Economic Viability Assessment

Three Dragons

Document control sheet

EXECUTIVE SUMMARY

1. The New Forest National Park Authority (NFNPA) is reviewing its Local Plan. The new Local Plan will set out the opportunities for development across the National Park and the policies to support that development for the period until 2043. A Regulation 18 (Part 1) Consultation: Strategic Direction of Travel was published in January 2025 and a Regulation 18 (Part 2) Consultation: Draft Local Plan is anticipated to be published in October / November 2025. A call for sites has also been carried out during 2025.
2. As part of the evidence base to inform this process and to demonstrate whether its potential draft policies, including those for affordable housing, are deliverable, the Authority commissioned Three Dragons to undertake an Economic Viability Assessment (EVA).
3. The current Local Plan 2016-36 was adopted in July 2019. The new Local Plan will encompass issues of increasing importance such as climate change; health and wellbeing alongside continuing to deliver sustainable development within the context of a nationally protected landscape.

Testing Principles

4. The EVA has been prepared in consultation with the Authority, the local authorities (that are the housing authorities covering the National Park), the development industry (including an in-person workshop) and Registered Providers who are active in the National Park. Preparation of the EVA has followed the relevant regulations and guidance and is aligned with the National Planning Policy Framework (as revised in December 2024) and Planning Practice Guidance (PPG).
5. The testing uses a standard residual value approach. The residual value is the value of the completed development (known as the Gross Development Value or GDV) less all scheme costs including the costs of building the development, plus professional fees, scheme finance and a return to the developer as well as any planning obligations or other policy costs and the costs of the land and those associated with land purchase. This is as described in the PPG.

   “Viability assessment is a process of assessing whether a site is financially viable, by looking at whether the value generated by a development is more than the cost of developing it. This includes looking at the key elements of gross development value, costs, land value, landowner premium, and developer return.” (Paragraph: 010 Reference ID: 10-010-20180724)

6. For the testing, the EVA uses the Three Dragons Toolkit for residential development.

Types of site tested

7. A set of fourteen typologies was selected which are representative of the range of sites identified in the call for sites and those that could potentially be allocated through the Local Plan, or windfall sites where they will be impacted by policy. These were agreed with the Authority and discussed with the development industry. This is as per the approach set out in PPG stating that

   “A typology approach is a process plan makers can follow to ensure that they are creating realistic, deliverable policies based on the type of sites that are likely to come forward for development over the plan period”. (Paragraph 004 Reference ID: 10-004-20190509)

8. The typologies are of a range of sizes and dwelling numbers and include sites above and below the 10-dwelling NPPF threshold at which affordable homes will generally be sought. As confirmed in the PPG, in the National Park contributions below this threshold are permissible (Paragraph: 023 Reference ID: 23b-023-20190901).
9. For each typology, the proportion of net developable area reflects policy requirements as well as typical characteristics of the site type.
10. Typologies are tested on both brownfield (BF) as well as greenfield (GF) land. Smaller typologies of 20 or fewer dwellings were tested on greenfield and brownfield land and larger typologies on greenfield land only as per future development patterns reported by the Authority.

Key assumptions used in the testing

11. In drawing up the assumptions used in the testing, the EVA used a range of data sources, including government impact assessments, national datasets and local examples of development. Assumptions were reviewed with the housing authorities and at the development industry workshop, adjusted as necessary following feedback. A final set of testing assumptions was agreed with the Authority.
12. The assumptions used included:
    • Dwelling mix, unit size and tenure – taking into account the Housing Needs Assessment (HNA 2025), recent planning applications and feedback received from local developers, Registered Providers (RPs) and housing authority officers
    • Market values which were derived from an analysis of Land Registry data and sense-checked against recent asking prices for homes on Rightmove and with the development industry: noting that the analysis identified higher values in Brockenhurst than in the rest of the National Park but the main testing was undertaken using those values found in the majority of the National Park with sensitivity testing at values above and below this
    • The value of affordable housing was also assessed – both for social rent and shared ownership and the values were confirmed through consultation with RPs active in the National Park
    • Build costs were derived from the Build Cost Information Service (BCIS) rebased for the local authority area of the New Forest District Council, providing realistic build costs for the National Park and were discussed with the development industry at the workshop
    • Other development costs were assembled and discussed with the development industry at the workshop: these costs drew on the PPG and experience of other high level plan making viability testing, including in National Parks and included an allowance of 15% on build costs for plot costs, site infrastructure works and contingency as well as a 7% rate for finance and 8% to 10% of build costs allowed for professional fees
    • A developer return of 17.5% of value for market housing and 6% for affordable housing was used – consistent with guidance in the PPG
    • Other policy and mitigation costs included in the testing were for Biodiversity net gain, EV charging, and Accessibility (allowing for all new homes at M4(2) standard i.e. providing accessible and adaptable dwellings – as well as a sensitivity test to look at delivering a proportion of homes to the higher accessibility standard M4(3)(2)a) and for Nutrient Neutrality and recreational mitigation across the National Park Area
    • Benchmark land values used were based on a range of data sources and ranged from £0.5m to £0.75m per gross ha for greenfield development and, for brownfield land, a benchmark land value of £2m per gross ha was used, although it is noted that, where the market is able to pay a higher premium, it will do so: however, the PPG is clear that benchmark land values should not be based on sales values.
13. The testing included sensitivity tests to consider the effect of possible alternative scenarios and which were:
    • Higher market sales values than used in the main testing, to reflect the situation in Brockenhurst
    • Lower market sales value as may be applicable in a small number of locations in the Park Authority Area - this was raised as an issue at the developer workshop and has been reflected in the sensitivity test at 90% of the market values used for the main testing
    • Higher developer return – at the top of the range set out in PPG paragraph 18 to reflect comments made at the development industry workshop.

Key findings of residential testing

14. Affordable housing – current policy requiring 50% of net new dwellings to be delivered as affordable housing on sites of 3 or more dwellings is viable and deliverable. There will be exceptions for all-flatted development, demolition and redevelopment of single houses on large plots, specialist older persons (C3) housing, and some sites affected by phosphates where policies will need to flex to account for higher costs, but these can be dealt with on a case-by-case basis. The potential introduction of the Future Homes Standard and of the Building Safety Levy next year does not change these conclusions.
15. Affordable housing threshold – the results from the modelling suggest that a threshold of 2 or more dwellings is feasible.
16. The affordable tenure split tested was 80% social rent and 20% shared ownership and this was shown to be viable. In cases where viability is marginal, a higher proportion of shared ownership units, or another affordable home ownership product, could improve viability as could allowing an element of affordable rent which has a higher value than social rent, although rents would be higher for the occupants.
17. As well as affordable housing, the testing included allowances for potential policies including:
    • A limit of 100 sqm on the size of all new dwellings
    • Improved water efficiency to 100l /p /d
    • Accessibility to Building Regulations M4(2) standard on every dwelling.

    The costs for meeting these policies is not considered a significant issue in terms of the viability of development.

Conclusion

18. The NFNPA is developing a Regulation 18 (Part 2) Consultation Draft Local Plan for the period up to 2043. In summary, the viability testing supports the inclusion of a policy requiring 50% affordable housing on sites of 2 or more dwellings within the Defined Villages and on sites allocated for residential development in the Local Plan. Some flexibility over policy will be needed for all-flatted development including older persons C3 housing as well as redevelopment of single dwelling plots for additional units. The EVA also supports a policy requiring 100% of dwellings on Rural Exception Sites to be affordable, so long as the tenure mix is not overly prescriptive. Other potential policies including those for a limit of 100 sqm on the size of all new dwellings; improved water efficiency to 100l /p /d; and accessibility to Part M4(2) do not affect these conclusions. There is headroom in most cases for energy efficiency / carbon reduction policies including the Future Homes Standard were these to be introduced.

Chapter 1 Introduction

Purpose of the Economic Viability Assessment

1.1 The New Forest National Park Authority (NFNPA) is reviewing its Local Plan. The new Local Plan will set out the opportunities for development across the National Park and the policies to support that development for the period until 2043. A Regulation 18 (Part 1) Consultation: Strategic Direction of Travel was published in January 2025 and a Regulation 18 (Part 2) Consultation; Draft Local Plan is anticipated to be published in October / November 2025. A call for sites has also been carried out during 2025.

1.2 As part of the evidence base to inform this process and to demonstrate whether its potential draft policies, including those for affordable housing, are deliverable, the Authority commissioned Three Dragons to undertake an Economic Viability Assessment (EVA).

1.3 The current Local Plan 2016-36 was adopted in July 2019. The new Local Plan will encompass issues of increasing importance such as climate change; health and wellbeing alongside continuing to deliver sustainable development within the context of a nationally protected landscape.

1.4 Unlike other local planning authorities, those covering National Parks are not also the local housing authority. The New Forest National Park Authority has three constituent authorities: New Forest District Council; Test Valley Borough Council and Wiltshire County Council. The majority of the Authority area and hence the housing delivery occurs within New Forest District Council (NFDC). The New Forest National Park Authority remains a separate local planning authority.

1.5 The Economic Viability Assessment 2025 has been prepared in consultation with the development industry and other key stakeholders (including local housebuilders, their agents, landowners, Registered Providers of affordable housing and Rural Housing Enablers) and has followed the relevant national policy and guidance.

Chapter 2 Policy Background

National policy

2.1 National policy and guidance on viability for plan making and Community Infrastructure Levy is set out in National Planning Policy Framework (NPPF) December 2024 and the Planning Practice Guidance (PPG). There is also useful guidance contained within 'Viability Testing Local Plans - Advice for planning practitioners' (Harman 2012) and ‘Assessing Viability in Planning’ (RICS 2021). The viability testing undertaken within this study complies with this national policy and guidance, the details of which are set out in Appendix I.

2.2 There are a number of other national policies recently introduced that have a bearing on development costs and which have been included in the viability testing undertaken. These include:

• More stringent requirements to improve building standards, including to reduce carbon emissions in new homes, particularly the update to Building Regulations Part L (conservation of fuel and power), Part F (ventilation) and Part O (overheating)
• Update to Part S - Infrastructure for Charging Electric Vehicles which requires new development to provide electric vehicle charging points where a parking space is provided or cabling elsewhere
• Provision for biodiversity net gain introduced through the Environment Act 2021, with 10% net gain a mandatory requirement for most development types from April 2024
• Through an updated NPPF (December 2024), the removal of the requirement, previously introduced through Written Ministerial Statement (24 May 2021), that a minimum of 25% of affordable housing units should be First Homes
• The government has set out the importance it attaches to delivery of Social Rent homes, notably in its recent policy paper, Delivering a decade of renewal for social and affordable housing.

2.3 In December 2023 the previous government issued a consultation on the Future Homes and Buildings Standard which seeks to make further improvements to the level of carbon emissions in new homes and non-domestic buildings and is anticipated to come into force in 2025. The status of this document and which options may be pursued is unclear since the July 2024 change of government but we nonetheless comment on headroom for the additional related costs associated with the standard should it be introduced.

2.4 The government has also set out regulations for the introduction of the Building Safety Levy in October 2026. The levy sets fixed rates per sqm for new market homes.

2.5 Also of significance - Conservation of Habitats and Species Regulations 2017 - Mitigating impacts from nutrients. It is a requirement that the effects of nitrates in the Solent and phosphates in the river Avon are mitigated – all development falls into one of these 2 catchments, but most within the Solent catchment area and only limited circumstances where there is impact on the Avon. It is also a requirement to address in-combination recreational impacts on the New Forest's designated sites from development across the National Park Area. In addition, development within 5.6km of the Solent coastal designations is required to address recreational impacts on the coast.

National policy context relevant to the National Park

2.6 The founding blocks of all policy designed and adopted by New Forest National Park Authority are the two statutory purposes placed on all National Parks as laid out in the Environment Act 1995:

1. to conserve and enhance the natural beauty, wildlife and cultural heritage (of the National Parks); and
2. to promote opportunities for the understanding and enjoyment of the special qualities (of the National Parks) by the public.

2.7 The NPPF reflects the statutory requirements placed on National Parks, stating that “the scale and extent of development within all these designated areas should be limited, while development within their setting should be sensitively located and designed to avoid or minimise adverse impacts on the designated areas” (paragraph 189).

2.8 Recognising the importance of affordable housing to such areas the NPPF allows an exception to the requirement that “affordable housing should not be sought for residential developments that are not major developments” permitting authorities to “set out a lower threshold of 5 units or fewer” (paragraph 65).

Local Plan policy context

2.9 The Draft Local Plan includes the following key policies which will affect viability of development

• Draft Policy SP41- Affordable Housing setting out the requirement for 50% of net dwellings developed within the Defined Village and on sites allocated for residential development in the Local Plan will be provided as affordable homes to meet local needs
• Draft Policy SP42- Rural Exception Sites - 100% of the housing on rural exception sites will be affordable
• Draft policy SP30 - Dwelling Size- net new dwellings permitted in the National Park will have a maximum total internal habitable floor area of 100 square metres
• Draft Policy DP28: New residential development in the National Park - new dwellings should be built to accessible and adaptable standards to meet the requirements of the Building Regulations M4(2), and where evidenced by local need, a proportion of affordable dwellings to be built as wheelchair user dwellings to meet the requirements of Building Regulations M4(3)
• Draft Policy SP7: Safeguarding and improving water resources - a water efficiency standard of 100 litres maximum daily allowable usage per person.

2.10 A table describing how the viability impact of national and local policies are dealt with in the modelling can be found in chapter 4.

Chapter 3 Approach to testing and viability

Principles and approach

3.1 As is standard practice (see Viability Testing Local Plans: Advice for Planning Practitioners Harman 2012 p25) we have adopted a residual value approach to our analysis. Residual value is the value of the completed development (known as the Gross Development Value or GDV) less scheme costs. The remainder is the gross residual value and is available to pay for the land. The value of the scheme includes both the value of the market housing and affordable housing. Scheme costs include the costs of building the development, plus professional fees, scheme finance and a return to the developer as well as any planning obligations or other policy costs and the costs associated with land purchase, as described in PPG

3.2 This is illustrated in the figure below

Figure 3.1: Residual Value Approach

Total development value (market and affordable)
Minus
Development costs (including build & site costs, developer / contractor return, CIL, planning obligations, fees etc)
=
Gross residual value (available to pay for land)
Minus
Cost and fees associated with buying the land
=
Net residual value

3.3 If net residual value is positive then development can be said to be viable.

Consultation with the development industry

3.4 The PPG sets out that:

3.5 Consultation with the development industry, undertaken for this assessment, involved a range of activities which provided opportunities for the development industry to engage with the process. The activities were:

• A workshop consultation exercise with developers active within the Authority in July 2025 (a note of the workshop is appended at Appendix II)
• A note of the workshop was sent to those who attended the workshop and those who sent apologies, offering a further opportunity to comment or discuss
• Consultation with housing associations active in the Authority area to discuss assumptions for affordable housing and issues around delivery; these took place during July 2025
• Consultation with the local housing authorities in June 2025.

3.6 The industry consultation was broadly supportive or raised no issues with the majority of viability assumptions proposed by Three Dragons. Those points that were raised by consultees included:

• House prices – whilst there was consensus that values were likely to higher in Brockenhurst than elsewhere in the National Park it was noted that the main testing should use values found in the majority of the National Park
• It was suggested that the viability testing should include a sensitivity test at c10% below values shown at the workshop to reflect values found in a few locations in lower value areas and this has consequently been included as a sensitivity test
• Social rent – comment that social rent would impact on scheme viability and that the inclusion of social rented 1 bed properties was not realistic – these units were nonetheless tested because the HNA had identified a need for rented units that were more affordable and this was supported by most RPs
• Delivery rates are lower than shown at the workshop and these were subsequently amended
• S106 allowance – comments that this looks low - Three Dragons was able to confirm that payments for mitigations including nutrient neutrality and recreation were in addition to the straight s106 allowance – also the s106 allowance was subsequently increased for larger sites
• Developer return – comment that this was low but acknowledging that the figure quoted was at the mid point of the range set out as suitable in PPG (paragraph 18) – it was agreed to include a higher return (20%) for a sensitivity test
• Finance rate – comment that this was low and the interest rate used in the testing was subsequently uprated
• Greenfield benchmark values – should be higher for smaller greenfield sites – again this was subsequently uprated.

3.7 Consultation with the housing associations mainly confirmed the proposed affordable housing assumptions, although it was commented by some (not all) that the proposed number of 1-bed units (as set out in the draft Housing Needs June 2025 Iceni – unpublished at time of writing) was too many for sustainable development and also that a higher percentage of shared ownership units would be preferable to assist with internal viability. The affordable housing mix was however kept as per the HNA to reflect local need and the comments of the majority of consultees.

Typologies

3.8 A set of fourteen typologies was selected which are representative of the range of sites identified in the call for sites and those that could potentially be allocated through the Local Plan, or windfall sites where they will be impacted by policy. These were agreed with the Authority and discussed with the development industry. This is as per the approach set out in PPG stating that

3.9 The typologies are of a range of sizes and dwelling numbers and include sites above and below the 10-dwelling NPPF threshold at which affordable homes will generally be sought. In the National Park contributions below this threshold are permissibleas outlined in the PPG resource on Planning Obligations (Paragraph 023 Reference ID: 23b-023-20190901).

3.10 For each typology, the proportion of net developable area reflects policy requirements as well as typical characteristics of the site type.

3.11 Typologies are tested on both brownfield (BF) as well as greenfield (GF) land. Smaller typologies of 20 or fewer dwellings were tested on greenfield and brownfield land and larger typologies on greenfield land only as per future development patterns reported by the Authority.

3.12 For brownfield sites, the testing does not assume that there is any existing floorspace on the site. In practice, it is possible that this will be the case and, in these cases, the existing space should be netted off against the affordable housing liability, thus increasing the residual value and strengthening the viability position of the scheme. (see PPG Paragraph: 027 Reference ID: 23b-027-20190315) However, this can only be realistically assessed on a scheme-by-scheme basis, at planning application. The approach taken in this study is a conservative one which will therefore tend to under-estimate viability on some brownfield sites.

3.13 The typologies are labelled CS1 through to CS10, or OP1 / OP2 for specialist older persons and RES1/RES2 for Rural Exception Sites. Some typologies (CS3, CS5, CS7 are tested at more than one density where there is evidence of different densities being taken forward. Where a typology has a second option at an alternative density – this is labelled as i).

3.14 Non-residential development has not been viability tested within this study for the following reasons. Firstly, the Authority does not expect a significant amount of non-residential development over the plan period; and that the Local Plan’s ‘deliverability’ is not reliant on such development. Secondly, the policies that the Authority may include that are directly relevant to these types of developments (BREEAM and Biodiversity Net Gain for example) only represent modest costs and would not, either on their own or in combination, effect delivery of these forms of development.

Affordable housing requirements

3.15 As described in chapter 2, through both the current and emerging Local Plan, require 50% of net dwellings developed within the Defined Village and on sites allocated for residential development in the Local Plan to be provided as affordable homes to meet local needs and this was therefore the starting point for the modelling.

3.16 Sites with affordable housing are tested with an affordable tenure mix of 80% social rent and 20% shared ownership to reflect the findings of the HNA 2025.

Chapter 4 Testing Assumptions

4.1 The EVA draws on a range of data sources, including government impact assessments, national datasets, local examples of development. A series of assumptions were then derived that were reviewed at the development industry workshops, adjusted as necessary following feedback, with a final set of testing assumptions agreed with the Authority. The final set of assumptions were used in the viability testing. This chapter summarises the key assumptions and the data they rely on.

Dwelling mix, unit size and tenure

4.2 The overall size and mix of dwellings in the typologies used in the testing takes account of information from the latest Housing Needs Assessment (HNA draft June 2025 – unpublished at the time of writing), recent planning applications and feedback received from local developers, Registered Providers (RPs) and housing officers. The affordable housing tenure split also reflects the HNA and is weighted towards social rented units to meet local need and affordability.

4.3 Dwelling sizes meet Nationally Described Space Standards (NDSS). The size of market dwellings used reflects draft policy SP30 restricting dwelling sizes to 100sqm or less, as well as recent planning permissions and was discussed at the workshop, following which some adjustments were made. It is recognised that other sizes of dwellings will be proposed by developers and the typologies used for the testing are not meant to be prescriptive, but they do provide a proportionate guide to dwelling sizes. For affordable dwellings, following consultation, it was found that 1-bed units were most likely to be delivered as maisonettes without shared space.

4.4 Development costs for flats will include non-saleable circulation and common areas, although we have assumed that flatted development will be 1-2 storeys, often ‘maisonette style’ without communal areas in the National Park.

4.5 The housing mixes and dwelling sizes used for the typologies in the study are shown below.

4.6 A slightly different dwelling mix was used for Rural Exception Sites where 1-bed units were modelled as 1-bed houses. For older persons housing the mix was split 50/50 between 1 and 2 beds for the affordable and market units.

Market values

4.7 Market values in the National Park were derived from an analysis of Land Registry data over the last five year period. The Land Registry data was matched to Energy Performance Certificates to enable a value per sqm to be generated for the different house types, based on almost 2,000 records for the NFNPA. As there was insufficient data to generate reliable values for new build properties only, values for existing properties were included and indexed to align with new build values.

4.8 A value of £5,800 a sqm for both houses and flats was arrived at with a higher value of £6,400 for houses in Brockenhurst (but the same for flats). Values for specialist older persons housing are based on the premise that a 2-bed sheltered apartment is the same value as 3-bed second hand semi – as per the Retirement Housing Group guidance.

4.9 Market values for different dwelling types used in the testing were derived from the per sqm values described above applied to the average floor spaces of newbuild market dwellings (shown in Table 2). As a sense test, the market values identified in this way were compared with recent asking prices for homes on Rightmove (albeit with limited examples) and were reviewed by the development industry. The development industry commented that, although the prices were about right for most of the National Park and that prices were higher in Brockenhurst, there were parts of the National Park, especially on the periphery, where values could be as much as 10% lower. Although this was difficult to identify through the data, we have nonetheless accounted for the potential for lower values through a sensitivity test.

4.10 The values used in the main viability testing are shown in Table 4.3 below. These are shown as unit values, based on the sizes set out in the housing mix section earlier in this chapter. Values in Brockenhurst were found to be 10.34% higher for houses, but the same for flats. The background data for the house price analysis, including sample data from Land Registry, can be found in Appendix III.

