thebenchmark.

iv. SAH7 Sudbrook Paper Mill is also measured against the urban benchmark of £650,000 pergross hectare (again because it has a previous use as an industrial site) and generates amaximum potential CIL of £172 / sq m. When Sudbrook Mill was tested in 2014 the viabilitywas not strong enough to support a CIL, even though relatively little site specificinfrastructure was required as part of policy SAH721 and the site provides less affordablehousing than the other strategic sites. However, the values are now estimated to have risenin Severnside and this has strengthened the viability to the extent that it is able to support aCIL.

v. SAH1 Deri Farm is able to support a potential maximum CIL of £104/sq m against the higherland value.

4.15 The PDCS proposed CIL rates for strategic sites of £60/sq m except for Sudbrook Mill, which wasproposed to have a CIL of £0. On the basis of this updated strategic site testing, the rates willrequire some amendment:

• Significant additional costs have been identified for Fairfield Mabey and as a result this site

will no longer be able to support a CIL. Some of the additional costs result frominfrastructure being paid for by s106 rather than CIL, as agreed with Monmouthshire County

Council.

• The general cost and value changes for Sudbrook Mill has meant that the site can now

support a CIL, with a theoretical maximum comparable to other strategic sites.

• The £60/sq m rate proposed in the PDCS remains achievable for the other strategic sites

and there is some scope to increase it, subject to an appropriate buffer and the evidence of

infrastructure funding requirements. However, it should be noted that the viability at Deri

Farm is less strong in relative terms (as a result of the additional undergrounding costs) andfor this site the scope for increases is limited.

Small Case Study Sites (Case Studies 8 - 82)

4.16 The smaller case studies are hypothetical schemes representative of future development inMonmouthshire (away from the strategic sites). They are based on information about sitesallocated in the LDP but should also be representative of windfall developments. The small

21 Only ecological mitigation totalling £34,700 for the whole site.


March 2016 32

case studies vary in size from 1 to 35 dwellings. The choice of small case studies reflects anumber of factors:

• Build costs vary between single dwelling developments and developments of two/three

dwellings. Build costs also vary between developments of two/three dwellings and four or

more dwellings22.

• Values differ between 1-3 dwelling developments and 4 or more dwellings23.

• Policy S4 requires that on developments of 5 or more dwellings where 35%/25% affordablehousing is required, the number of units is rounded, with ½ unit rounding up. In practice

this means that the affordable housing requirement will vary around the 35%/25% headline

rates. The effect is most pronounced for the smaller sites (below 25 dwellings). Above 30dwellings the effect is de minis and has been ignored for the purposes of the testing.

Case Studies 8-73

4.17 The first group of small case studies are of developments that will provide the ‘normal’ policylevel of affordable housing i.e. 25% in Severnside and 35% elsewhere. These case studies rangefrom single dwellings to 35 dwellings in the market towns and Severnside. Differentdevelopment sizes are tested in Severnside and in the market towns to ensure that the testingtakes account of the instances where the requirement is above the headline rate because ofrounding up of affordable units.

4.18 For these small case studies, we assume that development occurs within one year and wefollow a similar approach to that used for the other testing, with the benchmark land valuededucted from the residual value to estimate the additional value available for a CIL charge.

4.19 Table 4-3 below sets out the key characteristics of the small case studies, all other assumptionsare as for the notional 1 ha scheme including an assumption that all dwellings have to meet aresidual s106 payment of £1,000 per dwelling and there is an additional cost to providesprinklers.

4.20 The 1, 2 and 3 dwelling case studies are tested using higher build costs, as referred to aboveand discussed in section 2. The impact of these higher build costs are particularly evident forthe single dwelling developments24. These smaller sites are also tested with 10% higher values,reflecting the likely premium over estate housing. The single dwelling case study is also testedat 20% premium as a sensitivity test.

22 See section 2 for the details of build costs used23 See section 2 for details of the dwelling values used24 Although this does not preclude the possibility that single development may come forward at costs similar to the 2 and 3dwelling developments.


March 2016 33

Table 4-3 Severnside Small Case Study Characteristics

Dwgs Gross ha Net haNet togross(%)

DevelopmentPeriod

AH %Dwelling Mix

35 1.17 1.17 100% 1 year 25.00%30 dph blended mix ofterrace/semi/detached
















2 0.07 0.07 100% 1 year 25.00%Two 4 bed detachedhouses

1 0.03 0.03 100% 1 year 25.00%One 4 bed detachedhouse

Table 4-4 Market Towns Small Case Study Characteristics


DevelopmentPeriod

AH %Dwelling Mix




March 2016 34


DevelopmentPeriod

AH %Dwelling Mix













2 0.07 0.07 100% 1 year 35.00%Two 4 bed detachedhouses

1 0.03 0.03 100% 1 year 35.00%One 4 bed detachedhouse

4.21 The results of the viability testing for the small case studies are set out in the following charts.


March 2016 35

Figure 4-2 Severnside Small Site Case Studies 8 - 25 Maximum Potential CIL


March 2016 36

Figure 4-3 Monmouth Small Site Case Studies 26-41 Maximum Potential CIL


March 2016 37

Figure 4-4 Chepstow Small Site Case Studies 42 - 57 Maximum Potential CIL


March 2016 38

Figure 4-5 Abergavenny Small Site Case Studies 58 - 73 Maximum Potential CIL

4.22 Most of the case studies 8 to 73 generate residual values over the land value benchmark andtherefore can potentially make some level of CIL payment. The main issue with these smallercase studies is the single dwelling sites, where despite the value premium, the considerablyhigher build costs result in much poorer viability.

4.23 The two dwelling case studies comprise two 4-bed houses and these are viable, although at alower maximum potential CIL. Along with the poor viability for the single dwelling sites, therelatively weak viability for the two dwelling sites is the main difference between the variouscase studies and is apparent across the different value areas tested. Some of this differencestems from the impact of the different dwelling mixes used for different case studies; so wherethe three dwelling case studies uses the standard 30 dph mix of house types viability is stronger


March 2016 39

compared to the weaker viability two dwelling case study based on a pair of four bed detachedhouses. While a pair of detached houses on a site is very plausible, other dwelling mixes mayprovide better viability where the site is suitable25.

4.24 There is relatively little difference between the viability of the larger of these small case studieswithin each value zone. The differences between value zones reflect the lower values inSevernside and the higher values in Chepstow, with Abergavenny and Monmouth fallingbetween them. Note that the extent of the difference in value zones between Severnside andthe market towns is masked by the lower proportions of affordable housing built into theSevernside modelling.

4.25 The single dwelling schemes have also been modelled with a 20% premium in values as asensitivity test as single dwellings may attract considerably higher values than estate housing insome circumstances. While this strengthened the viability, it still failed to compensate for thehigher build costs26. Therefore, even with this premium single dwelling developments areunable to support a CIL.

4.26 The conclusions about the CIL that might be supported by these types of site are:

• Single dwelling sites have little ability to pay CIL

• Other small sites of two or three dwellings can support a CIL payment. The detail of the

dwelling mix will have an impact on viability and the two dwelling sites modelled have apoorer viability than the three dwelling sites. The two dwelling sites can support a

theoretical maximum CIL of between £56/sq m and £115/sq m; and the three dwelling case

studies can support a theoretical maximum CIL of between £186/sq m to £294/sq m.

• Four to 35 dwelling sites may be able to support a theoretical maximum CIL of between£110/sq m and £303/sq m, depending on the value area.

4.27 The PDCS proposed a CIL of £60/sq m for non-strategic sites in Severnside and £110/sq m fornon-strategic sites elsewhere (except for developments providing more than 35% affordablehousing). The findings from these small sites case studies suggests that this needs to change,with single dwelling sites not able to pay CIL and some two dwelling developments only able tosupport a lower CIL. Apart from that, the other proposed charges of £60/sq m for non-strategic sites in Severnside and £110/sq m for non-strategic sites elsewhere can be supportedand if necessary, increased. However, this would result in some two dwelling sites beingunviable if they were included in these CIL charges.

Case Studies 74-82

4.28 The adopted LDP includes a policy which allows some residential development in villages butonly when this achieves a high proportion of affordable housing. The relevant extract from theLDP is shown below.

25 Sensitivity testing with alternative dwelling mixes for the 2 dwelling case studies added 13% to the residual value inSevernside and 42% to the residual value in Abergavenny.26 The additional values sensitivity tests added c.£200/sq m on the residual values.


March 2016 40

Figure 4-3 Extract from Monmouthshire County Council Local Development Plan –Policy S4

4.29 We have tested this policy but only in the rural rest of Monmouthshire value area. There is nospecific land value benchmark that can be easily identified for these sites as they are notavailable for other forms of development. However, it is highly unlikely that they would bebrought forward if the residual value did not at least exceed agricultural land value.

4.30 The following table sets out the characteristics of the sites, which includes one larger scheme at15 dwellings and different schemes of 1, 2, 3 or 4 dwellings. All assumptions are as for the 1 hatile. However, we have considered the composition of the small case studies in more detail andhave taken advice from the Council on the make-up of the 15 dwelling scheme. Case studies78-82 relate to the Main Villages and case studies 83 to 86 relate to the Minor Villages.

Table 4-4 Details of Case Studies 74 to 82

CaseStudy Scheme MVA

Grossha

Netha

Net togross(%)

DevelopmentPeriod

Market% AH %

74 Main villages (4 dwgs) Rural 0.13 0.13 100% 1 year 40% 60%




78 Main Villages (15dwgs) Rural 0.50 0.50 100% 1 year 40% 60%

79 Minor Village (4 dwgs) Rural 0.13 0.13 100% 1 year 25% 75%

80 Minor Village (3 dwgs) Rural 0.10 0.10 100% 1 year 33% 67%


March 2016 41


Grossha

Netha

Net togross(%)

DevelopmentPeriod

Market% AH %

81 Minor Village Small (2 dwgs) Rural 0.07 0.07 100% 1 year 33% 67%

82 Minor Village Small (1 dwg) Rural 0.03 0.03 100% 1 year 33% 67%

4.31 The residual values generated by the schemes are set out in Table 4.5 below. Thisdemonstrates that the Main Village three and four dwelling case studies and 15 dwellingschemes generate a value well in excess of agricultural land values at 60% affordable housing(although less than the standard urban benchmark), while the Main Village two and singledwelling schemes are not viable. Again, the higher build costs (especially for the single dwellingscheme) and the impact of the dwelling mix are the main reasons for the poorer viability for thesingle and two dwelling schemes compared to the larger exception sites.

4.32 At higher proportions of affordable housing in Minor villages viability is weaker although thethree and four dwelling schemes are stronger than the single and two dwelling schemes. Therelative lack of viability means that most of these schemes are only likely to proceed if valuesare higher or costs lower than those modelled here.

4.33 Delivery of the Local Development Plan is not dependent on these affordable-led schemes andthe Council acknowledges that they will only proceed where the specific format of a schemeand local circumstances generate sufficient value above the costs of development. It is clearthat overall the emphasis for these sites is providing affordable housing and there is noopportunity to charge CIL on these exception sites.


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Table 4-5 Residual Value for Case Studies 74 to 82 – Exception Sites


AH%

ResidualValue

ResidualValue/gross

haResidual

Value/plot

74 Main villages (4 dwgs) Rural 60% £72,000 £553,846 £18,000

75 Main villages (3 dwgs) Rural 60% £46,000 £460,000 £15,333

76 Main villages (2 dwgs) Rural 60% -£12,000 -£179,104 -£6,000

77 Main villages (1 dwgs) Rural 60% -£89,000 -£2,696,970 -£89,000

78 Main Villages (15dwgs) Rural 60% £263,000 £526,000 £17,533

79 Minor Village (4 dwgs) Rural 75% -£5,000 -£38,462 -£1,250

80 Minor Village (3 dwgs) Rural 67% £17,000 £170,000 £5,667

81 Minor Village (2 dwgs) Rural 67% -£41,000 -£611,940 -£20,500

82 Minor Village (1 dwg) Rural 67% -£105,000 -£3,181,818 -£105,000

Case studies 83-87 Retirement Housing

4.34 The testing has also included a retirement housing scheme of 50 units on a 0.5ha plot, locatedin each of the value areas at the relevant affordable housing percentage. The retirementschemes were not viable in any of the value zones at policy compliant affordable housing. Itremains possible that retirement schemes will come forward, perhaps on the basis ofnegotiated affordable housing. However, it would be prudent to exempt all retirement housingfrom CIL.

Other Housing

4.35 Care homes are considered under the separate non-residential viability testing.

4.36 The Council has advised that there is no market for student accommodation in Monmouthshireand therefore there is no purpose in testing its viability nor any evidence on which to base anytesting.

Summary

4.37 The CIL rates in the PDCS will need to be amended to take account of the updated costs andvalues tested for the current study. This includes changes to the specific costs associated with


March 2016 43

the strategic sites as well as the general costs and values. The higher build costs associatedwith smaller sites sites has had an impact on the CIL that may be raised from this scale ofdevelopment although, build costs for schemes of 2 or 3 dwellings are less than for singledwelling developments.

4.38 The potential CIL from the strategic sites varies, with the cost of site-specific infrastructurehaving more of an impact than location. Apart from the Wonastow Road site which ispotentially able to support a CIL of over £274/sq m, the majority of the rest of the strategic sitesare able to support a theoretical maximum CIL of between £170/sq m to £238/sq m. The clearexception to this is SAH3 Fairfield Mabey which is marginal and unable to support any CIL, andalso SAH1 Deri Farm which has to bear relatively high infrastructure costs and can only supporta theoretical maximum CIL of £104/sq m.

4.39 Small sites in the market towns and Severnside show relatively strong viability, with theoreticalmaximum CIL rates of £110/sq m to £303/sq m – except for the smallest sites.

• The two dwelling schemes modelled are less viable than developments with three or more

dwellings.

• Single dwellings are modelled using particularly high build costs in line with BCIS. These are

not viable at this level of cost, even with premium values. They are not able to support any

CIL.

4.40 All the above rates are theoretical maximum rates and should take into account the need tointroduce a viability buffer.

4.41 Village schemes required to provide a high percentage of affordable housing are very varied inthe residual values they generate. It is unlikely that they can make any CIL payments andremain viable.

4.42 Retirement housing is unable to support a CIL.


March 2016 44

5 RESIDENTIAL VIABILITY CONCLUSIONS

Introduction

5.1 This viability study has been undertaken to update the viability findings in order to considerwhether the CIL rates proposed in the PDCS remain sound or need to be changed.

5.2 The process for developing potential CIL rates is a set of structured qualitative judgementswhich takes account of the type of development being tested and the role of this developmentin delivering the adopted Local Development Plan.

5.3 Comparing the results from the current viability study with those of a year ago, thestrengthening market and payment for affordable housing based on ACGs has had a biggerimpact on the residual values calculated than the changes in build costs and use of DQR for theaffordable housing over the same period. For some of the strategic sites, the changes in thesite specific infrastructure required have also changed the viability. The variations in theviability demonstrate the impact of changes in the testing assumptions, and it would beprudent to take a conservative view about the potential changes to CIL.

5.4 However the difference in values in different parts of Monmouthshire remains, with values inSevernside remaining lower than other parts of the area. Set against this in terms of setting aCIL rate is the lower affordable housing proportion required in Severnside.

5.5 The testing using the 1ha tiles and the smaller case studies shows that the PDCS proposed£60/sq m for non-strategic development in Severnside and £110/sq m for non-strategicdevelopment in the main towns and rural Monmouthshire remains broadly sound, with theproviso that single dwelling developments could be set at £0 CIL as a precaution against thehigher build costs. Some two dwelling schemes are not able to support £110/sq m, and it maybe necessary to set a lower or £0 CIL for these. However other schemes are able to support asignificantly higher CIL charge. As discussed in section 4, the village affordable-led schemes andthe retirement housing schemes are not able to support a CIL.

5.6 For the strategic sites, Sudbrook Mill is now able to support a CIL while Fairfield Mabey is nolonger able to support CIL. Apart from Fairfield Mabey, all of the strategic sites can support the£60/sq m in the PDCS and apart from Deri Farm and Fairfield Mabey, most of the strategic sitescould afford considerably more.

5.7 Taking this into account, the following revised CIL rates are proposed:

A standard CIL charge of £80/sqm for development of 3 or more dwellings except for:

• Deri Farm, which remains at £60/sq m;

• Fairfield Mabey, single dwelling and two dwelling sites, sites with over 35% affordable

housing and retirement housing which are all £0 rated;

• Non-strategic development of 3 or more dwellings in Monmouth, which will have a rate of

£100/sq m;

• And other non-strategic development of 3 or more dwellings in Monmouthshire (excluding

Severnside) which is £120/sq m.


March 2016 45

5.8 This includes a 30% buffer applied to the theoretical maximum CIL rates discussed earlier, aswell as reflecting the CIL guidance preference for simplicity. This also preserves a substantialbuffer for the majority of strategic sites, which will help to ensure delivery is less susceptible tofuture adverse cost or value changes.

5.9 Non-strategic development in Monmouth is able to meet the proposed £120/sq m ratealthough the buffer is considerably less than 30% in some cases. Therefore, the £100/sq m rateis proposed in order to maintain a suitable buffer in this location.

5.10 The proposed rate of £120/sq m for non-strategic development elsewhere in Monmouthshire(£80/sq m in Severnside) may render some two dwelling sites unviable, although it is likely thatdifferent dwelling mixes will improve viability for some development. However, on aprecautionary basis a zero rate is recommended for two dwelling developments.

Table 5.1 Recommended CIL Rates

Development Recommended CIL rates

Deri Farm, Abergavenny £60

Crick Road, Portskewett £80

Fairfield Mabey, Chepstow £0

Wonastow Road, Monmouth £80

Rockfield Farm, Undy £80

Vinegar Hill, Undy £80

Sudbrook Paper Mill £80

Sites of less than 3 dwellings anywhere inMonmouthshire

£0

Non-strategic development of 3 or moredwellings in Severnside

£80

Non-strategic development of 3 or moredwellings in Monmouth

£100

Other non-strategic development of 3 or moredwellings elsewhere in Monmouthshire

£120

Sites with over 35% affordable housing £0

Retirement housing £0

5.11 On a ‘typical’ 85 sq m market 3 bed semi the proposed charges would be £6,800 where the£80/sq m rate applies and £10,200 where the £120/sq m rate applies. The equivalents will be£10,400 and £15,600 respectively for a 130 sq m four bed detached house. This would be inaddition to the typical £1,000/dwelling residual s106 and any of the obligations affectingdevelopment on the strategic sites. This compares to the current typical s106 payments of£6,000-£7,000 per dwelling, indicating much of the development in Monmouthshire will bepaying more under CIL than s106, particularly non-strategic development in higher value areas.Sites of less than 3 dwellings will be unaffected by CIL. CIL will remain a small part of thedevelopment costs and value – e.g. Case study 67 with 10 dwellings in Abergavenny will have aCIL of £120/sq m totalling approximately £85,320 which is 5.2% of total scheme developmentcost (excluding land purchase) and 4.3% of gross development value.


