Dynamic Viability Model
Government policy and planning law require that affordable housing targets be ‘deliverable’. Affordable housing is partly obtained by taxation of new development (which falls on the landowner) and partly by public funding (the Homes and Communities Agency). A major difficulty is establishing the correct level of taxation: the affordable housing target.
The dilemma: Since 2007-8, when the case law demanded that targets must be deliverable and at the same time the volatile housing market ensured that no single target could be deliverable over a plan period, there has been a problem. Attempts have been made to test single target levels by applying a variety of scenarios to them. This does not resolve the problem, since it provides no guarantee that the target will in fact be deliverable at any stage over the plan period.
The Dynamic Viability model, which Fordham Research has developed over the past 18 months, ensures that there is a deliverable target at all points during the plan period, whatever the changes to the housing market. This is done by using three published indexes to update the deliverable target set at the starting point. As a result the Local Development Framework Core Strategy does not require adjustment. All that is required is checking the three indexes of cost and price each year for the Annual Monitoring Statement, and making any adjustment to the target which they indicate.
As a result the target will always be deliverable and will never make the commercial position of the landowner/developer worse. The following diagram illustrates this:
