Local development plans - deliverability of site allocations: research

4 A Framework for Assessing The Deliverability of Site Allocations

Introduction and Approach

4.1 This chapter applies the research in Chapters 2 and 3 to the Scottish Government’s brief for the deliverability of site allocations set out in Chapter 1.

4.2 While the framework presented here is based upon detailed research and consultation, the Scottish Government requires that it should be brief and practical, and the associated information requirements proportionate.

4.3 The principal aim of the framework, therefore, is to identify a suite of information which is appropriate and proportionate to a site being considered for allocation. The information should not only identify the site and its potential, but also those factors which may constrain or impede that potential, ie. its deliverability.

4.4 The research has confirmed that Scotland allocates a broad mix of sites through its development planning system. For reasons of demand and need, though, the current land use focus is very much on housing and its associated infrastructure. The sites assessment framework needs to address that predominant concern, while recognising that not all development is market housing in high demand areas with pressurised infrastructure. It is suggested here that the direction of travel in England and Wales, with housing development viability increasingly becoming a decisive factor in allocating land, is insufficiently nuanced for Scotland’s range of locations, markets and land uses. Viability is an important source of information to be interrogated in support of deliverability. But, if used as decisive in plan-making, it risks creating a market-led focus on prime areas only and risks the avoidance of public goods such as infrastructure and affordable housing. Moreover, excessive information requirements around development viability could present too high a ‘hurdle’ for smaller, non-professional organisations and/or in weaker markets.  

4.5 The framework has been designed using the research presented here, supported by a full review of existing call for sites forms operated by Scottish planning authorities. It seeks to improve confidence in deliverability across different site types, uses, geographies, and from LDP allocation forwards through the planning system. 

4.6 The framework for sites assessments is presented in the Annex. Its purpose is two-fold: 

• To be applied as a site progresses from a bid towards an allocation and a planning application.  
• To be applied proportionately to sites in different circumstances: size, use, location types, promoter/ owner type(s), infrastructure impacts and mitigations. 

4.7 This staged-and-scaled approach to sites assessment responds to Proposal 5 of People, Places and Planning, by focusing on the effectiveness of sites and when they can be delivered. Consultation responses to People, Places and Planning agreed that information could strengthen development plans, but noted that such information in the early stages of a proposal can change, some site promoters will not have certain information (for example regarding viability), and that confidence in delivery of site allocations is only possible up to a point.  The staging and scaling of site information accommodates those concerns.

4.8 The stages and scales set out in the framework are illustrated below:-

Figure 1: Staged-and-Scaled Sites Assessment (structure only, see Annex)

Stage 1 Sites Assessment

4.8.1 Stage 1 (see Annex). This first stage is intended to provide sufficient information to conduct a sieve of promoted sites. The assessment can also include sites from other sources such as existing allocations, planning authority allocations, community-led suggestions and unbuilt consents, planned disposals and demolitions, and can be used to quickly screen any windfall gap sites or regeneration areas. 

4.8.2 The Stage 1 assessment includes site and promoter information, land use proposals, descriptions and proximity to facilities. The assessment form indicates a single link to relevant policy and infrastructure information on the LDP website to identify any issues relating to natural heritage and environment, historic environment or other potential constraints. 

4.8.3 Critically, the sites in this first sieve are intended to be subject to a spatial planning approach. The details and extent of this can be determined by the planning authority within national policy and guidance. Principal concerns are likely to include areas and targets identified at a national/ strategic planning level, existing allocations, settlements, infrastructure and so on, to determine whether sites or groups of sites accord with the broad emerging Plan and use that information to consider allocations (or to seek further potential sites in preferred areas). In a plan-led system where deliverability is a principal concern, spatial planning should work symbiotically with market considerations. Deferring or demoting spatial planning considerations during the site allocation process risks skewing development planning towards a more market-led process. 

4.8.4 Markets, viability and funding are however clearly the linchpin of deliverability - assuming that a site is not unacceptable in broad policy terms and is physically feasible to develop. At this Stage 1 sites sieve it will therefore be appropriate to identify that there are: 

• a willing landowner; and,
• a willing developer or note of market potential; and, 
• awareness of any policy requirements and infrastructure context; and, 
• confirmation that in these contexts the site is believed to be viable (or if not then there is a potential deficit funding solution). 

Site promoters will be acknowledging in their bids that they are aware of these considerations in stating that their site is believed to be viable. Smaller, local sites are less likely than major sites to require significant infrastructure upgrade(s), although of course each site’s circumstances are different and some flexibility is likely to be required.

4.8.5 Stage 1 is potentially a reasonable holding pool for: local / smaller sites (up to 50 houses or 2 hectares); some rural sites; employment/ commercial/ institutional sites in single ownership; sites held by patient but willing landowners with no developer yet committed; sites where interest has only recently been secured; and emerging public sector sites for regeneration. The aim is to avoid ‘pricing out’ those sites which may have planning merit but are not yet able or required to meet a higher hurdle for information and deliverability. These types of sites may not merit a Stage 2 assessment pre-allocation, unless there is specific reason to do so.

4.8.6 Stage 1 will yield three types of outcome for sites:

• Sites not proposed for development plan allocation.
• Sites proposed for allocation where further information will not be sought. In the interest of transparency and best information there may some minor further dialogue with promoters or other organisations. These sites could proceed straight to proposed allocation.
• Sites where further information is required via a Stage 2 assessment.

It will be important for planning authorities to confirm to each site promoter which outcome is being recommended for their candidate site.

Stage 2 Sites Assessment

4.8.7 Stage 2 (see Annex). The stage 2 sites assessment is intended for major sites (>50 houses / 2 hectares) which are being promoted for development plan allocation. Information to support deliverability is developed and added to become more specific.  This is because major sites are on balance more likely to have a degree of complexity (and cost) of infrastructure investment, ownership, developer interest, development mix and phasing. In delivery terms they are individually more important, but also likely to be more challenging. A higher bar needs to be set for their deliverability.

4.8.8 Thus, Stage 1 sought information and promoter awareness of factors affecting deliverability for smaller / simpler sites, to allow these to be considered and screened for potential allocation. Stage 2 now seeks evidence of factors affecting deliverability, for larger / more complex sites. The methodology should begin to create a definitive suite of information to support larger / more complex site allocations, and to identify and request information to fill gaps, or to note for later detailed analysis.

4.8.9 The ‘major sites’ threshold is not intended to be prescriptive. It may be that slightly smaller sites with potentially high or complex impacts, particularly cumulative, also require Stage 2 assessment. Equally, some larger sites that are the already-serviced next phases of strategic expansions may be dealt with via a Stage 1 assessment then a planning application. Or, the site in question may be in a growth/ regeneration area with agreed potential but no active site promoter, where only Stage 1 information is currently available, but a masterplan requirement is set out in the LDP. 

4.8.10 Within the broad site assessment stages, planning authorities can therefore develop their own approach and guidance appropriate to their locations, sites and market circumstances. 

4.8.11 The staged process with clear and progressive infrastructure interrogation should also allow the development of better information flows into the LDP Action / Delivery Programme. 

4.8.12 Under the extant planning system the equivalent of a Stage 2 assessment can currently happen at different times (see Section 3). Some authorities request this level of detail upfront, some seek it in support of promising site proposals, and others receive it later during plan-making, or at application.  

4.8.13 The main additions to the sites assessments at Stage 2 are: further information on the land use (eg. layout plans), development mix and anticipated phasing; any community engagement; and site conditions^[14]. A full suite of affirmative infrastructure statements and any supporting evidence is now required including confirmation of enquiries and broad capacity (but not proposals for mitigations of any constraints at this stage).

4.8.14 In terms of market, viability and funding assessments, the additional information to be sought at Stage 2, necessary and proportionate to understanding deliverability is: 

• For housing uses, a summary report of target markets, formats, tenures and the proportion of each type anticipated. Evidence of development viability. Rates and sources for: development cost (construction, services, abnormals), sales prices / anticipated values, fees & finance, profit margin, any deficit funding and anticipated land value. This is sensitive and may require non-disclosure agreements between the promoter and the planning service, and a recognition that variables can and will change with markets and as proposals are worked-up. Independent advice may be required, although where authorities receive information across sites and over time, their internal capacity to compare and evaluate headline viability data could be encouraged. 
• For employment, institutional and commercial uses, a summary report of the potential target markets, anticipated user types and potential activity (eg. workers, customers, students, visitors) on site.

Stage 3 Sites Assessment

4.8.15 Stage 3 (see Annex). The largest formal definition in the planning system is ‘major’, as noted above at 4.8.7. This fails to capture that development planning has sought, and site promoters propose, much larger sites for allocation. These are variously termed Strategic Development Areas, Community Growth Areas, Major Development Areas or similar. Some of these are being delivered, some are stranded and some are stalled, often for infrastructure cost and delivery reasons. Much of the uncertainty over deliverability stems from their long term nature and ‘step change’ infrastructure requirements. Assessing the deliverability of these high cost, high impact allocations thus demands a much higher hurdle than local or major sites. This may already be recognised where for example an LDP identifies that a masterplan is required for a very large site. 

4.8.16 The term ‘strategic allocation’ is used here. The scale may vary, but most will be housing-led and of high significance and impact with an LDP area. Most LDP areas will have very few strategic allocations. Various broad benchmarks could be applied. For example in housing, a target build rate of 50 units per annum would yield 250 units over a 5-year LDP period; anything much larger would span more than one Plan. More than 200 units usually requires a secondary road access, introducing design and servicing complexity. Faster delivery rates would imply multi-developer sites, which have their own complexities. It would be beneficial to assess the thresholds applied to housing and other types of development by planning authorities^[15], infrastructure agencies and perhaps by developers. 

4.8.17 It may be that the threshold for a ‘strategic allocation’ will vary by planning authority area; for example the 250 housing units noted above might fit into a major city housing estate regeneration without any step-change impacts. One simple test may be that if a Stage 2 assessment identifies that a site is clearly viable and has no infrastructure challenges, then it need not move to a Stage 3 strategic allocation assessment even if the development scale is significant. 

4.8.18 The amplified information requirements at Stage 3 reflect the much more significant Plan and market roles of strategic allocations, and their higher impacts and delivery risks. This scaled approach to site assessment also supports a place-based approach to plan-making. The amplified requirements are in only two areas: the benefits of the proposals; and development viability.  

4.8.19 In terms of development viability, the additional information to be sought at Stage 3, necessary and proportionate to understanding deliverability, is a development appraisal. This should show construction costs, abnormal costs, service and infrastructure costs, policy requirements, sales prices/ values, fees and finance rates, profit margin(s), and deficit funding and the resulting residual land value^[16]. This is sensitive and may require non-disclosure agreements between the promoter and the planning service. 

4.8.20 Independent verification of development appraisals via the District Valuer, local authority panel surveyor appointment or RICS-appointed expert is likely to be appropriate. It is not anticipated that the number of strategic sites will be large, but the volume of work associated with each may be significant.

4.8.21 Extreme caution will be required when dealing with long term proposals. The later phases of these may not be confirmed in terms of development potential and funding solutions. It may be appropriate to focus development appraisal initially on the phases within the proposed LDP and the links of those with the Action Programme. Less demanding (eg. Stage 2) viability information could be sought for future phases around an indicative masterplan. Some information has a long shelf life (for example remediation costs may be subject only to price inflation) whereas other information (for example schools capacity, sales prices and viability) can decay rapidly. A fully discounted long term strategic allocation including all infrastructure and policy requirements may show marginal or negative viability (which may of course highlight where targeted public resources could potentially support wider plan outcomes). 

4.8.22 The Steering Group advised that these substantial information and assessment requirements for strategic allocations could encourage a “co-production” between the promoter, planning authorities and their local authorities, infrastructure providers, agencies, statutory bodies and communities.  