March 2016 46

5.12 It is likely that most of the single dwelling developments will be classified as custom or self-build, which are exempt from CIL. As a result having a £0 CIL rate for single dwellings willprobably not make much difference to the CIL revenue available to pay for infrastructure.

ANNEX 1Benchmark Land Values

Land value benchmarks

1. Establishing suitable land value benchmarks is an important part of any viabilitytesting. Welsh Government guidance1states that viability is a key factor in strikingthe balance between collecting revenue and not setting rates too high (para 2.2);and that viability studies should concentrate on sites where the imposition of CILmay have an impact on viability (para 2.18). It is noted that land values across anarea may already result in development becoming unviable or marginal and thisneeds to be considered (para 2.20).

2. Department for Communities and Local Government CIL guidance 2 applies in Walesand states that a charging authority should use ‘appropriate available evidence’,recognising that it is unlikely to be fully comprehensive and this will include values ofland in both existing and planned uses (2.2.2.4).

3. The Advice for planning practitioners3 sets out a preferred approach in the followingextract from page 29:

“We recommend that the Threshold Land Value is based on a premium over currentuse values and credible alternative use values (noting the exceptions below…….).”

4. The exceptions referred to in the Advice for planning practitioners reflect thesignificant differences in the types of current use found within settlements and ongreenfield land adjoining settlements. The exceptions are summarised as:

• Larger scale sites for urban extensions on greenfield land where the uplift oncurrent use value (agricultural land) sought by the landowner will be significantlyhigher than in an urban context.

• Smaller, edge-of-settlement greenfield sites, where landowners’ requiredreturns will be more like those for sites within the settlement.

5. Advice for planning practitioners states that reference to market values can stillprovide a useful ‘sense check’ on the benchmark values that are being used fortesting, but it is not recommended that these are used as the basis for the input to amodel. This is an important concept and explains why the land value benchmarkused to test plan policies (and CIL rates) can be less than the value at which land isbeing traded in the market. This point was highlighted in a recent CIL examiner’sreport4:

“Finally the price paid for development land may be reduced. As with profit levels there maybe cries that this is unrealistic, but a reduction in development land value is an inherent partof the CIL concept. It may be argued that such a reduction may be all very well in the mediumto long term but it is impossible in the short term because of the price already paid/agreedfor development land. The difficulty with that argument is that if accepted the prospect ofraising funds for infrastructure would be forever receding into the future. In any event insome instances it may be possible for contracts and options to be re-negotiated in the light ofthe changed circumstances arising from the imposition of CIL charges.” (para 32)

1 Welsh Government, 2011, Community Infrastructure Levy Preparation of a Charging Schedule,2 DCLG, 2014, Community Infrastructure Levy Guidance3 Local Housing Delivery Group, 2012, Viability Testing Local Plans4 Report to The Mayor of London, by Keith Holland January 2012

6. In addition to the guidance advocating the use of premium over existing use value(particularly the Local Housing Delivery Group, 2012), recent RICS research5

highlights the issues with using market values to set land benchmarks – “If marketvalue is based on comparable evidence without proper adjustment to reflect policycompliant planning obligations, this introduces a circularity, which encouragesdevelopers to overpay for sites and try to recover some or all of this overpayment viareductions in planning obligations”. Furthermore, there are tangible differencesbetween the types of appraisals supporting market values and those used for areawide viability appraisals such as this CIL study. These differences further highlightthe issues with using market value comparables to set benchmarks:

Appraisal Input Area-wide viability study Developer appraisal to informland purchase

Sales values Current day Potentially inflated to take intoaccount of market rises

Build costs Current day full BCIS cost Value engineered

Profit Full target applied Not at target level

Planning requirements Applied in full Potentially squeezed

Site costs Extensive None/limited

Development Programme Lengthy Short

7. Therefore the basis for establishing the land values is a rounded view including thebenchmarks established as part of the local plan process, published reports on landvalues, consultation with the development industry and a review of the sale priceinformation available from Land Registry.

8. The Homes and Communities Agency is the housing and regeneration agency forEngland. As part of its work it is concerned with viability to ensure delivery ofmarket and affordable housing. It provides some generic guidance on land valuebenchmarking6 which states that in relation to the required premium above existinguse value (EUV):

“Benchmarks and evidence from planning appeals tend to be in a range of 10% to30% above EUV in urban areas. For greenfield land, benchmarks tend to be in a rangeof 10 to 20 times agricultural value”. (page 9)7

9. Another report in 2011 also undertaken in England for the Department forCommunities and Local Government8 also provides generic guidance on land valuebenchmarking. It suggested that a premium of 25% over existing use value wasrequired to bring forward industrial land for redevelopment. The premium forgreenfield land was said to be higher, recognising that while the existing use valuebase is low, the costs normally associated with realising new development onunserviced greenfield land are considerable.

5 RICS, 2015, Financial Viability Appraisal in Planning Decisions: Theory and Practice6 Annex 1 (Transparent Viability Assumptions) to the Homes and Communities Agency guidance for its AreaWide Viability Model, August 20107 Homes and Communities Agency, 2010, Annex 1 (Transparent Viability Assumptions)8 Turner Morum, 2011, Cumulative impacts of regulations on house builders and landowners

10. For residential land, current use value is taken as industrial land for urban sites andagricultural land for strategic sites/urban extensions, with appropriate upliftsapplied. Sites are taken as being suitable for development but not necessarilyconsented.

11. The benchmarks refer to sites suitable for development i.e. not constrained byabnormal conditions such as contamination from previous uses or archeological ortopographical constraints etc. Where these abnormal constraints can reasonably bejudged to form part of any due diligence we have assumed that they will feature inany negotiations about purchasing the land and the price adjusted accordingly. It isof course possible that in some circumstances the costs of dealing with theconstraints is greater than the existing use value. In these situations it may be bestthat either the site remains in its existing use or that if it is strategically important,third party funding is sought to assist redevelopment.

Implications for Residential Benchmark Land Values in Monmouthshire

12. The key factors to be taken into consideration are:

• The land values used for the Affordable Housing Viability Study in the LocalDevelopment Plan, which was examined in 2013 and adopted in 2014.

• Published research reports on land values.

• Consultation with the development industry active in Monmouthshire.

• Data from Land Registry.

Local Development Plan

13. The Monmouthshire Local Development Plan examination ended in October 2013and the Plan was adopted in February 2014. The evidence base for this plan wasalso considered at examination and included land values as part of the AffordableHousing Viability Study (AHVS). The AHVS was originally undertaken and thenupdated in 2011 and 2012 to reflect progress in the LDP and to take account ofmarket changes. The AHVS stated that

“Based on information from the Valuation Office Agency (VOA), local data and localindustry experience a benchmark of £650,000 per hectare, allowing for an uplift onindustrial land values (as an alternative/existing use), appears to be a realisticminimum level at which land might be expected to come forward for residentialdevelopment.”

Published Land Value Research

14. Recent information on agricultural land values can be found through the reportspublished by estate agents. In 2014, Smiths Gore9 suggests that the value offarmland in Wales has risen since 2010, and varied between £20,000 and £28,000per ha. Knight Frank stated that Wales farmland is between £11,000 per ha to£27,000 per ha in 201410 (excluding upland grazing, which has less value).

9 Smiths Gore, 2014, Farmland Market Great Britain 2014Q110 Knight Frank, 2014,

15. The latest information from the Valuation Office Agency showed that clearedindustrial development sites 0.5-1 ha in Cardiff had a value of £620,000 per ha in201111, although we acknowledge that this information is somewhat dated.

16. Elsewhere in South Wales, the residential benchmark land values referred to in theCaerphilly CBC CIL examination12 were typically £500,000 per ha, although this fell to£200,000 per hectare in some areas. The benchmark land values in Merthy Tydfil(jointly examined with Caerphilly13), ranged between £250,000 per ha to £500,000per ha. In Caerphilly the examiner rejected evidence of higher value landtransactions which were based on permissions with lower affordable housing.House price data14 shows that Monmouthshire has higher values than Caerphilly andMerthyr Tydfil and this may result in higher land values.

Consultation with the Development Industry

17. The development industry workshop held at Monmouthshire Council’s offices inMarch 2014 discussed the proposed threshold land values of £650,000 per ha forurban sites based on an uplift on alternative use (taken to be industrial land) and£250,000 per ha for strategic greenfield sites. Development industry representativesconsidered that these values are low but no specific alternatives were put forwardand it was acknowledged that there has been limited activity in recent years. Takinginto account that the benchmark should represent what a realistic landowner mightbe willing to bring land forward for with policies in place rather than the highestvalues that might be achieved, £650,000/ha was considered acceptable. Thedevelopment industry workshop did not suggest that there were specific differentthresholds within Monmouthshire.

