According to the National Audit Office (NAO), the government should consider implementing open cost calculation to assess financial viability during planning, in order to level the playing field between developers and local planning authorities.<\/p>\n\n\n\n
In an important report published today, the independent public spending watchdog provided an overview of the Ministry of Housing, Communities and Local Government\u2019s activities concerning the developer contributions system in England.<\/p>\n\n\n\n
It was found that local councils are at a disadvantage in negotiations over contributions due to a lack of transparency and significant disparities in staff expertise compared to large developers.<\/p>\n\n\n\n
A profit margin of 15% to 20% of the gross development value is generally considered acceptable for assessing project viability, although a lower figure may be justified for affordable housing with a guaranteed sale price.<\/p>\n\n\n\n
Local planning authorities can reduce contributions if they believe the developer\u2019s profit level is too high, but this may affect project delivery.<\/p>\n\n\n\n
The NAO noted a lack of transparency in viability assessments and an imbalance of power between negotiating parties.<\/p>\n\n\n\n
\u201cThere is an inequality of capabilities between the public and private sectors, with large developers having access to specialist negotiation skills,\u201d the report states.<\/p>\n\n\n\n
A previous 2019 review found that developers used viability arguments to reduce contributions, leading the Conservative government to propose a reform of infrastructure charges intended to replace the existing system.<\/p>\n\n\n\n
The proposals were legislated but were scrapped after the Labour Party came to power.<\/p>\n\n\n\n
The NAO report contains recommendations to improve the system\u2019s functioning, including a proposal to review viability assessments, including the effectiveness of their removal or the use of alternative methods such as open cost calculation.<\/p>\n","protected":false},"featured_media":5742,"template":"","class_list":["post-5744","news-cu","type-news-cu","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n