Final Economic Viability Report September 2009 - pdf

Affordable Housing Mix
3.37 The base assumption for the modelling exercise has been that 50% of the affordable housing built will
be for social renting and 50% will be intermediate tenure. However, consideration has been given to
the impact on viability of changing this proportion with options of 70% social rented/30% intermediate
and 30% social rented/70% intermediate being tested.
Homes and Communities Agency Grant Funding
3.38 The base assumption for the modelling is that social housing grant is not available for affordable
housing provision through Section 106 Agreements. However, it is important to understand the extent
to which grant can enhance viability. In order to justify a higher percentage of affordable housing,
SDC may have to approach the Homes and Communities Agency (HCA) to request additional grant
funding for Section 106 Agreements. Generally, the HCA only fund Section 106 schemes where there
is evidence of additionality and whilst there maybe some limited opportunities to access social
housing grant, this has not been taken into account during the modelling process.
Build Costs
3.39 The build costs used in the viability model are taken from the average residential costs from BCIS 4 , re
based using the local index for the Selby area. The assessment uses the build costs per square foot
of gross internal area excluding external works and contingencies and with preliminaries is
proportioned by cost. These were correct as at June 2009, and have been tested through stakeholder
consultation to ensure they are in line with the current market expectations. Ordinarily, build costs for
affordable housing would be presumed to be higher than those for market sale units in order for them
to meet the current design and space standards required by the HCA including the code for
Sustainable Homes Level 4 and Lifetime Homes Standards. However, as this modelling assumes no
grant is provided to the Section 106, and in line with evidence provided by the Local Authority,
standard build products have been accepted on all Section 106 sites. As at June 2009, any
application for a Section 106 site would not have incurred additional costs associated to the standards
above, as no grant would have been provided for these schemes. Therefore, for the basis of this
valuation, the build costs are uniform across both private and affordable dwellings and it is assumed
that all units will be delivered to Code for Sustainable Homes Level 3.
3.40 On the basis set out above, build costs in the model are as follows:
Flat - £95 psf
House - £85 psf
4 The Building Cost Information Services (BCIS) is the UK property market’s leading provider of construction
cost and price information.
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