Benchmark land value: existing use value plus a premium
Benchmark land value decides most viability arguments before the build cost is opened. Here is how to establish existing use value, justify the premium and handle alternative use value.
Benchmark land value decides most viability arguments before anyone looks at the build cost. National planning guidance is explicit that it should be established on the basis of the existing use value of the land plus a premium for the landowner, and that the price actually paid cannot justify a reduced contribution. Everything else in an appraisal, from sales values to finance, is contestable at the margins. The land value input moves the answer wholesale.
Which is why a reviewing surveyor reads the benchmark section first, and why an assessment that gets it wrong loses before it starts.
Why the land value input decides the answer
A residual appraisal works backwards. Take the gross development value, deduct build costs, professional fees, finance and the developer's return, and what remains is the residual land value. Compare that residual to the benchmark. If the residual exceeds the benchmark, the scheme can afford the policy package. If it falls short, the applicant argues for a reduction.
Move the benchmark and you move the conclusion directly, pound for pound. A benchmark set £500,000 too high converts a policy-compliant scheme into an unviable one on paper.
That sensitivity is the reason guidance constrains how the benchmark is set rather than leaving it to the market. And it is the reason a Viability Assessment that treats the land value as a given, rather than as something to be justified, gets very little weight.
Existing use value and how it is established
Existing use value is the value of the land in its current use, assuming that use continues. Not its value with permission, and not what somebody hoped it was worth.
For an agricultural field it is agricultural value. For a trading office building it is the investment value of the office, derived from passing rent, market rent on reversion, yield, void and letting assumptions. For a redundant building with no income, it may be close to site value in a very limited use.
Three inputs do most of the work in a commercial existing use valuation:
- The rent, and whether it is passing rent or an estimate of market rent.
- The yield, which is where two valuers most often differ, and which should be evidenced by comparable investment transactions.
- The allowances for voids, letting costs, rent free periods and any outstanding repair liability.
State every assumption and its evidence. An existing use value presented as a single figure with no workings invites a review that produces a different one.
Note: existing use value must exclude hope value. A field next to a settlement boundary is worth agricultural value in its existing use, however confident everyone is about the emerging plan.
Setting the premium and evidencing it
The premium is the incentive that persuades a rational landowner to sell rather than continue the existing use. Guidance describes it as a reasonable incentive for the landowner to bring land forward, while allowing a sufficient contribution to comply with policy requirements. Those two limbs pull against each other deliberately.
There is no fixed percentage in the guidance. Practitioners commonly express the premium as an uplift on existing use value, and the figure is argued case by case. What matters is the evidence: comparable transactions where the price paid reflected a policy-compliant scheme, the landowner's circumstances, and the strength of the existing use.
The premium should be smaller where the existing use is weak or the building is obsolete, and larger where the landowner has a real alternative in continuing to trade. A vacant, unlettable warehouse does not command the same premium as a fully let one.
Do not present the premium as a market norm. Present it as a conclusion drawn from the evidence you have set out.
Alternative use value and when it is admissible
Alternative use value is admissible in limited circumstances, and applicants reach for it too often.
The test in guidance is that the alternative use must be one that would fully comply with development plan policies and for which permission could reasonably be expected. A theoretical alternative that would be refused is not a benchmark. Neither is an alternative that requires the same policy relaxations the applicant is seeking.
Where alternative use value is used, the assessment has to demonstrate that the alternative is deliverable, not merely conceivable. Evidence of demand for the alternative use, and of the planning position, both belong in the report.
| Benchmark basis | When it applies | Common weakness |
|---|---|---|
| Existing use value plus a premium | The default in guidance | Premium asserted rather than evidenced |
| Alternative use value | Where the alternative is policy compliant and deliverable | Alternative could not obtain permission |
| Market evidence cross-check | As a sense check on the above | Transactions that did not reflect policy requirements |
Market evidence and its limits under the guidance
Market evidence has a place, and it is a cross-check rather than a starting point.
The reason is circularity. If land is routinely traded at prices that assume reduced affordable housing, using those transactions to set the benchmark builds the reduction into the benchmark, and policy never gets delivered. Guidance addresses this by requiring market evidence to reflect policy requirements, which in practice means the comparables have to be interrogated rather than listed.
Ask three questions of every comparable: what planning position did the purchaser assume, what obligations were in place or anticipated, and was the price conditional. A conditional contract at a headline figure tells you very little.
Where councils and applicants most often disagree
The recurring flashpoints, in order.
The yield in a commercial existing use valuation, where a quarter point moves the benchmark materially.
Whether the premium reflects a landowner who has an alternative, or a landowner with a redundant asset and no options.
Whether an alternative use is truly policy compliant, which is a planning judgement dressed as a valuation input.
Whether the site's constraints, such as abnormal ground conditions or a contaminated land liability, are already reflected in the existing use value or are being counted twice.
That last one is worth checking every time. A cost allowance for remediation and an existing use value that already assumes contaminated land are not compatible.
Presenting the benchmark so it survives scrutiny
- State the existing use and evidence that it is the actual current use.
- Value it with the inputs set out and comparables attached.
- Justify the premium from evidence rather than convention, and say what it is compensating for.
- Address alternative use value explicitly, even if only to explain why it is not being used.
- Cross-check against market evidence, interrogating each transaction.
- Present a sensitivity table showing how the conclusion changes across a range of benchmarks.
Point 6 is the one that builds credibility. A report that shows the answer under three benchmark scenarios reads as an analysis. One that shows a single figure reads as an advocacy document, and reviewing surveyors treat it accordingly.
Expect publication. Viability evidence submitted with an application is normally made public, and the RICS professional standards on viability reporting assume transparency as the default.
Illustrative example: a former builders' merchant site where the applicant's benchmark rested on an office alternative use. The council's reviewer showed the office use conflicted with an employment land policy and would not have obtained permission, so the benchmark reverted to existing use value plus a premium, and the affordable housing offer moved. This example is illustrative.
PlanScope drafts the Affordable Housing Statement and viability documents that carry a benchmark argument, structured to UK planning policy, with valuation inputs left to a qualified surveyor. Councils expect a suitably qualified author for viability work, and professional review is strongly advised. Browse the report types to see what a viability case usually needs.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
What is benchmark land value based on?
National planning guidance says it should be established on the basis of existing use value plus a premium for the landowner. The premium should give a reasonable incentive to bring land forward while still allowing a sufficient contribution to policy requirements. The price actually paid for the land cannot be used to justify a lower contribution.
Is there a standard percentage for the landowner premium?
No. Guidance sets no figure, and practitioners argue it case by case. Evidence matters more than convention: comparable transactions that reflected policy-compliant schemes, the strength of the existing use, and whether the landowner has a real alternative in continuing to trade. A vacant obsolete building does not command the premium a fully let one does.
When can alternative use value be used as the benchmark?
Only where the alternative use would fully comply with development plan policies and permission could reasonably be expected. A theoretical alternative that would be refused, or one that needs the same policy relaxations the applicant is seeking, is not a benchmark. The assessment must show the alternative is deliverable rather than merely conceivable.
Can market land transactions set the benchmark?
Only as a cross-check, and only where the transactions reflected policy requirements. Using prices that assumed reduced obligations builds that reduction into the benchmark and policy is never delivered. Interrogate each comparable: what planning position the purchaser assumed, what obligations were anticipated, and whether the price was conditional.
Does hope value count in existing use value?
No. Existing use value is the value of the land in its current use assuming that use continues. A field adjoining a settlement boundary is worth agricultural value in its existing use, however likely development looks under an emerging plan. Hope value belongs nowhere in a benchmark land value calculation.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.