18. The discussion in the development industry workshop was supported by separatediscussion with agents and desk research, which indicated land values for industrialand other non-residential development were in the region of £400,000 to £700,000depending largely upon location.

Land Registry

19. Land registry is able to provide information on recorded values in land titles. Titleswere identified within the strategic site allocations in the Local Development Planand a subset of these were able to reveal information about values. This informationfrom Land Registry shows that there have been agricultural value land transactionsat £11,600 per ha to £14,500 per ha in Monmouthshire 2010-2012, similar to thedata noted above.

20. There is also evidence of prices rising well above agricultural values as the residentialdevelopment potential is identified as part of the site promotion process. Thevariation in these transaction values is large, both above and below the benchmarkssuggested in the workshop. By itself, the transaction evidence does not indicatethat the suggested benchmarks are incorrect although the paucity of transactions

11 VOA, 2012, Property Market Report12 Philip Staddon, 2014, Report to Caerphilly CBC13 Philip Staddon, 2014, Report to Merthyr Tydfil CBC14 Land Registry, 2014, House price index

and spread of values mean that it would be difficult to set a benchmark on thisevidence alone. The transaction data did not suggest that it was necessary to setspecific benchmarks in different part of Monmouthshire.

21. The table below includes land titles with financial information held by Land Registryfor areas allocated for development in the Local Development Plan. There is nobackground information about option agreements etc. and the spread of values issuch that an arithmetic mean or median would not be prudent. However, the valuesdo not indicate that the benchmarks need to be amended.

Location Area (ha) Price £/ha Date Notes

Chepstow 52.7 £650,000 £12,343 2010

Part of thesite has aresidentialallocationyet valued asagricultural

Undy 5.28 £200,000 £38,828 2001

Clearlyaboveagriculturalvalues butnote date.

Chepstow 16.1 £9,375,000 £582,298 2012 Brownfield

Monmouth 20.6 £15,729,468 £766,756 2012 These areadjacenttitles. Takentogether theaverage is£416,439/ha

Monmouth 18.26 £400,000 £21,957 2007

Site Viability Assessments

22. Site viability appraisals from scheme promoters have been received byMonmouthshire Council since the 2014 work.

• For a large greenfield site development with 0% affordable housing butsignificant costs, the development is considered to produce a residual value ofapproximately £450,000 per gross ha. However this is considered by the schemepromoter to be below the benchmark. The same scheme with policy compliantaffordable housing was estimated to have a negative residual value.

• For a large brownfield site the viability appraisal used the standard

urban/brownfield benchmark.

23. It should be noted that the Council’s advisors do not agree with the schemepromoters’ assessments.

Development Land Sales

24. Information on development land sales is available from CoStar Suite and from UKLand Directory (UKLD). These provide a useful illustration although no informationis available upon the terms of the sales, planning obligations, site constraints or thedevelopment values/costs that underpin any bid for the land. Some of the sites areclearly for industrial uses while others may support other development.

Location Size £/ha Date Source Notes

NP15 1HN Usk 0.47ha £0.34m 2015 CoStar Former builders yard

NP4 6HLPontypool

0.25ha £1.16m(asking)

2010 CoStar Former school

NP19 8BPNewport

3.04ha £0.066m 2012 CoStar Urban site

NP18 2AXNewport

0.2ha £0.08m 2014 CoStar Rural site

NP4 7DYPontypool

0.04ha £2.13m 2010 CoStar Former school

NP4 0JJPontypool

0.9ha £0.244m 2015 CoStar Edge of urban area

NP4 0JJPontypool


2015 CoStar Edge of urban area

NP19 4SZNewport


2015 CoStar Edge of urban area

NP4 0DQPontypool


NP20 2JQNewport


NP20 2JDNewport


2013 CoStar Urban site

NP4 0JJPontypool

6.8ha £0.074m 2015 CoStar Edge of urban area

Newport 1ha £6.5m (asking) 2015 UKLD Consent for 12 units (high density)

Blaina 0.6ha £0.57m(asking)

2015 UKLD Detailed consent

Newport 0.1ha £2.5m (asking) 2015 UKLD Detailed consent

25. The information from CoStar and UKLD shows a disparate set of values, withrelatively little evidence from within Monmouthshire. The values for the sites listedfall either side of the benchmarks and do not provide evidence that the benchmarksneed to be amended.

Land Value Summary

26. As illustrated above, there is no single source of information or approach that can bedrawn on to identify an appropriate land value benchmark. Furthermore theguidance suggests a composite view is taken based on premium over existing use,and considered against market values. However there is considerable argumentagainst the use of market values to establish benchmarks as this produces acircularity that results in overpayment for sites and ever higher market valuecomparables.

27. There is some measure of consensus from the development industry consultationthat £650,000 per gross ha is a suitable benchmark for urban sites using a premiumover exist use approach. This figure is 60% over the estimated industrial land value.There is also some consensus that the £250,000 per gross ha is a suitable benchmarkfor strategic greenfield sites, which is 15-20 times agricultural values. Whilst thesebenchmarks represent an estimate of the lowest value land for residentialdevelopment may transact, it is clear that where development can afford to paymore for land there will be a higher return to the land owner.

28. The benchmarks are applicable across Monmouthshire as there is no clear evidenceto vary them by location.

ANNEX 2Testing Assumptions

Residential Development Assumptions

All market value areas to be tested at 30dph, 40dph and 50dph.

The affordable housing requirements for each market value area are noted in the table below, basedon LDP policy.% affordable housing

Market Value Area % AH

Severnside 25%

Market towns (Monmouth, Chepstow and

Abergavenny)

35%

Rural rest of Monmouthshire 35%

60%

Affordable Housing Dwelling mix%ages of totalAffordable homes

Total

1 bed flat 22%

2 bed bungalow 3%

2 bed terrace 45%

3 bed terrace 25%

4 bed terrace 5%

Total 100%

(as advised by MCC)

Affordable Housing Values (100% of ACG)Abergavenny,Severnside, Rural

Monmouth,Chepstow

Unit Type Band 4 Band 5

2P1B Flat 101,900 108,000

3P2B Flat 126,600 133,500

3P2B Bungalow 157700 174700

4P2B House 161,600 175,500

5P3B House 179,400 194,200

6P4B House 209,000 226,000

42% of these values are used in the modelling, in line with the Affordable Housing SPG.

Mixes (for notional 1 hectare scheme)For Market units

30 dph 40 dph 50 dph

%s %s %s

1 bed flat

2 bed flat 5% 10%

2 bed terrace 10% 15%

3 bed terrace 10% 25% 40%

4 bed terr

3 bed semi 15% 35% 15%

3 bed det 5% 5%

4 bed det 60% 20% 20%

5 bed det 10%

(as advised by MCC)

Dwelling sizes (in sq m GIA)

Affordable Market

House Type DQR

1 bed flat 51 45

2 bed flat 59 55

2 bed bungalow 60

2 bed terrace 78 65

3 bed terrace 90 80

4 bed terrace 107

3 bed semi 85

3 bed detached 85

4 bed detached 130

5 bed detached 155

Assume all flats are 1 - 2 storey. 10% circulation space allowed for flats in addition to the sizesabove.

Development costsBuild costs£s /sq m – using Building Cost Information Service (BCIS) 5 year median values, using location factorfor Gwent with a 15% uplift for external works.Houses £981Flats £1,097 (assume 1 and 2 storey)Bungalows £1,125

For case studies of 2 or 3 units, the standard BCIS build costs noted above have been increased by10%. A 15% uplift is included to cover external works costs.Houses £1,079/sq mFlats £1,208/sq m (assume 1 and 2 storey)Bungalows £1,238/sq m

For the 1 dwelling case studies, the BCIS build cost for a single detached house has been used. A 15%uplift to cover external works costs has been included.Detached house £1,607/sq m

CS11, 17, 23 and 29 – market dwelling mix.