Source – Land Registry / EPC

Values - Affordable housing

4.11 The value of affordable housing was based on a capitalised net rent approach i.e. the notional amount the provider of the unit can borrow against the net income received to arrive at a transfer value (i.e. the amount paid to the developer in a developer led development). The assumptions were based on known industry standards informed by an analysis of annual reports for six actively developing RPs (A2 Dominion; Accent; Aster; L&Q; Stonewater; Sovereign 2023) as well as the government global accounts (January 2025). This analysis helped in developing the initial list of assumptions.

4.12 The affordable housing assumptions were discussed at the developer workshop and with local Registered Providers (RPs) in one-to-one interviews. No significant alternatives to our approach were identified and the agreed assumptions used to calculate the capitalised net rent are set out below.

4.13 The next table summarises the values attributed to the affordable housing property types included in the testing, using these assumptions. We have assumed that no grant is available for the affordable homes, although in practice there may be occasions when it is – we have therefore assumed a ‘worst case’ scenario.

Development costs

Build costs

4.14 The Build Cost Information Service (BCIS) provides benchmarking information for build costs, adjusted for the location. Residential build costs and conversion costs are based on actual tender prices and the tender price data was rebased to 2nd Quarter 2025 (in line with values). BCIS provides indexes by local authority and, as a National Park, there is not a separate cost index for NFNPA therefore we have rebased the location factor to New Forest District as a realistic location factor.

4.15 We understand from work with housebuilders and cost consultants that volume and regional house builders can comfortably operate within the BCIS lower quartile cost figures, especially given that they are likely to achieve significant economies of scale in the purchase of materials and the use of labour. Many smaller and medium sized developers of houses, such as develop in the National Park, are usually unable to attain the same economies, so their construction costs may be higher although this will vary between housebuilders and sites. We have worked with BCIS to identify how costs change according to the size of the development. We have used this analysis by BCIS to inform our approach to testing for NFNPA. The variable build costs by site size have been applied to houses only, as flat build costs primarily vary by height.

Source: BCIS – see Appendix IV for BCIS report

Other residential development costs

4.16 A range of other standard costs have been used in the viability testing. These were discussed with the development industry at the workshop and are based on PPG and experience of other high level plan making viability testing, including in National Parks. Further information providing background to some of the costs is set out in the following table, 4.7.

4.17 Allowances are made for an additional 15% on build costs for plot costs, site infrastructure works and contingency. These are industry standards on which we monitor what is happening elsewhere in similar locations in the UK as well as consulting with the local development industry.

4.18 A cost is included below for the Future Homes Standard 2025. This proposed standard was introduced by the previous government and is still at consultation stage with no indication of how it might be taken forward. We do not therefore include it in the standard testing but nonetheless comment on available viability headroom should it be adopted nationally. Costs are based on the government impact assessment (DLUHC December 2023). There are two options included in the consultation and we have used Option 1 which is the higher cost because this option takes better account of the cost to the consumer. This approach was agreed with the Authority.

National and local policy requirements

4.19 The testing has taken into account the implied development costs of both national policies and those in the emerging Local Plan. Some of the costs are in the base modelling undertaken and others are potential future policy changes and are set out in terms of the ability of development to accommodate this change, were it to be introduced. All policies in the draft Plan are included in the base testing. The key national and Local Plan policies are set out below with a note about how they are treated in the testing. (Note policy numbers in the emerging Regulation 18 (part 2) Local Plan may be subject to change.)

S106

4.20 In addition to the policy costs above, a s106 figure of £1,000 per dwelling for typologies below 40 dwellings is included. This rises to £,5000 per dwelling for the three largest typologies of 40 dwellings and above to cover transport, open space or education costs should these be required. In practice these costs are not regularly applied but an allowance is nonetheless made as there are instances of recent collection.

4.21 The total allowance for planning obligations used in the EVA is therefore:

• for typologies under 40 dwellings - £12,374 per unit (inc nitrate neutrality and New Forest mitigation) plus BNG and £7,500 per scheme for BNG monitoring
• for typologies of 40 or more dwellings- is £16,374 per unit (inc nitrate neutrality and New Forest mitigation) plus BNG and £7,500 per scheme for BNG monitoring.

Benchmark land value

4.22 National guidance on setting benchmark land values (BMLVs) is clear that BMLVs should not be based on market values (although these can be used as a sense-check), or indeed the price paid for a particular site, but rather on the existing value of land plus an uplift to provide an incentive to the landowner. The EVA has followed this guidance and arrived at benchmark land values through a review of a number of data sources, including existing use values (with an uplift), site specific appraisals submitted with planning applications, previous land values found sound at examination (Three Dragons EVA 2018) with adjustments for inflation. Again, conclusions were sense-checked with the development industry. Greenfield land values were increased from the levels presented to the development industry workshop as a result of comments made (from £0.5m ha for sites under 10 dwellings and £0.375m for larger sites, to £0.75m ha for sites under 10 dwellings and £0.5m for larger sites).

4.23 The benchmark land value used for CS3(i) – which is modelled on the premise of demolition of a property and construction of 4 dwellings on the site, is based on a site value of £370,000 which is the value of a lower quartile house on a 0.1ha plot.

4.24 Benchmark land values used in testing Rural Exception Sites (RES) are derived on a different basis and assumed to achieve lower values than for general residential development. A land value of £10,000 per plot was used which was considered generally acceptable by the RPs consulted. But consultees indicated that land values for RES plots may be increasing and this needs to be borne in mind in interpreting the results.

Residential sensitivity testing

4.25 Sensitivity tests were carried out to consider the effect of possible alternative market scenarios and were:

• Higher market sales values to reflect the higher values found in Brockenhurst
• Lower market sales value as may be applicable in parts of the National Park Authority Area, raised as an issue at the developer workshop
• Higher developer return – at the top of the range set out in PPG paragraph 18.

4.26 The EVA also comments on capacity of development to meet the Future Homes Standard or other local higher environmental requirements as may be required, through the Local Plan and/or national policy.

4.27 Background to the cost assumptions used in the testing can be found at Appendix IV.

Chapter 5 Results of modelling

5.1 Using the assumptions discussed in the previous chapters, the results for the viability modelling are presented in this chapter of the EVA. The results are presented as a residual value (RV) per unit and take account of all costs and values including the payment for land and include on-site affordable housing at 50% of dwellings (unless otherwise specified); if the RV is positive then the typology can be said to be viable.

General typologies

5.2 In the results table below, the typology reference is shown in the first column, the number of units in the second, net density per hectare in the third. Note that both CS6 (6-units) and CS7 (20 units) are tested at c35 dph and again at a lower density. The results themselves are split between greenfield land and brownfield sites (noting that not all typologies were tested on brownfield sites). Negative results are in red font.

5.3 Across both greenfield and brownfield typologies, Table 5 demonstrates generally good viability for the testing undertaken. Exceptions to this are the one-unit typology (CS1) and the flatted scheme (CS4). All other GF typologies are viable with significant headroom to meet potential additional costs.

5.4 The picture with the brownfield typologies is more complex and typologies of 6 and 20 units (CS5 and CS7) are not viable when tested at a lower density. However, the testing shows that such schemes are viable at a slightly higher density, in this case 35 dph.

5.5 The testing reported above uses the market values found across the majority of the National Park. However, as noted earlier, there is evidence that values in Brockenhurst are some 10.34% higher than these values.

5.6 Conversely, the development industry commented that lower values can be found in some more peripheral parts of the National Park. Development industry feedback also indicated that higher developer return on risk, at the top of the 15-20% range given as ‘suitable’ in PPG (Paragraph: 018 Reference ID: 10-018-20190509) may be applicable in some instances. To reflect these differences, a sensitivity tests were carried out to evaluate the:

1. impact of higher market values, to reflect the higher values found in Brockenhurst (plus 10.3% against the values used in the main testing)
2. impact of potential for lower values in some parts of the National Park (minus 10% - against the values used in the main testing)
3. increased developer profit (from 17.5% of GDV to 20% of GDV – as a notional alternative developer return).

