Enhanced PART V Obligations
The Affordable Housing Act 2021 brought about changes to the Part V process. The most significant change is the requirement for new housing developments granted planning permission after 3rd September 2021, to have a 20% rather than 10% Part V (social and affordable) provision. Of the increased 20% provision, at least half must be allocated for social housing support. The remainder can be used for affordable housing which can be in the form of either a purchase or cost rental (or a combination of both).
The over-arching aim of Part V provisions is for the State to capture a portion of the increase in land value resulting from the granting of planning permission for qualifying residential developments. According to the Government’s Housing Agency, the preferred option which should be pursed by local authorities is the acquisition of completed units on the development site, by means of a transfer to the local authority or to an Approved Housing Body (AHB). The net monetary value (NMV) obtained by the local authority must be the equivalent of 20% of the difference between the market value of the land on the date on which planning was granted and the existing use value.
For a development site with planning permission and a market value (MV) of €3 million and an existing use value (EUV) of €500,000, the NMV due to the Local Authority will have increased from €250,000 at a 10% obligation to €500,000 at a 20% obligation. Therefore the determination of an appropriate market value has considerably greater significance to the overall costs associated with any proposed scheme of development. Importantly, Section 96(7) of the Planning and Development Act provides that either party can refer the matter of NMV for determination by a Property Arbitrator in the event of disagreement with the Local Authority or their representative. However, any reference to Arbitration needs to be done in a timely manner as the conveyance of completed residential units will be contingent on the Part V issue being resolved.
Niall Brereton BSc MRCIS MSCI is a Registered Valuer and has considerable experience in preparing Part V Valuations on behalf of landowners and developers and negotiating agreements with Local Authorities.
