Viability Review for Planning Application at Holiday Inn Express

A major application was submitted by GMD Developments Ltd (“the applicant”) to OPDC on 14 March 2023 for the site at Holiday Inn Express, Victoria Road in North Acton.

The proposal comprises the demolition of the existing hotel and redevelopment of the site through construction of a 35-storey building comprising 699 student bedrooms; and construction of a 17-storey building comprising 91 BTR residential units. The proposal also includes ground floor commercial/retail units and associated works of amenity space, public realm, landscaping.

OPDC Local Plan policy SP4 ‘Thriving Communities’ sets an overarching 50% affordable housing target (by habitable room) for the OPDC area, subject to viability, and Local Plan policy H2 ‘Affordable Housing’ supports the threshold and viability approach set out by Mayoral policy and/or guidance. London Plan policy H4 ‘Delivering affordable housing’ sets a strategic target for 50% of all new homes delivered across London to be genuinely affordable. London Plan policy H5 ‘Threshold approach to applications’ sets a threshold level of affordable housing at a minimum of 35% or 50% on public sector land or specified industrial designations where the scheme would result in a net loss of industrial capacity. The affordable housing threshold for this particular site is 35%.

If an affordable housing offer of less than the relevant threshold is made, the application is subject to the ‘Viability Tested Route’ and applicants are required to submit a viability appraisal in support of the application, for review by OPDC.

The applicant is proposing that the residential element of the proposal meets the affordable housing threshold of 35% (by habitable room); however, all of the student bedrooms proposed are to be let at market rates. As such, the application does not meet the ‘Fast Track Threshold’ for affordable housing, as defined in the London Plan.

Therefore, as part of the ‘threshold approach’ to applications set out in London Plan Policy H5, a FVA prepared by Quod (dated March 2023) was submitted alongside the application.

The expertise required to undertake a robust assessment of the FVA is not available within OPDC, so it is therefore necessary to procure an external consultant to provide this support.

The OPDC requires an independent review of the submitted FVA to assist in securing the maximum public benefit from the development including the maximum reasonable amount of affordable housing having regard to appropriate planning policy and guidance (including the London Plan 2021 and Mayor’s Affordable Housing and Viability SPG 2017).

If it is determined that the proposal does not provide the maximum reasonable level of affordable housing, then the advice will set out what this level would be, having regard to other planning obligations.

The advice will be delivered in a detailed report which will include a review of the information contained within the submitted FVA and conclusions as to whether it is of sufficient detail to allow for an accurate assessment. Commentary will also be provided on appraisal assumptions including build costs; site specific characteristics; assumed profit rates/benchmarks; and the approach to the Benchmark Land Value.

A quote for this work has been obtained from BNP Paribas Real Estate (BNPPRE). BNPPRE have provided similar services to OPDC on several previous occasions and have demonstrated their ability to carry out and deliver work to a high standard and on time. They have also demonstrated good value for money against other suppliers when bidding for work on a competitive basis. They have the necessary expertise and capacity to undertake the work within the required timescales. A fixed fee quote of £14,250 has been provided, plus £350 for attendance at any meetings. The total cost of this work is not expected to exceed £15,000.

This decision is seeking approval to engage suitably qualified consultants to undertake an independent review of a submitted FVA for a major development within the OPDC area. As set out in detail in paragraphs 2.1 to 2.3 above, this will provide robust evidence and advice on whether the scheme’s affordable housing proposals are the maximum reasonable amount which can be delivered.

The outcome of this decision will contribute towards OPDC’s objective of creating sustainable and lifetime communities by providing a range of housing types and tenures that meet local needs and that contributes to strategic needs, as well as promoting social cohesion and integration (ref: Local Plan policy SP4 ‘Thriving communities’).

Undertaking the defined activities will support a number of existing and future OPDC workstreams including:

• Delivering policies SP4 and H2 within OPDC’s Local Plan; and
• Delivering policies H4 and H5 within the London Plan.

External viability consultancy support

The appointment of a suitably qualified independent viability consultant will be in accordance with OPDC’s Contracts and Funding Code. Any contract would be managed by the Principal Planning Officer with oversight from the Director of Planning and Head of Development Management.

Risks and issues

The level of risk associated with this decision is considered to be low given the relatively short timeframes of the proposed works. Notwithstanding, delays in securing the above defined activities will impact on the timeline for negotiating on and determining the subject planning application. This might impede the officer’s ability to negotiate on good outcomes in regards to public benefits and affordable housing; it might also result in difficulties/uncertainties regarding decision making at planning committee stage.

Under Section 149 of the Equality Act 2010, as a public authority, OPDC must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation, as well as to the need to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not.

Securing appropriate financial viability advice in relation to this planning application will contribute to the delivery of the regeneration objectives for Old Oak and Park Royal, as set out in the OPDC Local Plan. Ensuring the development provides the maximum deliverable amount of affordable housing will increase the housing supply for people in housing need and on low incomes. No potential adverse impacts on protected groups or others have been identified as a result of this decision.

The review conducted by external consultants will also be published on the public register for full transparency.

There are no other considerations that need to be considered in the taking of this decision.

No one involved in the preparation or clearance of this Form, or its substantive proposal, has any conflict of interest

There is no overall/net budgetary impact to OPDC from this study. Initial expenditure of up to £14,250 for the study plus £350 per meeting to be met from the 2023/24 Planning budget; the corresponding contribution of the same value from the applicant will be recognised under Cost Recovery, for which they have signed a commitment.

Any further expenditure will be subject to the Corporation’s decision-making process.

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The key steps that will need to be undertaken to deliver the proposal are set out below:

None

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