5.7 Results of the above sensitivity testing are set out below using the 6-unit and 40-unit typologies (CS5 and CS8) to illustrate this.

5.8 As would be expected, residual values have increased for typologies in Brockenhurst and the 6-unit typology on brownfield land which was previously ‘marginally’ viable has become comfortably viable with a RV of £25,460 per unit. Where values have been reduced, the greenfield typologies remain viable but the 6-unit typology on brownfield land is no longer viable. An increase in developer profit has reduced viability on the greenfield typologies but the results remain viable. The 6-unit typology on brownfield land is marginally non-viable.

Older persons housing

5.9 A specialist sheltered housing scheme (also known as retirement housing or housing with support) and an extra care scheme (also known as housing with care) were modelled. Both older persons typologies were modelled with 50% affordable housing on greenfield and brownfield land as well as with the main National Park house prices and Brockenhurst house prices. On brownfield land, where this type of development is more likely to be built, we have also looked at the effect of reducing the affordable housing contribution to 30%. (We note that where older persons housing is developed as C2 accommodation it will not be liable to contribute towards affordable housing.)

5.10 The results demonstrate that developer-led specialist C3 retirement housing is capable of delivering a policy compliant 50% affordable housing contribution on GF sites where higher housing values are found – as in Brockenhurst. In other circumstances, it may not be possible to deliver 50%, however 30% as a target may be more realistic but this will vary on a case-by-case basis. Care home developments were not viable, although as C2 development would not be required to provide affordable housing.

Rural Exception Sites

5.11 Rural Exception Sites (RES) were modelled as 100% affordable housing as per draft policy SP42. RES were modelled firstly with a tenure split 80% social rent and 20% shared ownership and secondly with a tenure split of 50% social rent and 50% shared ownership. In practice the tenure split and housing mix for RES are dependent upon local need.

5.12 RES should be able to deliver 100% affordable housing schemes but the testing indicates that flexibility about the tenure mix and the relative contribution of shared ownership and social rent may be needed. Where some form of public subsidy is available, viability will be strengthened.

Accessibility

5.13 As in chapter 4, all testing included costs for all units to meet the accessibility standard of the Building Regulations M4(2). The Authority’s policy for M4(3) is not fully developed and is tested on a 20-dwelling typology with 10% of units meeting M4(3)(2)a (noting that this was the smallest scheme tested where whole units could be included – 5% of market dwellings and 5% of affordable dwellings). The results are shown below.

5.14 The results show that although viability is reduced, the results remain comfortably viable with 10% of homes achieving Part M4(3)(2)a (dwellings which allow for simple adaptation to meet the needs of occupants who use wheelchairs). Part M4(3)(2)b (dwellings which meet the needs of occupants who use wheelchairs) has not been modelled because the costs will be specific to the occupying household but expected to be around 2-3 times higher than for M4(3)(2)a.

Conclusions from the modelling

5.15 The EVA has demonstrated good general viability for the typologies modelled. In particular, policies setting a 50% affordable housing target, a limit of 100 sqm on the size of all new dwellings and a requirement for all dwellings to meet accessibility standard Part M(4)2, are deliverable in most cases, along with other policy requirements. Some results on smaller or lower density brownfield sites are more marginal meaning that whilst small adjustments can be made to achieve viability, additional economic pressure could mean that, unless the market improves or land value can flex, there may need to be some flexibility around policy on a site-by-site basis.

5.16 Single dwellings and 100% flatted development (including specialist older persons) were not viable with 50% affordable housing on greenfield or brownfield land, although for specialist older persons a lower percentage was found to be feasible in some cases. Rural Exception sites are deliverable with 100% affordable housing so long as flexibility is retained over the tenure mix. In most cases potential for additional costs for Part M4(3)a or from future government regulation such as the Future Homes Standard or the Building Safety Levy does not change the outcome but for smaller sites below 10 dwellings on brownfield land, additional flexibility could be required, achieved, for example, though an alternative mix of house types or a lower land transaction value to account for policy costs.

Chapter 6 Summary and conclusions

6.1 To inform the Regulation 18 (Part 2) Consultation Draft Local Plan 2025 we have modelled the viability of a range of typologies across the National Park. These are representative of the types of development anticipated to come forward during the plan period and include costs attributed to the potential draft policies. The testing assumptions used have been derived from published sources and consulted upon with the development industry and other key stakeholders. The implications drawn from the results are discussed below.

Policy implications

6.2 Affordable housing – current policy requiring 50% of net new dwellings to be delivered as affordable housing on sites of 3 or more dwellings is viable and deliverable. There will be exceptions for all-flatted development, demolition and redevelopment of single houses on large plots, specialist older persons (C3) housing, and some sites affected by phosphates where policies will need to flex to account for higher costs, but these can be dealt with on a case-by-case basis. The impending introduction of the Future Homes Standard and the Building safety Levy does not change these conclusions.

6.3 Affordable housing threshold – the results from the modelling suggest that a threshold of 2 or more dwellings is possible.

6.4 The affordable tenure split tested was 80% social rent and 20% shared ownership and this was shown to be viable. In cases where viability is marginal, a higher proportion of shared ownership units, or other affordable home ownership product, could improve viability as could allowing an element of affordable rent which has a higher value than social rent, although rents would be higher for the occupants.

6.5 As well as affordable housing, the testing included allowances for potential policies including:

• A limit of 100 sqm on the size of all new dwellings
• Improved water efficiency to 100l /p /d
• Accessibility to Building Regulations M4(2) standard on every dwelling.

6.5 The costs for meeting these policies is not considered a significant issue in terms of the viability of development.

6.6 Emerging Policy DP28: New residential development in the National Park, requires a proportion of dwellings to meet Building Regulation Part M4(3) standards and we are aware that this policy is still being developed. A sensitivity test on the 20-dwelling typology shows that if 10% of homes meet this standard as Part M4(3)(2)a then viability is not compromised. (Note that costs would be higher if the policy applies to households on a case-by-case basis to Part M4(3)(2)b.)

Viability Headroom for additional future policy costs

6.7 There are a number of potential national policy costs that could be introduced over the life of the new Local Plan. The range and scope of these should become clearer as the new Local Plan is taken forward to its next stage, ready for Examination. At that point, the viability of the Local Plan will need to be tested in detail to reflect the then policy position. At this stage, the EVA comments on the scale of the potential costs and their implications, all other things being equal.

6.8 The introduction of higher carbon reduction standards such as those proposed in the 2023 Future Homes Consultation has implications for higher costs. The government’s Impact Assessment accompanying the consultation for Future Homes implies an additional cost of around £5,000 to £6,000 per dwelling (market and affordable housing) in the National Park, with variation depending on unit size and type.

6.9 Where development falls within the catchment area for phosphates a mitigation cost will apply for nutrient neutrality and this could be in the region of £18,000 per dwelling for the areas in which it applies (offset against the allowance of £7,000 per dwelling for nitrates which has been applied).

6.10 Where development falls with the catchment area for Solent Bird Aware a mitigation cost will apply. The scale of contribution ranges from £482 per 1-bed unit up to £1,067 for a 4-bed unit. A weighted average for the dwelling mix used in the EVA is around £950 per unit.

6.11 The Building Safety Levy is a future cost which is likely be applied to all market development of a £ per sqm basis. However the nature of exclusions have been discussed in the government’s consultation response March 2025 and as well as the expressed intention to exclude affordable housing and sites of fewer than 10 dwellings, there is stated potential to exclude sites under 50 new dwellings. Therefore much development in National Park could be excluded and the introduction of the Levy would have a more limited impact.

6.12 Where the Building Safety Levy does apply, the rates for the New Forest District Council (which applies to most of the New Forest NPA) are £18.51sqm for development on previously developed land and £37.01sqm for development on non-previously developed land. Allowing for 50% affordable housing, this could mean additional cost to the developer per house of, say, 90sqm, of around £800 on brownfield sites and £1,700 on greenfield sites.

6.13 These figures suggest a possible additional cost to development of between £5,000 and £7,700 per unit if the above circumstances for Future Homes and the Building Safety Levy prevail. However, the results in this chapter indicate that the majority of development within the NPA is able to absorb these costs. The typologies most likely to be impacted are the smaller typologies on brownfield land (where Building safety Levy would not apply) and specialist older persons. In many cases some flexibility of items such as tenure mix may be required to ameliorate the cost. These comments do not take into account that additional value could be generated to schemes by increased house prices at the time Future Homes is adopted.

Specialist and non-residential development

6.14 Specialist older persons housing, where this counts as C3 accommodation, was shown as not able to support a full affordable housing contribution in most instances and that 30% may be a more realistic target.

6.15 Care homes (C2 and therefore not expected to provide an affordable housing contribution) were shown to be non-viable. This does not mean that such development will not come forward as it is often developed on the basis of the long-term income provided rather than as speculative development.

6.16 Non-residential development has not been viability tested within this study and we comment that policies likely to relate to these types of developments (BREEAM and Biodiversity Net Gain for example) only represent modest costs and would not, either on their own or in combination, effect delivery of these forms of development.

Conclusion

6.17 The NFNPA is developing a Regulation 18 (Part 2) Consultation Draft Local Plan for the period up to 2043. In summary, the viability testing supports the inclusion of a policy requiring 50% affordable housing on sites of 2 or more dwellings within the Defined Villages and on sites allocated for residential development in the Local Plan. Some flexibility over policy will be needed for all-flatted development including older persons C3 housing as well as redevelopment of single dwelling plots for additional units. It also supports a policy requiring 100% of dwellings on Rural Exception Sites to be affordable, so long as the tenure mix is not overly prescriptive. Other potential policies including those for a limit of 100 sqm on the size of all new dwellings; improved water efficiency to 100l /p /d; and accessibility to Part M4(2) do not affect these conclusions. There is headroom in most cases for energy efficiency / carbon reduction policies including the Future Homes Standard were these to be introduced.

Appendix I National policy on viability

National policy context

1. The National Planning Policy Framework (NPPF) (December 2024) recognises the importance of positive and aspirational planning but states that this should be done 'in a way that is aspirational but deliverable’. (Para 16)
2. The NPPF advises that cumulative effects of policy should not combine to render plans unviable:

   ‘Plans should set out the contributions expected from development. This should include setting out the levels and types of affordable housing provision required, along with other infrastructure (such as that needed for education, health, transport, flood and water management, green and digital infrastructure). Such policies should not undermine the deliverability of the plan.'(Para 35)

3. The government has signalled its desire to simplify the planning process, including development contributions. The NPPF advises that:

   ‘All viability assessments, including any undertaken at the plan-making stage, should reflect the recommended approach in national planning guidance, including standardised inputs, and should be made publicly available.' (Para 59)

4. In terms of affordable homes the government has reiterated previous policy on affordable homes thresholds and places an emphasis on social rent:

   ‘Provision of affordable housing should not be sought for residential developments that are not major developments, other than in designated rural areas (where policies may set out a lower threshold of 5 units or fewer). To support the re-use of brownfield land, where vacant buildings are being reused or redeveloped, any affordable housing contribution due should be reduced by a proportionate amount.' (Para 65)

5. ‘Where major development involving the provision of housing is proposed, planning policies and decisions should expect that the mix of affordable housing required meets identified local needs, across Social Rent, other affordable housing for rent and affordable home ownership tenures.' (Para 66)

6. With regard to non-residential development, the NPPF states that local planning authorities should:

   ‘Set out a clear economic vision and strategy which positively and proactively encourages sustainable economic growth…local policies for economic development and regeneration …set criteria, or and identify strategic sites, for local and inward investment to match the strategy and to meet anticipated needs over the plan period. Appropriate sites for commercial development which meet the needs of a modern economy should be identified, including suitable locations for uses such as laboratories, gigafactories, data centres, digital infrastructure, freight and logistics. Seek to address potential barriers to investment, such as inadequate infrastructure, services or housing, or a poor environment…be flexible enough to accommodate needs not anticipated in the plan, allow for new and flexible working practices (such as live-work accommodation), and to enable a rapid response to changes in economic circumstances.' (Para 86)

7. Planning policies and decisions should recognise and address the specific locational requirements of different sectors. This includes making provision for: ‘a) clusters or networks of knowledge and data-driven, creative or high technology industries; and for new, expanded or upgraded facilities and infrastructure that are needed to support the growth of these industries (including data centres and grid connections); . . . b) storage and distribution operations at a variety of scales and in suitably accessible locations that allow for the efficient and reliable handling of goods, especially where this is needed to support the supply chain, transport innovation and decarbonisation; c) the expansion or modernisation of other industries of local, regional or national importance to support economic growth and resilience.’ Para 87)
8. However, the NPPF does not state that all sites must be viable now in order to appear in the plan. Instead, the NPPF is concerned to ensure that the bulk of the development is not rendered unviable by unrealistic policy costs and that overall, Local Plan policies should not undermine the deliverability of the plan (Para 35 . It is important to recognise that economic viability will be subject to economic and market variations over the local plan timescale. In a free market, where development is largely undertaken by the private sector, the local planning authority can seek to provide suitable sites to meet the needs of sustainable development. It is not within the local planning authority's control to ensure delivery actually takes place; this will depend on the willingness of a developer to invest and a landowner to release the land. So, in considering whether a site is deliverable now or developable in the future, we have taken account of the local context to help shape our viability assumptions.
9. Written Ministerial Statement - Local Energy Efficiency Standards Update (13 December 2023) recognises that for a number of years, the plans of some local authorities have sought to go further than national standards for energy efficiency. The WMS states that the Government does not expect plan-makers to set local energy efficiency standards for buildings that go beyond current or planned buildings regulations unless they have a well-reasoned and robustly costed rationale that ensures development remains viable and that any additional requirement is expressed as a percentage uplift of a dwelling’s Target Emissions Rate calculated using a specified version of the Standard Assessment Procedure.
10. Planning Practice Guidance - Planning Practice Guidance (PPG) provides further detail about how the NPPF should be applied. PPG contains general principles for understanding viability (also relevant to CIL viability testing). The approach taken reflects the latest version of PPG. In order to understand viability, a realistic understanding of the costs and the value of development is required and direct engagement with development sector may be helpful (Paragraph: 010 Reference ID: 10-010-20180724). Evidence should be proportionate to ensure plans are underpinned by a broad understanding of viability, with further detail for strategic sites that provide a significant proportion of planned supply (Paragraph: 005 Reference ID: 10-004-20180724).
11. All development costs should be taken into account, including within setting of benchmark land values, in particular para 014 within the PPG Viability section states that:

    'Costs include:

    • build costs based on appropriate data, for example that of the Building Cost Information Service
    • abnormal costs, including those associated with treatment for contaminated sites or listed buildings, or costs associated with brownfield, phased or complex sites. These costs should be taken into account when defining benchmark land value
    • site-specific infrastructure costs, which might include access roads, sustainable drainage systems, green infrastructure, connection to utilities and decentralised energy. These costs should be taken into account when defining benchmark land value
    • the total cost of all relevant policy requirements including contributions towards affordable housing and infrastructure, Community Infrastructure Levy charges, biodiversity net gain (as required by Schedule 7A of the Town and Country Planning Act), and any other relevant policies or standards. These costs should be taken into account when defining benchmark land value
    • general finance costs including those incurred through loans
    • professional, project management, sales, marketing and legal costs incorporating organisational overheads associated with the site. Any professional site fees should also be taken into account when defining benchmark land value
    • explicit reference to project contingency costs should be included in circumstances where scheme specific assessment is deemed necessary, with a justification for contingency relative to project risk and developers return.’
12. Land values should be defined using a benchmark land value that is established on the basis of Existing Use Value plus a premium for the landowner. The premium should reflect the minimum return at which it is considered a reasonable landowner would be willing to sell their land. The benchmark should reflect the implications of abnormal costs, site specific infrastructure and fees. It can be informed by market evidence including current costs and values but that this should be based on development that is compliant with policies, where evidence is not available adjustments should be made to reflect policy compliance. (Paragraph: 013 Reference ID: 10-013-20190509 and 014 Reference ID: 10-014-20190509)
13. PPG states that developer return should be 15 - 20% of gross development value and that a lower figure may be more appropriate for affordable homes delivery (Paragraph: 018 Reference ID: 10-018-20190509)

Other guidance on viability testing for development

14. Other guidance on viability testing for development - Guidance has been published to assist practitioners in undertaking viability studies for policy making purposes - "Viability Testing Local Plans - Advice for planning practitioners" . (The guide was published in June 2012 and is the work of the Local Housing Delivery Group, chaired by Sir John Harman, which is a cross-industry group, supported by the Local Government Association and the Home Builders Federation.) The foreword to the Advice for planning practitioners includes support from DHCLG, the LGA, the HBF, PINS and POS. Within the guidance, PINS and the POS state that:

    ‘The Planning Inspectorate and Planning Officers Society welcome this advice on viability testing of Local Plans. The use of this approach will help enable local authorities to meet their obligations under NPPF when their plan is examined’

15. The approach to viability testing adopted for this study follows the principles set out in the Advice. The Advice re-iterates that:

    ‘The approach to assessing plan viability should recognise that it can only provide high level assurance’

16. The Advice also comments on how viability testing should deal with potential future changes in market 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 the basis of current costs and values’. (page 26)

    But that:

    ‘The one exception to the use of current costs and current values should be recognition of significant national regulatory changes to be implemented………’ (page 26)

Principles of viability testing

17. The Advice for planning practitioners summarises viability as follows:

    'An individual development can be said to be viable if, after taking account of all costs, including central and local government policy and regulatory costs and the cost and availability of development finance, the scheme provides a competitive return to the developer to ensure that development takes place and generates a land value sufficient to persuade the land owner to sell the land for the development proposed. If these conditions are not met, a scheme will not be delivered.' (page 14)

18. Reflecting this definition of viability, and as specifically recommended by the Advice for planning practitioners, we have adopted a residual value approach to our analysis. Residual value is the value of the completed development (known as the Gross Development Value or GDV) less the costs of undertaking the development. The residual value is then available to pay for the land. The value of the scheme includes both the value of the market homes and affordable homes (and other non-residential values). Scheme costs include the costs of building the development, plus professional fees, scheme finance and a return to the developer. Scheme costs also include planning obligations (including affordable homes, direct s106 costs) and the greater the planning obligations, the less will be the residual value.
19. The residual value of a scheme is then compared with a benchmark land value. If the residual value is less than the benchmark value, then the scheme is less likely to be brought forward for development and is considered unviable for testing purposes. If the residual value exceeds the benchmark, then it can be considered viable in terms of policy testing.
20. PPG paragraph 012 – 017 (09/05/19) sets out that benchmark land values should be based on the current use value of a site plus an appropriate site premium in most cases. The principle of this approach is that a landowner should receive at least the value of the land in its 'pre-permission' use, which would normally be lost when bringing forward land for development. The benchmark land values used in this study are based on the principle of 'Existing Use Value Plus' which is considered further in other parts of this report.
21. Note the approach to Local Plan level viability (or CIL) assessment does not require all sites in the plan to be viable. The Harman Report says that a site typologies approach (i.e. assessing a range of example development sites likely to come forward) to understanding plan viability is sensible, a view echoed in CIL guidance.

    “A charging authority should use an area-based approach, involving a broad test of viability across their area, as the evidence base to underpin their charge. The authority will need to be able to show why they consider that the proposed levy rate or rates set an appropriate balance between the need to fund infrastructure and the potential implications for the viability of development across their area” (Paragraph: 020 Reference ID: 25-020-20190901)

22. PPG viability guidance takes the same pragmatic approach. “Assessing the viability of plans does not require individual testing of every site or assurance that individual sites are viable. Plan makers can use site typologies to determine viability at the plan making stage. Assessment of samples of sites may be helpful to support evidence. In some circumstances more detailed assessment may be necessary for particular areas or key sites on which the delivery of the plan relies.” (Paragraph: 003 Reference ID: 10-003-20180724)

Appendix II Notes from the stakeholder workshop

New Forest National Park Authority

LOCAL PLAN VIABILITY ASSESSMENT

Developer Workshop

National Park Authority Offices, Lymington

10th July 2025

Attendees

• Barker Mill Estates
• Cadland Estate
• Corylus
• Churchill Retirement Housing
• Pennyfarthing Homes
• Ken Parke Planning Consultants
• Gilling Planning
• CL Planning
• New Forest National Park Authority
• Three Dragons (3D)

The Powerpoint slides shown in the workshop are set out in this note, with workshop comments following each slide.

David Illsley (DI) of the National Park Authority welcomed everyone attending the workshop and gave an overview of the agenda outlining that the workshop content will be presented as a series of slides from the consultant team (Three Dragons) who will be undertaking the viability assessment on behalf of the Authority.

Lin Cousins (of 3D) explained that a note of the workshop would be circulated to participants for any further comment and that the note (when finalised) would be included in the viability study report prepared by the consultant team. The note would list organisations attending but not names of individuals.

DI explained that the Authority is reviewing its current Local Plan which was adopted in 2019. A ‘Direction of Travel’ document was published in February 2025 and the Authority will be issuing a Regulation 18 consultation draft Local Plan in the autumn. The viability study, along with other commissioned reports, will help inform policy asks in the Plan.

Three Dragons undertook a similar viability study exercise for the Authority in respect of the previous update of the Local Plan (in 2016-2026).

3D presented a map of the National Park boundary (as shown in the slide above) for clarification. While the National Park Authority is the planning authority for the National Park, the local district authorities covering the NP area remain the housing authorities (in this case New Forest DC, Test Valley Borough Council and Wiltshire Council).

A number of points were raised by workshop attendees identifying costs that newbuild development had to make e.g. BNG and requesting that all costs were included in the testing. 3D explained that the costs included in the viability testing would be set out for the workshop and asked that, if workshop attendees felt any costs had not been identified, this was brough to the attention of Three Dragons. 3D requested that if attendees wished to challenge the assumptions put forward by the consultant team (at the meeting or later), supporting evidence is provided.

verlapping planning housing context
National Park Authority is the planning authority hence need to demonstrate viability of the local plan and therefore its deliverability
The Park sits within other constituent authorities (mainly New Forest District Council) who have own local plans and are the housing authorities for the National Park

3D explained the basis of the testing and the approach adopted including that national guidance will be followed and that this was part of an ongoing process of consultation.