CS 33 60%AH

CS38 67%AH

Units 3 0% AH Floor areas

Mkt SR Total Mkt AH Build cost Total

1bf 0.000 - 0.000 - - 1,097.1 -

2bf 0.000 - 0.000 - - -

2bt 0.000 - 0.000 - - 983.25 -

3bt 0.300 - 0.300 24.0 - 983.25 23,598.0

4bt 0.000 - 0.000 - 983.25 -

3bs 0.450 0.450 38.3 1139.65 43,591.6

4bs 0.000 0.000 -

3bd 0.150 0.150 12.8 1,606.55 20,483.5

4bd 1.800 1.800 234.0 1,606.55 375,932.7

5bd 0.300 0.300 46.5 1,606.55 74,704.6

2bb - 0.000 - - 1,256.95 -

Total 3.000 0.000 3.000 355.5 - 538,310.4

Average build cost 1,514 per sq m



1bf 0.000 0.396 0.396 - 22.2 1,097.1 24,329.3

2bf 0.000 - 0.000 - - -

2bt 0.000 0.810 0.810 - 63.2 983.25 62,121.7

3bt 0.120 0.450 0.570 9.6 40.5 983.25 49,260.8

4bt 0.000 0.090 0.090 9.6 983.25 9,468.7

3bs 0.180 0.180 15.3 1139.65 17,436.6

4bs 0.000 0.000 -

3bd 0.060 0.060 5.1 1,606.55 8,193.4

4bd 0.720 0.720 93.6 1,606.55 150,373.1

5bd 0.120 0.120 18.6 1,606.55 29,881.8

2bb 0.054 0.054 - 3.2 1,256.95 4,072.5

Total 1.200 1.800 3.000 142.2 138.7 355,138.0




1bf 0.000 0.442 0.442 - 24.8 1,097.1 27,167.7

2bf 0.000 - 0.000 - - -

2bt 0.000 0.905 0.905 - 70.6 983.25 69,369.3

3bt 0.099 0.503 0.602 7.9 45.2 983.25 52,254.8

4bt 0.000 0.101 0.101 10.8 983.25 10,573.4

3bs 0.149 0.149 12.6 1139.65 14,385.2

4bs 0.000 0.000 -

3bd 0.050 0.050 4.2 1,606.55 6,759.6

4bd 0.594 0.594 77.2 1,606.55 124,057.8

5bd 0.099 0.099 15.3 1,606.55 24,652.5

2bb 0.060 0.060 - 3.6 1,256.95 4,547.6

Total 0.990 2.010 3.000 117.3 154.9 333,767.9


For the retirement case study site, a build cost of £1,168/ sq m has been used based on the BCIS 5year median figure of £1,016/sq m for 2 storey sheltered housing.

Additional build costs per dwelling

• Sprinklers £3,075/house£879/flat

Other development costs

Professional Fees % As a % of build costs:

• 12% for 1-3 dwellings;

• 10% for 4-50 dwellings;

• 8% for 51 dwellings +

Finance 6% of build costs

Marketing Fees 3% of market value

Developers Return 20% of GDV

Contractors Return 6% of development costs

Agents Fees 2.0%

Legal Fees 0.5%

SDLT Variable

DCF Assumptions (for larger case study sites)

• Debit Interest Rate 6%

• Credit Interest Rate 2%

• Annual Discount Rate 3.5%

Residual s106 costs£1,000 per dwelling (market and affordable)

Market Values

Revised Dwelling Prices Abergavenny Chepstow Monmouth SevernsideRural rest ofMonmouthshire

1 bed flat £115,000 £125,000 £125,000 £100,000 £115,000

2 bed flat £130,000 £146,000 £140,000 £120,000 £130,000

2 bed terrace £170,000 £175,000 £165,000 £140,000 £179,000

3 bed terrace £195,000 £210,000 £195,000 £170,000 £200,000

3 bed semi £210,000 £215,000 £200,000 £194,000 £210,000

3 bed detached £215,000 £220,000 £210,000 £200,000 £224,000

4 bed detached £310,000 £315,000 £302,000 £290,000 £343,000

5 bed detached £375,000 £380,000 £333,000 £325,000 £395,000

Also:

• On case study sites of 3 units or less, the selling prices listed above have been uplifted by10% to reflect the higher prices achievable on small sites.

• Fairfield Mabey strategic site has a 25% up lift for 25% of the dwellings in response toriverside views.

Retirement Housing Market Values used are as follows

Abergavenny Chepstow Monmouth SevernsideRural rest of

Monmouthshire

1 bed flat £157,500 £161,250 £150,000 £145,500 £157,500

2 bed flat £210,000 £215,000 £200,000 £194,000 £210,000

Retirement Housing scheme

• 0.5 ha net and gross

• 50 unit - 20x1 bed (50 sq m), 30x2 bed (75 sq m).

• 25% of total area is communal (non-saleable) spaceRetirement Housing affordable housing assumptions are the same as those used in the other casestudies:

• 42% of ACGOther retirement housing assumptions are:

• Marketing – 6%

• Empty Property costs allowed - £120,000 (as scheme built before any significant number ofoccupations) for utilities, staff etc.

Retirement housing delivery:

• 18 months until 1st sale.

• Approx. 30% sales in yr 2

• Approx. 40% sales in yr 3

• Approx .30% sales in yr 4

ANNEX 3Case Study Profiles

Large Case Studies

Note – opening up costs are per net hectare.

Small Case StudiesCaseStudy

Location Dwgs Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH%

Dwelling Mix

CaseStudy Location Dwgs

Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH% Dwelling Mix

8 Severnside 35 1.17 100% 1 year 75% 25%30 dph blended mix ofterrace/semi/detached






Case

Study Scheme MVA Dwgs Gross ha Net ha

Net to

gross (%)

Opening Up

Costs/ ha

(Strategic

sites)

Additional

Development

Costs

Development

Rate;

Dev Period Market % AH %

1 SAH1 Deri Farm Abergavenny Abergavenny 250 8.70 7.70 89% 100,000 5,250,000

20pa yr 1 then

40 pa;

7 yrs

65% 35%

2 SAH2 Crick Road Portskewett Severnside 285 9.95 7.70 77% 100,000 120,00055pa;

6 yrs75% 25%

3.1 SAH3 Fairfield Mabey, Chepstow Chepstow 350 13.10 9.50 73% 128,947 5,550,000

45pa yr 1 then

90 pa;

5 yrs

65% 35%

3.2 SAH3 Fairfield Mabey, Chepstow Chepstow 350 13.10 9.50 73% 128,947 7,240,000

45pa yr 1 then

90 pa;

5 yrs

65% 35%

4 SAH4 Wonastow Rd Monmouth Monmouth 450 19.61 16.46 84% 100,000 420,000

62pa yr 1 then

100 pa;

5 yrs

65% 35%

5.1 SAH5 Rockfield Farm Undy Scenario 1 Severnside 270 9.00 8.20 91% 100,000 1,700,00055pa;

5 yrs75% 25%

5.2 SAH5 Rockfield Farm Undy Scenario 2 Severnside 270 9.00 8.20 91% 100,000 1,970,00055pa;

5 yrs75% 25%

5.3 SAH5 Rockfield Farm Undy Scenario 3 Severnside 270 9.00 8.20 91% 100,000 400,00055pa;

5 yrs75% 25%

6.1SAH6 Vinegar Hill Undy

Scenario 1Severnside 225 7.81 7.81 100% 100,000 2,000,000

50pa;

5 yrs75% 25%


Scenario 2Severnside 225 7.81 7.81 100% 100,000 2,320,000

50pa;

5 yrs75% 25%


Scenario 3Severnside 225 7.81 7.81 100% 100,000 450,000

50pa;

5 yrs75% 25%

7 SAH7 Paper Mill Sudbrook Severnside 190 6.60 6.60 100% 100,000 34,20050pa;

4 yrs75% 25%

STRATEGIC SITES

CaseStudy


Netto

gross(%)

DevelopmentPeriod

Market%

AH%

Dwelling Mix











24 Severnside 2 0.07 100% 1 year 75% 25% Two 4 bed detached houses

25 Severnside 1 0.03 100% 1 year 75% 25% One 4 bed detached house

26 Monmouth 35 1.17 100% 1 year 65% 35%30 dph blended mix ofterrace/semi/detached












CaseStudy


Netto

gross(%)

DevelopmentPeriod

Market%

AH%

Dwelling Mix



40 Monmouth 2 0.07 100% 1 year 65% 35% Two 4 bed detached houses

41 Monmouth 1 0.03 100% 1 year 65% 35% One 4 bed detached house

42 Chepstow 35 1.17 100% 1 year 65% 35%30 dph blended mix ofterrace/semi/detached














56 Chepstow 2 0.07 100% 1 year 65% 35% Two 4 bed detached houses

57 Chepstow 1 0.03 100% 1 year 65% 35% One 4 bed detached house

58 Abergavenny 35 1.17 100% 1 year 65% 35%30 dph blended mix ofterrace/semi/detached




CaseStudy


Netto

gross(%)

DevelopmentPeriod

Market%

AH%

Dwelling Mix











72 Abergavenny 2 0.07 100% 1 year 65% 35% Two 4 bed detached houses

73 Abergavenny 1 0.03 100% 1 year 65% 35% One 4 bed detached house

Other Case Studies

74 Main vi llages Small (4 dwgs) Rural 4 0.13 100% 1 year 40% 60%




78 Main Vil lages (15dwgs) Rural 15 0.50 100% 1 year 40% 60%

79 Minor Vil lage Small (4 dwgs) Rural 4 0.13 100% 1 year 25% 75%




83 Severnside Retirement (50 dwgs) Severnside 50 0.50 0.50 100% 4 years 75% 25%

84 Monmouth Retirement (50 dwgs) Monmouth 50 0.50 0.50 100% 4 years 65% 35%

85 Chepstow Retirement (50 dwgs) Chepstow 50 0.50 0.50 100% 4 years 65% 35%

86 Abergavenny Retirement (50 dwgs) Abergavenny 50 0.50 0.50 100% 4 years 65% 35%

87 Rural Retirement (50 dwgs) Rural 50 0.50 0.50 100% 4 years 65% 35%

RETIREMENT SCHEMES

ANNEX 4Development Industry Workshops 18th March2014 – notes

Monmouthshire County CouncilCommunity Infrastructure Levy – Development Industry Workshop18th March 2014

Organisations attending the workshop:

• Taylor Wimpey

• Edenstone Homes

• Monmouthshire Housing Association

• Melin Homes

• Persimmon Homes

• Savills

• Johnsey Estates

• Martin Davies (MD), Monmouthshire County Council

• Shirley Wiggam, Monmouthshire County Council

• Rachel Jones, Monmouthshire County Council

• Jane Coppock, Monmouthshire County Council

• Deb Hill-Howells, Monmouthshire County Council

• Ben Winstanley, Monmouthshire County Council

• Lin Cousins (LC), Three Dragons

• Dominic Houston (DH), Three Dragons

• Mark Felgate (MF), PBA

MD welcomed everyone to the workshop.Community Infrastructure Levy (CIL) IntroductionLC introduced CIL and described how it operates and process for setting CIL. She explained that CILapplies to all development (that people go into) and is based on a payment rate per sq m. The ratecould be set at £0. Setting rates for a local authority area must be based on viability evidence andnot policy considerations. Presentation slides for this section of the workshop are shown in theAnnex.Workshop attendees who wanted to understand better the process for setting CIL and the stages ofconsultation may find the following WG publication helpful -http://wales.gov.uk/docs/desh/publications/110912cilleafleten.pdf. DCLG has also published CILguidance.Other questions raised were:

• What happens about brownfield versus greenfield sites (brownfield sites have extra costs

and an established use value – both factors need to be taken into account – LC indicated

that if viability analysis indicated the need for a lower CIL rate, this could be accommodated

in a charging schedule (as long as a distinct zone could be identified on an OS base).

• How is CIL reviewed? What triggers a review? - LC explained that it was up to the charging

authority when a review takes place but when this happens, the authority need to complete

a full CIL setting process.

Update on Local Development Plan and Introduction of CILMD explained that the LDP has been found sound by the planning inspector who presided over itsexamination and is currently subject to a 6 week period for legal challenge. The onward timetable isas follows:

The level of growth set out in the LDP is:

MD set out the key housing allocations in the Plan and highlighted that the new site allocationsaccount for about half of housing supply over the plan period (2011 to 2021) at 2,445.The 7 strategic sites in the LDP are:

MD outlined that there is also a series of smaller housing sites as follows:

MD outlined the council’s approach to s106 and CIL. MCC has a draft infrastructure plan that sets outrequirements associated with delivery of the Plan. Policy S7 in the Plan sets out a list ofinfrastructure requirements to be met and indicates priorities for delivery.If CIL is introduced it will be used for strategic and place making elements as follows:

In answer to a question from a workshop attendee, MD stated that CIL could to be used to funddrainage infrastructure if the council chooses to include this in their R123 list (yet to be decided),but care would be needed to ensure that CIL was not used to fund infrastructure that was theresponsibility of Welsh Water. MD also emphasised that, in terms of sites allocations, no issues hadbeen raised re flooding issues for the sites (that had not already been taken onto account in theallocation).LC explained that the CIL Regulations allowed for different CIL rates (even £0 CIL rates) for differentareas and that this could include, subject to the viability testing, rural sites where the council’spriority is delivery of affordable housing.MD emphasised that the council appreciates the importance of balancing s106 requirements and

use of CIL (and how it is set).The timetable for preparation of the CIL is as follows:

Non-residential development testing approach and assumptionsMF described the types of non-residential uses that it was intended to test. This was agreed by theworkshop.

MF then reviewed the assumptions to be used.

Workshop generally felt that rent free periods – should be longer than 3 months and 12 months wasput forward.In reply to a Q – MF noted that acquisition costs would be included in the analysis and using thefollowing assumptionsPost meeting note – for clarity the following sets out the assumptions regarding sales and landpurchase costs:

Generally development funding is not available without a pre let in place. There may be morefunding available but rates are still high. DH explained that finance assumed for 100% of thedevelopment. In reality this is likely to be a mix of borrowed and equity money. Workshopindicated that interest rates are on the increase and LC asked for any further information to justifyhigher interest rates in the testing.Require a 7/8% interest costs. Lenders are still looking for a higher rate of return. Situation is not asbad as 2 or 3 years ago but still considered to be risky.Require 25/30% return on value was suggested but MF explained that the consultant team wouldneed to see some evidence to change a figure that has generally been accepted elsewhere i.e. why isMonmouthshire different?MF set out assumptions on rent and yields and explained that these were sourced from propertytransaction databases and reports such as CoStar Focus and Estates Gazette.

No comments were offered as to whether the proposed figures were correct. MF stated that hewould undertake further consultation with local agents and asked for suggestions of who to speak toconsult.MF explained that lack of activity in Monmouthshire means have had to widen search to includesurrounding areas.Comments indicated that it was important to understand the hotel market and that futuredevelopment was likely to be budget hotels – modelling must reflect the way the hotel marketoperates.Land values – no immediate comments were received.

Sale costs

Legals, surveyors, marketing etc 4.0% Gross development value

Industry

standards These rates are based on industry accepted scales at the following rates:

Surveyor - 1.00%0.75%Legals -

Professional fees

on Land Purchase

Industry

standardsFees associated with the land purchase are based upon the following industry standards:

Residential development approach and assumptionsDH set out the overall approach to be taken to the assessment of viability, using as residual valueapproach as follows:

DH noted that the consultant team would make use of the guidance set out in the Harman report(Viability Testing Local Plans - Advice for planning practitioners)15 MD commented that the ‘Harmanguide’ is being used widely by local authorities in Wales. Workshop agreed that this is not a problembut the viability testing must take into account specific Welsh issues. DH also noted that the DCLGCIL guidance is also common across England and Wales.The principles by which the modelling is to be undertaken were set out as follows:

DH explained the approach to identifying the land value threshold to be used. As with the previousstudies, two thresholds are to be used (per gross hectare) - £650,000 for sites generally and£250,000 for larger scale strategic sites. The former is over 30% above CUV (industrial/commercial)and the latter is over 15 times agricultural land value at £15k per hectare.

The workshop generally considered that these values are too low but no specific alternatives wereput forward and it was acknowledged that there has been limited activity in recent years. Theconsultant team also emphasised that the benchmark should represent what a realistic landownermight be willing to bring land forward for with policies in place; the benchmark was not intended torepresent the highest values that might be achieved in the market today.Through debate it became clear that different measures were being used when discussing landvalues– including a value per net hectare and a value for the element of schemes that is market

15 The guide was published in June 2012 and is the work of the Local Housing Delivery Group, chaired by SirJohn Harman, which is a cross-industry group, supported by the Local Government Association and the HomeBuilders Federation.

housing only. It also became clear that views on threshold land values depended on the stage ofthe development process, with some land cost suggestions referring to development-ready landwith consent.It was noted by one attendee that the average land cost per dwelling was £8/10k per plot at theprevious policy of 20%. Through this discussion it was suggested that for 40 units or more with 20%affordable housing (as under the former unitary development plan) and some open space andhighways obligations, £650k/ha was acceptable.LC asked for evidence of land values within 2 weeks (say by 11 April). Consultant team will alsoexplore available data further and, with feedback from the workshop, provide a separate land valuenote for workshop attendees.LC noted that experience to date in Wales allowed testing below AH policy.Testing 1 ha schemeMinimum density to be tested should be 30 dph generally. Densities at c 50 dph relevant only totown centres – these densities are not found in more rural developments.DH presented the following notional mix for a 30 dph scheme:

Workshop comments:

• Mixes are moving towards the middle of the market – with an emphasis on 3 bed detached

and small 4 bed detached; and flats are not favoured as a market product, although may be

required for affordable housing.

Post meeting note – in light of the workshop comments, following revised mix for market housingput forward for further comment:

Type % Dwg sizesq m GIA

2 bed terrace 15% 60

3 bed terrace 15% 70

3 bed detached 20% 85

4 bed detached (small) 20% 110

4 bed detached (large) 30% 140

5 bed detached Nil 160

Consultant team will review this proposal in light of mixes for recent permitted developments.DH then presented the proposed case studies and assumptions for testing:

Workshop comments:

• Net/gross development area must allow for the LPA standard for open space – NPFA

standards (Policy CRF2) and which include play (likely provided on site) and other open

spaces (with details of provision sorted out on a site by site basis);

• Some attendees suggested that viability analysis should be on basis of net developable area-

so that issues around net/gross area of sites would be minimised;

• Maximum pace of development is 50 per developer but schemes over 250 dw would expect

2 developers to be active and therefore assume a max annual pace of 80 to 100 dwellings

per annum (say 90 dw per annum).

Market valuesDH presented following notional market values for new houses. He explained that the values werederived from a number of sources including Land Registry data for new build properties 2011 to2012. This had been supplemented by available information for 2014 sales (of current properties onthe market - deducting 8% from asking prices to derive best estimate of actual sales values).

Workshop comments:

• Reflecting earlier comments about typical mixes – market values for 3bed detached and

small 4 bed detached need to be sourced. Small 4 bed at c 1200 sq ft;

• Caerwent is not typical for Severnside and the values for Severnside should be amended to

reflect this;

• Persimmon selling in Monmouth – 3 bed semis at £150K and struggling (note average Land

Registry sales price for new build semi detached in Monmouth in 2013 was £191,000 but

sample size very limited)

• Alternative approach to market values is to identify an average price per sq ft for each

location – which will vary with mix of dwellings in a scheme – depending on relative values

for different dwelling types. Suggested values from developers present as follows:

o Abergavenny/Monmouth - £185 per sq ft;

o Severnside similar

o Chepstow will be higher than this

o Rural areas are very mixed but suggested at £175 per sq ft

Post workshop note – consultant team to review market values in light of workshop feedback andanalysis of actual per sq m sales values. Separate note to follow.

