Last week Historic England adopted their new ‘Enabling Development Good Practice Advice Note 4’ – an update on the 2008 publication. Our heritage and viability specialists have been considering how the guidance differs from the earlier publication and how this will affect our approach when advising clients on development schemes.
We all agree that the guidance is less prescriptive and sets out only ‘one approach’ to assessing the viability of converting heritage assets. Notably, the updated guidance removes reference to the enabling development ‘policy’ contained within the 2008 document, and clarifies that it comprises best practice guidance to support the implementation of national policy.
The seven step assessment process contained within the 2008 guidance remains broadly the same, although the requirement for a Conservation Management Plan is made explicit, as is the requirement for an assessment of alternative solutions through appropriate marketing / other sources of funding.
The new Advice Note also confirms that the approach and inputs in an Enabling Works Viability Assessment are similar to a traditional Financial Viability Assessment, including the consideration of planning policy requirements such as affordable housing or CIL, which may increase the amount of enabling development required.
However, to establish if there is a ‘conservation deficit’ in an enabling works case, the applicant will need to assess the Market Value of the asset in its existing state against its value following a repair and/or conversion. If the existing value plus the cost of the reasonably required repairs and conversion to optimum viable use exceeds the value when completed, then there is a conservation deficit and enabling development is required to support the repair of the asset.
Reasonable, justified holding costs are an allowable item for a period, particularly where they relate to the protection of the asset. However, the guidance clarifies that the following ‘costs’ are likely to be discounted when permitting enabling development:
- As set out in PPG and established in Parkhurst v SoS (2018), a purchase price and any overage agreements that do not reflect the condition of the asset or planning restrictions;
- An owner’s inability to fund a commercially viable scheme;
- A wish to fund an unprofitable business; and
- An owner’s insurance being inadequate to meet the cost of repair.
We’ll no doubt be advising our clients on the nuances of the above in the months to come. If you would like further advice on Enabling Development and Heritage Assets, do get in touch.