Comments:

• There were no comments

Building Regs part (parts F, , ,S), BNG 10%, Nationally Described Space Standards, Building Safety evy, Future Homes, Accessibility
Affordable housing 50%, new units 100sqm max
ater quality , habitat mitigation, carbon reduction
Based on notional typologies representative of future development and re ecting different policy options
But our work doesn t dictate to National Park its policy choices

3D presented a high-level description of the national and local policies that the viability testing would need to take into account. Local policies would include the current policies of the Local Plan and potential new policies indicated in the Direction of Tavel consultation undertaken by the Park Authority. 3D emphasised that this process was not intended to define the eventual content of the Local Plan. Given the uncertainty over some policies, the viability study would need to ensure that policies were set allowing for sufficient ‘viability headroom’ for the additional policy costs emerging.

3D set out the role of typologies in the viability study and the proposed typologies to be used. Typologies were based on those used in previous studies, recent delivery and future anticipated delivery, noting that specific sites have not been allocated at this stage of the Plan review process.

Comments:

• No specific comments on the range of typologies for testing
• It was noted that the densities shown are net densities
• It was confirmed that the starting point for testing affordable housing would be 50% as per current policy
• There were questions about Rural Exception sites shown in the list of typologies – 3D explained that it was expected they would be developed by Registered Providers (RPs) where a local housing need was demonstrated, with the housing authority having nominations rights, although they could in practice be developer-led
• A point was made about a potential need for low cost rented homes in control of the landowner.

3D explained that the market housing mixes were based on the latest Housing Needs Assessment for the New Forest, taking into account, the current policy that dwellings should be no more than 100 sq m GIA..

Comments:

• Reasonable to include market flats in ‘town’ locations but should not include in more peripheral sites. As a simple ’rule’ for the testing – include flats in brownfield typologies but not in greenfield typologies
• Overall there are too many 2 bed units – New Forest is more of a ‘family market’ and this should be reflected in the mix with more 3 bed houses. Workshop attendees offered to provide market mixes being used in latest schemes.

3D explained that values to be used are based on Land Registry data (aligned with EPC to arrive at unit size and cost per sqm), reference to HPI increases since last study and sense checked with the market. There was sufficient difference in values to assume a different/higher value for Brockenhurst. Specialist older persons values were based on the secondhand value of a semi detached unit, as per the RHG guidance, again sense checked with the current market.

Comments:

• The 100 sq m dwelling size limit has reduced values (on a £s per sq m basis) – reduced market interest
• Values are very sensitive to location
• Agreed that Brockenhurst is a higher value area but there are ‘pockets’ elsewhere that also have higher values
• Generally, values are about right but maybe a little high
• It would be useful for the viability testing to include a sensitivity test c10% below values shown to show implications of values found in lower value areas (Post meeting note – there was discussion about testing at 10% below the general NP value of £5,800 n- this would be a test at £5,220 per sq m – please can any evidence for this be sent to Three Dragons)
• Approach taken to values for specialist older person housing was considered to be a ‘good guide’ but there is also a ‘Brockenhurst premium’ and values of specialist older person housing Brockenhurst should have same proportionate uplift as for general housing
• Three Dragons confirmed that the dwelling sizes shown were consistent with NDSS but recognising that NDSS allowed for variation for properties with same number of bedrooms – however examples from the room included the following being developed now (which are just within or slightly below NDSS)
  • 2 bed terrace at 64 sq m
  • 3 bed semi at 84 sq m
  (Post meeting note – it would be useful to see the selling prices for these house types)
• Bungalows are popular and should be include in the testing as indicated in the slide

3D set out the initial proposals for the s106 affordable housing above. It was noted that 3D had already consulted with the two housing authorities which covered the majority of the NP (New Forest District Council and Wiltshire Council) and that there will be separate consultation with RPs. 3D explained that the testing would be on the basis of on-site provision but the viability impact was equally relevant when considering financial contributions in lieu of on-site provision.

Comments:

• In answer to a question from the workshop, Three Dragons explained that Affordable Rent was not being sought by the housing authorities hence its omission from the housing mix - although recognised that Affordable Rent meant higher payments to developers by RPs
• Workshop commented that reliance on social rent would impact on scheme viability – 3D confirmed that this will be discussed when consulting with RPs and there may be amendments following that consultation
• For social rent the inclusion of 20% 1 bed properties is not realistic – needs to be reduced

3D set out the proposed discount from open market values for different affordable tenures.

Comments:

• There was broad agreement with the proposed discount from open market values
• But possibly shared ownership nearer 70% rather than 75%, dependent upon share purchased
• A blended rate for SR and AR of 50% reflects recent experience
• There is a market for First Homes.

Base build costs set out in the slide above were BCIS figures for New Forest District, noting that there were a range of other costs (shown next) that would be included in the testing in addition to these costs

Comments:

• Base build costs look a bit low – especially costs shown for the larger schemes
• There is a ‘National Park’ effect which increases costs
• National Park does not attract major national housebuilders and build costs used must reflect this
• Delivery rates are lower than shown in the slide, closer to 2 units per month.

Build cost examples were requested by 3D, noting the difficulty of separating out cost elements and that participants at the workshop sometimes made reference to ‘all-in’ costs.

3D set out the other development cost to be used in the viability testing, in addition to base build costs, plot costs, site infrastructure and other building costs described in the previous slide. This includes the Building Safety Levy which seems unlikely to apply to smaller sites – although this has yet to be announced by government.

Comments:

• In response to a question, Three Dragons noted that there will be a cost £7,000 per site for BNG agreement monitoring fee (this cost was missing from the slide)
• There may be a need to include a cost for reduced water usage per person to deal with stress on the water supply
• S106 allowance looks low – Three Dragons confirmed is based on recent agreements and is addition to nutrient neutrality and recreation which are also collected through s106 – it was noted that if the Park Authority chooses to include site allocations in the draft Local Plan – more detailed testing will be required with analysis of all infrastructure required
• Developer’s return is low and should be at the upper end of the range set out in the PPG for risker schemes – 3D agreed to include a higher return (20%) for a sensitivity test
• Finance rate is too low – should be 7.5% to 8%, taking into account that development in the NP is largely undertaken by SME developers.

Differing benchmark land values were presented, noting that they are not necessarily the same as market values but will be enough to provide a return to a willing landowner. They are based on existing use value plus a premium.

Comments:

• Greenfield benchmark values are low – an alternative of £700k per hectare was discussed – based on 10 time current agricultural land value.

3D noted that there may be a need to test viability of non residential developments but not an intention to do so at this stage of the Plan process. Comment can be made on policies likely to have an impact.

Comments:

• It was noted that there are some limited examples of mixed use development, eg shops under apartments
• Nutrient neutrality has had a big impact on non-residential development.

3D summarised the workshop and next steps and asked if there were any other questions.

• Workshop notes slides to be circulated another opportunity for input to the study
• Follow up interviews with stakeholders if appropriate, or if need for confidential discussion
• Interviews with RPs
• Initial and sensitivity testing undertaken
• Reporting
• Report will be published by NFNPA with the Regulation 18 consultation

DI thanked everyone for attending the workshop and LC explained that a workshop note will be circulated shortly with a request for comment and noting the request that evidence is provided to support any comments. She noted that, if any workshop attendee would like to speak with Three Dragons outside the workshop, contact details were provided as above and Three Dragons would be happy to be contacted.

Appendix III House price information

Extract from Land Registry with EPC floor areas added – over 2,100 records in total, this is a sample

Appendix IV Build cost information

Appendix V Detailed results from the modelling

Base testing – all typologies