4.8.23 The extent of information required for Stage 3 strategic sites allocations, to understand and ensure their deliverability, has some commonality with Ryden’s 2016 report^[17] for the Scottish Government on Planning Permission in Principle Allocations – PPiP(A)s.  The planning review consultation did not support an automatic consent for allocated sites, due to the potentially excessive front-loaded information requirements. However, some of that front-loading recurs in the Stage 3 assessment described above.

Functionality

4.9 The information technology functionality associated with current calls for sites and assessments varies across planning authorities. Generally though, it is weak compared with other data-and-information-dependent industries. A typical planning authority captures sites information on (hundreds of) pro formas then transfer the results to tables, matrices and short reports, although some do also link to planning Geographic Information Systems (GIS). 

4.10 The points below are suggestions for enhancement of functionality when collating and analysing sites information. Although the Annex to this report is presented as printed pages, it is built as a spreadsheet capable of being developed to deliver some of this functionality. The comments below are however simply observations and the research project does not have a full audit of planning authority practice nor the ICT skills required to make detailed recommendations-

4.10.1 Sites assessment worksheets issued to promoters should have embedded hyperlinks to all policies, maps, agency and infrastructure information where this is (or will be) available online. For example mapping of landscape policy areas, utilities infrastructure^[18], school rolls and any related policy requirements set by the planning authority.  

4.10.2 Sites information should minimise open-ended questions and free text^[19]. Where possible fields should be yes/no then direction for further evidence, or data such as housing numbers, floorspace and phasing, with appropriate links to further information. The data should aggregate across cell / and forms to drive analytical tools (for example to aggregate housing numbers across areas and the Plan and to map using grid references). Planning authorities will wish to allow for supporting evidence to be attached where this answers a question (eg. consultation response from a key agency), but may or may not accept other documents (eg. marketing brochures).

4.10.3 The staged sites assessment should form part of a site’s planning history within the GIS / portals operated by authorities. This will record information for sites not allocated, sites allocated and sites carried through to planning applications and development management. 

4.10.4 The analyses drawn from the sites assessment should link directly to the Action Programme. This should be not only in the emerging Action Programme, but through the testing of sites options, impacts and mitigations, and then following LDP adoption as a monitoring tool as development and infrastructure investment proceed. There is also a potential link to be explored here with data collation and reporting for annual Housing Land Audits to avoid duplication and promote deliverability.

4.10.5 Looking to the future, digital software models could help to determine whether allocations are optimum or not. For example, layered mapping of constraints, infrastructure capacity and infrastructure investment proposals could inform site allocations. Standardised development viability assessment tools may also be appropriate ^[20]. However, the fragmentation of infrastructure, development and planning industries, the iterative nature of development proposals and market change, and the legalistic basis of planning in competitive markets, make this technocratic approach improbable any time soon.

Recommended Actions 

4.11 The research has demonstrated that site promoters seeking allocations in development plans provide only limited information. Site promoters may provide the physical site deliverability information, but typically not the market and viability information to support confidence in development deliverability. Outside of ‘market-led’ areas, promoters provide very little to allow deliverability to be assessed. Planning authorities wish to understand end-point deliverability, but for site promoters allocation is an early, uncertain step in a first-past-the-post system that hinges around, “site-specific arguments”.^[21] 

4.12 The concept of viability within deliverability is valid, but its application must be treated with caution. Many market sectors and locations in Scotland will struggle to fully fund all land assembly, site works, infrastructure, policy requirements and development on a ‘day one’ assessment. Seeking funding solutions and value-engineering during and post-allocation are normal activities. The sites allocation process should embed market realities, but should not inadvertently place these ahead of spatial planning considerations. This will be particularly important as Action / Delivery programmes are bound more tightly into the process of land releases.

4.13 The sites assessment approach presented above is devised in response to the Scottish Government’s brief and these research findings. The recommended actions flowing from this work programme are:

4.13.1 The Scottish Government should review the “staged and scaled” approach to sites assessment set out here and consider the extent to which that approach can provide greater confidence in the deliverability of site allocations.

