Benchmark land value in a viability appraisal
Benchmark land value is the figure a viability appraisal is tested against. It starts from existing use value plus a reasoned premium, and the price paid for the site is not the starting point.
Benchmark land value is the figure a viability appraisal tests its residual land value against. If the residual land value comes out above the benchmark, the scheme stacks up on the inputs used and the policy package stands. If it comes out below, the applicant argues that affordable housing or some other obligation should be reduced. The Planning Practice Guidance on viability sets that benchmark from existing use value plus a premium to the landowner, and it says the price actually paid for the site is not the starting point.
That single sentence undoes a great many appraisals. A land promoter who paid £2.4m for a site with a policy-compliant residual of £1.6m has not demonstrated a viability problem. They have demonstrated that they overpaid.
What the benchmark is for
The benchmark answers one question: what sum does a reasonable landowner need before releasing this land for development, assuming the scheme carries the obligations the adopted plan asks for? Everything else in the appraisal, from build cost rates to sales values, feeds a residual figure that is then measured against it.
Because the test is comparative, the benchmark carries as much weight as any cost input and attracts the most argument. A £300,000 swing in benchmark land value on a 40-unit site can move the affordable housing conclusion by several homes.
The guidance also expects the benchmark to reflect the policy requirements themselves. Land values are a product of what can be built and what must be contributed, so a benchmark derived from transactions where no affordable housing was provided is circular. It bakes in the outcome the applicant wants.
Existing use value plus a premium
Existing use value is the value of the site in its current, lawful use, with no assumption that permission will be granted. Paddock stays paddock. A working MOT garage stays a working MOT garage, valued on its trading income and the building's condition.
The premium on top is the landowner's incentive to sell rather than carry on. Guidance frames it as a reasonable return for releasing the land while leaving enough in the pot to meet policy. It is a judgement, not a formula, and that is exactly why it needs evidence rather than assertion.
Watch for two errors in the existing use figure. The first is valuing a derelict building as though it were lettable. The second is loading repair and holding costs so heavily that existing use value falls to a nominal sum, which pushes the whole benchmark down and makes almost anything look unviable.
When alternative use value is appropriate
Alternative use value can inform the benchmark where the alternative is really available. The test is implementability. An extant planning permission for offices on the same site, capable of being built out, is real. A hypothetical scheme nobody has applied for is hope value, and the guidance expects hope value to be disregarded.
So the question for a reviewer is procedural before it is financial. Is there a permission? Is it still live? Could it lawfully be implemented today, or has a pre-commencement condition gone undischarged? Where a lapsed consent is relied on, the argument is much weaker, and much the same reasoning applies as when an authority weighs what an earlier decision on the site should count for.
Alternative use value also has to be appraised properly in its own right. An office consent with a negative residual once current build costs and void periods are applied is not a higher benchmark. It is a worthless consent.
Market evidence and its limits
Transaction evidence feels like the strongest input and is usually the weakest. Comparable land sales rarely disclose what obligations were assumed, whether overage sits behind the headline figure, or whether the buyer was a special purchaser with an adjoining holding.
Three filters help:
- Was the transaction for a scheme that met the adopted plan's requirements, including affordable housing at the policy rate?
- Is the price the full consideration, or the first tranche of a deferred structure?
- Does the comparable share the planning constraints of the application site, or does it sit outside the designation that drives the cost?
Where evidence survives all three, it is worth real weight. Where it does not, say so in the report rather than averaging it into a table and hoping nobody asks. Local plan viability work goes through the same discipline at examination, and an inspector's handling of site typologies there often shapes what the authority will accept on individual applications.
Justifying the premium
The premium is where a careful report separates itself. Useful evidence includes the landowner's actual holding position, the income foregone, the tax treatment on disposal, and any comparable premiums accepted in the authority's own plan-wide viability study.
Percentages between roughly 10 and 30 per cent above existing use value circulate in practice, and the higher end is normally argued for sites with low existing use value where a small percentage produces a trivial cash premium. The figure should be reasoned, not asserted. A one-line claim that "a 20 per cent premium is standard" invites the reviewer to substitute their own.
An illustrative derivation on a brownfield site
The following worked figures are illustrative only and are not drawn from a real transaction.
A 0.6 hectare former builders' merchant, lawfully in storage and distribution use, proposed for 38 flats.
| Input | Illustrative figure | Basis |
|---|---|---|
| Passing rent, existing use | £74,000 a year | Lease in place, 2 years unexpired |
| Yield applied | 8.0 per cent | Secondary industrial, poor repair |
| Gross existing use value | £925,000 | Rent capitalised |
| Purchaser's costs | £59,000 | Deducted |
| Net existing use value | £866,000 | |
| Premium at 20 per cent | £173,000 | Reasoned against holding income |
| Benchmark land value | £1,039,000 | Compared with residual |
If the policy-compliant residual lands at £1.2m, there is no viability case. If it lands at £780,000, there is a conversation to have, and the honest next step is to interrogate the build cost and sales value assumptions before touching the affordable housing figure.
Where a reviewing surveyor pushes back
Independent reviewers commissioned by the authority tend to go to the same places. They check whether the existing use has been undervalued through aggressive void and repair allowances. They test whether the premium has been applied to a figure that already includes development potential, which double counts. They look for hope value smuggled in through an alternative use that could not be built.
And they look at timing. A benchmark set at acquisition, three years and two cost indices ago, is not a current benchmark.
One honest uncertainty: there is no settled national premium, and two competent surveyors can reach defensible figures several hundred thousand pounds apart on the same site. The way to manage that is transparency about every step, so the authority's reviewer argues with your reasoning rather than guessing at it.
A Viability Assessment drafted on PlanScope sets out the benchmark land value section with the inputs and the reasoning laid out for a surveyor to complete and sign, and the wider report library covers the supporting documents a major application needs alongside it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. For specialist technical reports, qualified professional input may be required.
Housing need arguments often sit next to viability in the same statement, and the authority's performance against the Housing Delivery Test can change how much weight the balance gives to delivery. Where a scheme is being reworked after an earlier refusal, read the benchmark alongside what weight a previous refusal carries before resetting the land value in the appraisal.
Frequently asked questions
Is the price I paid for the site the benchmark land value?
No. The Planning Practice Guidance on viability sets the benchmark from existing use value plus a premium to the landowner, and overpayment is treated as the buyer's commercial risk. A price above a policy-compliant residual shows that too much was paid, not that the scheme cannot carry its obligations. Expect a reviewer to say exactly that.
How large should the premium above existing use value be?
There is no national figure. Premiums argued in practice commonly sit between about 10 and 30 per cent of existing use value, with the higher end reasoned where existing use value is low and a small percentage gives a trivial cash sum. Whatever figure you use, evidence it from holding income, tax position and the authority's own plan viability work.
When can I use alternative use value instead?
Only where the alternative use is implementable. A live permission that could lawfully be built out today can inform the benchmark. A scheme nobody has applied for, or a consent blocked by an undischarged pre-commencement condition, is hope value and the guidance expects it to be disregarded.
Does the benchmark have to assume policy-compliant development?
Yes, and this trips up market-evidence approaches. Guidance expects the benchmark to reflect the policy requirements the plan sets, so comparable transactions used as evidence should be for schemes that met those requirements. Evidence drawn from deals with no affordable housing builds the applicant's conclusion into the input.
Who should prepare the benchmark land value section?
A chartered valuation surveyor working to the RICS professional standards on financial viability in planning. An AI-assisted draft can structure the section and list the inputs the authority will test, but the valuation judgements and the signature need a qualified surveyor who will stand behind the figures at appeal.
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.