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Update to guidance on viability assessments being drafted

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The Royal Institute of Chartered Surveyors (RICS) is currently reviewing its technical guidance for planning and viability, with a draft expected to be produced before the end of the year.

The review follows a joint open letter, sent last week to the RICS by James Murray (Lab), London’s deputy mayor for housing, and Diarmaid Ward (Lab) of Islington LBC.

Mr Murray said: “The mayor wants to see more social rented and other genuinely affordable homes built in London – so alongside councils building more homes themselves, that means developers doing their bit too. To make sure this happens we need clear planning guidance without any loopholes.”

A high court judge suggested in March that RICS should update its 2012 guidance note on viability to help “address any misunderstandings” surrounding the market valuation of homes.

Mr Justice Holgate concluded in his judgment on a case involving Islington LBC and a local property developer that an updated guidance would “help avoid protracted disputes of the kind seen in the present case”.

A spokesperson for the RICS said in a statement: “In the second stage of this review, RICS is addressing the recent comments published by Mr Justice Holgate including his desire for our guidance to play a central role in this area.  

“Once complete, this will provide greater clarity on the methodology to be adopted by the profession in undertaking viability assessments, within the parameters of the government’s current policy.

“We intend to consult on the second stage of our review early in 2019 and, as above, will actively be encouraging broad input from stakeholders.”

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Readers' comments (1)

  • This is good news but the welcome should remain a cautious one until the draft is available for consultation. A key issue is the existing value ascribed to the land to be developed. The present system seems to allow too much hope value to be included in land values. It is important that the EUV+ or existing use value plus method is applied rather than market values which simply allow the institutionalisation of overpayment for land. Also there must be a more rigorous way for local planning authorities to benefit from increases in final development value which occur post viability assessment.

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