4.13.2 The research has taken a high level, combined review of sites allocation across Scotland’s planning authorities. The staged and scaled approach is intended to allow flexibility across and within authority areas. The approach requires to be tested in a pilot study with one or more planning authorities about to commence the preparation of their plan. The pilot study should also examine and test options to integrate sites assessment information with the Action / Delivery Programme. This will move the research ‘in market’ to determine how it could work in practice.

4.13.3 The staged and scaled sites assessment requires to be appraised against the emerging reforms to the planning system. Currently the assessment of called-for sites comes before the completion of the Strategic Environmental Assessment and publication of the Main Issues Report.  The call for sites is not itself a statutory or policy requirement, but as shown by this research has become the dominant mode of identifying potential new site allocations. A conceptual view of the new system is shown along the top of Figure 1 above. Some suggestions for possible impacts and interactions with planning reforms are made below:

• If the Local Development Plan is to remain extant for 10 years rather than 5, the staged site assessment process will require to mesh with any proposals for interim review and associated changes to allocations. Given the predominance of housing in sites proposed for allocation, classifying housing sites as effective in annual Housing Land Audits would become more influential between 10-year LDPs.
• The removal of Strategic Development Plans would make the spatial planning exercise suggested above a more important exercise, along with any new cross-authority regional planning initiatives. 
• The role of a ‘gatecheck’ in the absence of a Main Issues Report requires further analysis, potentially through the current pilot study. 
• The role of proposed Local Place Plans at each suggested stage of the sites assessment requires further consideration to ensure that the intentions and outcomes align. 

4.13.4 Further consideration is required of the protocols for requesting and using information from infrastructure agencies. The information fields and thresholds used in sites assessments should where possible align with those used by the agencies themselves. There should be a consistent approach taken through sites assessments, Action / Delivery Programming and monitoring. The National Infrastructure Delivery Group may have a role in this. This two-way approach will have the benefit of binding infrastructure agencies more closely into the allocation process, including assessing deliverability.

4.13.5 Staged and scaled sites assessments undertaken on a broadly consistent basis using information systems could allow collation and analysis of data across Scotland on the sites allocation process and outcomes. This could inform both the sites assessment approach itself and the wider planning process in terms of sites proposed, rejected, allocated and developed. Site proposals and allocations could form the early base dataset for planning system-wide analysis and reporting.  

4.13.6 The staged and scaled sites assessment may be more resource-intensive for some planning authorities than their current approaches. The new standard would mean not only handling and validating more sites information, but for sites preferred in planning terms without active promoters, for example emerging through communities, the authority itself may need to provide some of the sites assessment information to at least reach a Stage 1 assessment. Better software-based information handling may help to manage the process. Closer working between Development Planning and Development Management may have some skills benefits, front-load sites assessments and remove duplication. Skills issues may be better dealt with through consulting with external agencies and advisers, although a general understanding of viability for planners is also increasingly important. 

4.13.7 For site promoters, the Stage 1 resource implications should be modest – mainly fact-checking and provision of site information and related correspondence rather than any new analyses. At Stages 2 and 3, there is front-loading of analyses for site promoters and more detailed information in comparison with some current planning authorities’ requirements, but not when compared against some of the more detailed calls for sites currently in use in Scotland. The exception is for viability, for which higher standards are suggested here at all stages of site assessment.

4.13.8 In the context of planning authority resource pressures, 34 separate planning authority approaches to sites assessment using a staged method is a challenge. There are two potential ways to aggregate the process to achieve efficiencies: 

• In addition to guidance and templates, the Scottish Government’s Digital Taskforce or planning authorities via Heads of Planning Scotland could sponsor software solutions which could be adopted across authorities both to collate and assess sites information and link this to planning system portals and GIS, and; 
• The optimum geography for sites assessment may, where LDP cycles can be aligned, be more than one adjoining planning authority area, sharing expertise and working across regional geographies such as housing market and transport areas. 

4.13.9 Finally, if the Scottish Government decides to support a more standardised, staged and scaled approach to sites assessment for proposed allocations as set out in this report, then any pilot study could inform national guidance to be agreed with and rolled-out through Heads of Planning Scotland.