Dwelling sizeThe following presented as average dwelling sizes:

Workshop comments:

• 1 bed flat – 500 sq ft – with nil circulation space

• 2 bed flat - 550-600 sq ft

• 2 bed terrace – 600-650 sq ft

• 3bed terrace – 750-800sq ft

• 3 bed semi – 800-900 sq ft

• 3 bed detached – 900-950 sq ft



Post workshop note: - Following put forward by consultant team as GIA for market units (in light ofworkshop comments and review of recent planning permissions)

Type Sq m GIA

1 bed flat* 45

2 bed flat 55

2 bed terrace 65

3 bed terrace 75

3 bed semi 80

3 bed detached 90

4 bed detached (small) 110

4 bed detached (large) 140

5 bed detached 160

*Nil circulation space

Development costsFollowing were presented to the workshop:

Workshop feedback:

• Build costs for mainstream development are similar across south Wales and reasonable to

use the averages shown;

• But traditionally a lot of smaller development/developers and costs tend to be higher;

• Sprinkler costs agreed;

• Other costs agreed (noted that c60% borrowed for development);

• Developer return of 20% is more realistic in the current market;

• Return for affordable housing should be c£15k per dw (but this is necessary to cover prof

fees and finance) – Three Dragons agreed to use this as a sensitivity test. But LC also noted

that Savills had agreed 6% return in statement of common ground for Caerphilly CIL

examination;

• Abnormals – for strategic sites, LC explained that consultant team will review information

used in previous strategic sites testing and MCC will contact scheme promoters to update

this information (including infrastructure requirements);

• LC also asked for any evidence about need to include a standard abnormal cost for smaller

sites

Affordable housing testingLC explained that the team would assume nil grant for all the testing. The following proposedassumptions were presented:

The workshop agreed that, for rental housing, the capitalised net rent approach should be followedand this would represent the minimum payment possible from a housing association. On this basis,LC presented the following proposed assumptions for comment.

The discussion indicated that:

• The policy position was noted and agreed

• The affordable housing tenure was noted and agreed

• Values – discussion suggested that capitalised net rent should be the main approach but

ACG should be used as a sensitivity test; with the higher value of the two used in the

modelling.

• There are additional costs to meet Development Quality Requirements (DQR) say £1100/sq

m for social rent; while shared ownership would just be building regulations. Discussion

indicated that DQR could amount to £3,500 per dwelling. Consultant team and SW to follow

up with housing associations, on use of DQR.

• Rents were broadly correct.

Annex – other information presented to the workshop

Annex 51ha Notional Site Results

Housing Market

Area DPH Market % AH %

Total Mkt

Floor Area

(Sq m) Residual Value Benchmark

RV less

benchmark

Max CIL

£s per sq m

Severnside 30 dph 75% 25% 2,666.3 £1,104,000 650,000 454,000 £170

Severnside 40 dph 75% 25% 2,686.5 £1,000,000 650,000 350,000 £130

Severnside 50 dph 75% 25% 3,247.5 £1,078,000 650,000 428,000 £132

Monmouth 30 dph 65% 35% 2,310.8 £1,053,000 650,000 403,000 £174

Monmouth 40 dph 65% 35% 2,328.3 £1,049,000 650,000 399,000 £171

Monmouth 50 dph 65% 35% 2,814.5 £1,264,000 650,000 614,000 £218

Chepstow 30 dph 65% 35% 2,310.8 £1,288,000 650,000 638,000 £276

Chepstow 40 dph 65% 35% 2,328.3 £1,299,000 650,000 649,000 £279

Chepstow 50 dph 65% 35% 2,814.5 £1,567,000 650,000 917,000 £326

Abergavenny 30 dph 65% 35% 2,310.8 £1,151,000 650,000 501,000 £217

Abergavenny 40 dph 65% 35% 2,328.3 £1,079,000 650,000 429,000 £184

Abergavenny 50 dph 65% 35% 2,814.5 £1,242,000 650,000 592,000 £210

Rural 30 dph 65% 35% 2,310.8 £1,471,000 650,000 821,000 £355

Rural 40 dph 65% 35% 2,328.3 £1,251,000 650,000 601,000 £258

Rural 50 dph 65% 35% 2,814.5 £1,475,000 650,000 825,000 £293

AREA/ LOCATION

Annex 6Case Study Results

Case

Study Scheme MVA Dwgs Gross ha Net ha

Net to

gross (%)

Development

Rate;

Dev Period Market % AH %

Total Mkt

Floor Area (Sq

m)

Scheme

Residual Value

sq m/gross

ha

Residual

value/gross

ha

Upper

Benchmark/

gross ha

Lower

Benchmark/

gross ha

Residual Value

less upper

benchmark/

gross ha

Residual Value

less lower

benchmark/

gross ha

Upper

Benchmark

Max CIL

£s per sq m

Lower

Benchmark

Max CIL

£s per sq m

1 SAH1 Deri Farm Abergavenny Abergavenny 250 8.70 7.70 89%

20pa yr 1 then

40 pa;

7 yrs

65% 35% 19,256.30 £4,615,392 2,213.37 £530,505 £300,000 £250,000 £230,505 £280,505 £104 £127

2 SAH2 Crick Road Portskewett Severnside 285 9.95 7.70 77%55pa;

6 yrs75% 25% 19,141.30 £7,214,442 1,923.75 £725,070 £300,000 £250,000 £425,070 £475,070 £221 £247

3.1 SAH3 Fairfield Mabey, Chepstow Chepstow 350 13.10 9.50 73%

45pa yr 1 then

90 pa;

5 yrs

65% 35% 20,372.60 £8,383,397 1,555.16 £639,954 £650,000 £650,000 -£10,046 -£10,046 -£6 -£6

3.2 SAH3 Fairfield Mabey, Chepstow Chepstow 350 13.10 9.50 73%

45pa yr 1 then

90 pa;

5 yrs

65% 35% 20,372.60 £6,880,890 1,555.16 £525,259 £650,000 £650,000 -£124,741 -£124,741 -£80 -£80

4 SAH4 Wonastow Rd Monmouth Monmouth 450 19.61 16.46 84%

62pa yr 1 then

100 pa;

5 yrs

65% 35% 34,661.30 £15,390,449 1,767.53 £784,827 £300,000 £250,000 £484,827 £534,827 £274 £303

5.1 SAH5 Rockfield Farm Undy Scenario 1 Severnside 270 9.00 8.20 91%55pa;

5 yrs75% 25% 23,996.30 £8,644,764 2,666.26 £960,529 £300,000 £250,000 £660,529 £710,529 £248 £266


5 yrs75% 25% 23,996.30 £8,404,718 2,666.26 £933,858 £300,000 £250,000 £633,858 £683,858 £238 £256


5 yrs75% 25% 23,996.30 £9,800,538 2,666.26 £1,088,949 £300,000 £250,000 £788,949 £838,949 £296 £315


Scenario 1Severnside 225 7.81 7.81 100%

50pa;

5 yrs75% 25% 19,996.90 £6,656,494 2,560.42 £852,304 £300,000 £250,000 £552,304 £602,304 £216 £235



50pa;

5 yrs75% 25% 19,996.90 £6,371,996 2,560.42 £815,877 £300,000 £250,000 £515,877 £565,877 £201 £221



50pa;

5 yrs75% 25% 19,996.90 £8,034,533 2,560.42 £1,028,749 £300,000 £250,000 £728,749 £778,749 £285 £304

7 SAH7 Paper Mill Sudbrook Severnside 190 6.60 6.60 100%50pa;

4 yrs75% 25% 16,886.30 £7,186,499 2,558.53 £1,088,863 £650,000 £650,000 £438,863 £438,863 £172 £172

STRATEGIC SITES

Other Sites Results


Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH%

SchemeResidual

Value

Residualvalue/gross

haBenchmark/

gross ha

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m

8 Severnside 35 1.17 100% 1 year 75% 25% £1,286,000 £1,099,145 £650,000 £449,145 £169

9 Severnside 34 1.14 100% 1 year 74% 26% £1,206,000 £1,060,686 £650,000 £410,686 £158

10 Severnside 30 1.03 100% 1 year 73% 27% £1,058,000 £1,025,194 £650,000 £375,194 £149

11 Severnside 26 0.87 100% 1 year 73% 27% £911,000 £1,048,331 £650,000 £398,331 £154

12 Severnside 23 0.77 100% 1 year 74% 26% £823,000 £1,070,221 £650,000 £420,221 £160

13 Severnside 22 0.74 100% 1 year 73% 27% £765,000 £1,040,816 £650,000 £390,816 £152

14 Severnside 19 0.64 100% 1 year 74% 26% £676,000 £1,064,567 £650,000 £414,567 £159

15 Severnside 18 0.60 100% 1 year 72% 28% £617,000 £1,024,917 £650,000 £374,917 £147

16 Severnside 15 0.50 100% 1 year 73% 27% £530,000 £1,057,884 £650,000 £407,884 £157

17 Severnside 14 0.47 100% 1 year 71% 29% £470,000 £1,004,274 £650,000 £354,274 £140

18 Severnside 11 0.37 100% 1 year 73% 27% £387,000 £1,051,630 £650,000 £401,630 £156

19 Severnside 10 0.33 100% 1 year 70% 30% £326,000 £987,879 £650,000 £337,879 £134

20 Severnside 7 0.23 100% 1 year 71% 29% £237,000 £1,025,974 £650,000 £375,974 £147

21 Severnside 6 0.20 100% 1 year 67% 33% £181,000 £914,141 £650,000 £264,141 £110

22 Severnside 4 0.13 100% 1 year 75% 25% £152,000 £1,169,231 £650,000 £519,231 £190

23 Severnside 3 0.10 100% 1 year 75% 25% £116,000 £1,160,000 £650,000 £510,000 £191

24 Severnside 2 0.07 100% 1 year 75% 25% £68,000 £1,014,925 £650,000 £364,925 £125


Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH%

SchemeResidual

Value

Residualvalue/gross

haBenchmark/

gross ha

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m

25 Severnside 1 0.03 100% 1 year 75% 25% -£48,000 -£1,454,545 £650,000 -£2,104,545 -£712

26 Monmouth 35 1.17 100% 1 year 65% 35% £1,228,000 £1,049,573 £650,000 £399,573 £173

27 Monmouth 33 1.10 100% 1 year 64% 36% £1,117,000 £1,012,693 £650,000 £362,693 £161

28 Monmouth 30 1.00 100% 1 year 63% 37% £1,005,000 £1,001,994 £650,000 £351,994 £157

29 Monmouth 25 0.84 100% 1 year 64% 36% £854,000 £1,021,531 £650,000 £371,531 £164

30 Monmouth 22 0.74 100% 1 year 64% 36% £744,000 £1,012,245 £650,000 £362,245 £160

31 Monmouth 19 0.64 100% 1 year 63% 37% £634,000 £998,425 £650,000 £348,425 £156

32 Monmouth 16 0.54 100% 1 year 63% 38% £524,000 £979,439 £650,000 £329,439 £149

33 Monmouth 13 0.44 100% 1 year 62% 38% £418,000 £960,920 £650,000 £310,920 £143

34 Monmouth 11 0.37 100% 1 year 64% 36% £376,000 £1,021,739 £650,000 £371,739 £165

35 Monmouth 10 0.33 100% 1 year 60% 40% £307,000 £930,303 £650,000 £280,303 £130

36 Monmouth 8 0.26 100% 1 year 63% 38% £251,000 £950,758 £650,000 £300,758 £134

37 Monmouth 5 0.17 100% 1 year 60% 40% £157,000 £951,515 £650,000 £301,515 £140

38 Monmouth 4 0.13 100% 1 year 65% 35% £146,000 £1,123,077 £650,000 £473,077 £200

39 Monmouth 3 0.10 100% 1 year 65% 35% £108,000 £1,080,000 £650,000 £430,000 £186

40 Monmouth 2 0.07 100% 1 year 65% 35% £53,000 £791,045 £650,000 £141,045 £56

41 Monmouth 1 0.03 100% 1 year 65% 35% -£56,000 -£1,696,970 £650,000 -£2,346,970 -£917

42 Chepstow 35 1.17 100% 1 year 65% 35% £1,502,000 £1,283,761 £650,000 £633,761 £275

43 Chepstow 33 1.10 100% 1 year 64% 36% £1,369,000 £1,241,160 £650,000 £591,160 £262


Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH%

SchemeResidual

Value

Residualvalue/gross

haBenchmark/

gross ha

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m

44 Chepstow 30 1.00 100% 1 year 63% 37% £1,236,000 £1,232,303 £650,000 £582,303 £259

45 Chepstow 25 0.84 100% 1 year 64% 36% £1,046,000 £1,251,196 £650,000 £601,196 £265

46 Chepstow 22 0.74 100% 1 year 64% 36% £914,000 £1,243,537 £650,000 £593,537 £263

47 Chepstow 19 0.64 100% 1 year 63% 37% £779,000 £1,226,772 £650,000 £576,772 £258

48 Chepstow 16 0.54 100% 1 year 63% 38% £646,000 £1,207,477 £650,000 £557,477 £252

49 Chepstow 13 0.44 100% 1 year 62% 38% £510,000 £1,172,414 £650,000 £522,414 £240

50 Chepstow 11 0.37 100% 1 year 64% 36% £462,000 £1,255,435 £650,000 £605,435 £269

51 Chepstow 10 0.33 100% 1 year 60% 40% £381,000 £1,154,545 £650,000 £504,545 £234

52 Chepstow 8 0.26 100% 1 year 63% 38% £325,000 £1,231,061 £650,000 £581,061 £259

53 Chepstow 5 0.17 100% 1 year 60% 40% £194,000 £1,175,758 £650,000 £525,758 £244

54 Chepstow 4 0.13 100% 1 year 65% 35% £178,000 £1,369,231 £650,000 £719,231 £303

55 Chepstow 3 0.10 100% 1 year 65% 35% £133,000 £1,330,000 £650,000 £680,000 £294

56 Chepstow 2 0.07 100% 1 year 65% 35% £66,000 £985,075 £650,000 £335,075 £133

57 Chepstow 1 0.03 100% 1 year 65% 35% -£48,000 -£1,454,545 £650,000 -£2,104,545 -£822

58 Abergavenny 35 1.17 100% 1 year 65% 35% £1,343,000 £1,147,863 £650,000 £497,863 £216



61 Abergavenny 25 0.84 100% 1 year 64% 36% £933,000 £1,116,029 £650,000 £466,029 £205



Grossha

Netto

gross(%)

DevelopmentPeriod

Market%

AH%

SchemeResidual

Value

Residualvalue/gross

haBenchmark/

gross ha

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m










72 Abergavenny 2 0.07 100% 1 year 65% 35% £56,000 £835,821 £650,000 £185,821 £74

73 Abergavenny 1 0.03 100% 1 year 65% 35% -£53,000 -£1,606,061 £650,000 -£2,256,061 -£881

CaseStudy

Location DwgsGross

ha

Net togross(%)

Developmentperiod

Market%

AH%Scheme

ResidualValue

Residualvalue/gross

haBenchmark

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m

74Main villagesSmall (4 dwgs)

4 0.13 100% 1 year 40% 60% £72,000 £553,846 £600,000 -£46,154 -£32

CaseStudy

Location DwgsGross

ha

Net togross(%)

Developmentperiod

Market%

AH%Scheme

ResidualValue

Residualvalue/gross

haBenchmark

ResidualValue less

benchmark/gross ha

MaxCIL

£s persq m


3 0.10 100% 1 year 40% 60% £46,000 £460,000 £600,000 -£140,000 -£98


2 0.07 100% 1 year 40% 60% -£12,000 -£179,104 £600,000 -£779,104 -£502


1 0.03 100% 1 year 40% 60% -£89,000-

£2,696,970£600,000 -£3,296,970 -£2,092

78Main Villages(15dwgs)

15 0.50 100% 1 year 40% 60% £263,000 £526,000 £600,000 -£74,000 -£52

79Minor VillageSmall (4 dwgs)

40.13

100% 1 year 25% 75% -£5,000 -£38,462 £600,000 -£638,462 -£700


3 0.10 100% 1 year 33% 67% £17,000 £170,000 £600,000 -£430,000 -£363


2 0.07 100% 1 year 33% 67% -£41,000 -£611,940 £600,000 -£1,211,940 -£946


1 0.03 100% 1 year 33% 67%-

£105,000-

£3,181,818£600,000 -£3,781,818 -£2,909

Case

Study Scheme MVA Dwgs

Gross

ha Net ha

Net to

gross (%)

Development

Period Market % AH %

Total Mkt

Floor Area

(Sq m)

Scheme

Residual Value

sq m/gross

ha

Residual

value/gross ha

Benchmark/

gross ha

Residual Value

less

benchmark

Max CIL

£s per sq m

83 Severnside Retirement (50 dwgs) Severnside 50 0.50 0.50 100% 4 years 75% 25% 3,060.00 -£243,962 6,120.00 -£487,924 £650,000 -£1,137,924 -£186

84 Monmouth Retirement (50 dwgs) Monmouth 50 0.50 0.50 100% 4 years 65% 35% 2,562.00 -£464,824 5,124.00 -£929,648 £650,000 -£1,579,648 -£308

85 Chepstow Retirement (50 dwgs) Chepstow 50 0.50 0.50 100% 4 years 65% 35% 2,562.00 -£174,031 5,124.00 -£348,062 £650,000 -£998,062 -£195

86 Abergavenny Retirement (50 dwgs) Abergavenny 50 0.50 0.50 100% 4 years 65% 35% 2,562.00 -£308,681 5,124.00 -£617,362 £650,000 -£1,267,362 -£247

87 Rural Retirement (50 dwgs) Rural 50 0.50 0.50 100% 4 years 65% 35% 2,562.00 -£308,861 5,124.00 -£617,722 £650,000 -£1,267,722 -£247

RETIREMENT SCHEMES

CIL VIABILITY ASSESSMENT - Monmouthshire County Council

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