Budgeting a viability appraisal and the review it triggers

The cost of a viability appraisal is the smaller part of what running a viability case commits you to. Budget for four things, not one: the appraisal itself, the land value evidence that sits under it, the authority's independent review that you will almost certainly pay for, and the later appraisals that a review mechanism in the section 106 agreement will require you to produce after permission. Treat the viability appraisal cost as a single line and the scheme's cash flow will be wrong by a wide margin two years from now.

When a viability case is worth running

Planning Practice Guidance on viability starts from the position that the plan has already tested viability at the plan-making stage, so site-specific assessment should be the exception. The burden sits with the applicant to show that circumstances justify it.

That matters commercially. A viability case that fails costs you the appraisal, the review fee, the delay and some credibility with the officer, and leaves the policy requirement where it started. Before spending anything, test whether the gap is large enough and the abnormal costs specific enough to survive scrutiny. Contamination remediation with a quantified cost plan, a listed building with a structural report, an unusual infrastructure requirement. Those are arguable.

A thin margin on a conventional greenfield site with a land price paid above policy-compliant value is not. The guidance is explicit that the price paid for land is not a justification for failing to meet policy.

The appraisal and where the money actually goes

The appraisal is a residual valuation, and most of its cost is not spreadsheet time. It is the evidence behind the inputs.

• Gross development value, which needs local new-build sales or rental evidence and a view on affordable tenure values
• Build costs, usually from a cost consultant rather than from an index alone, with abnormals itemised
• Professional fees, finance, marketing and contingency as percentages that the reviewer will challenge
• Developer return, expressed as profit on cost or on value, with a justification for the rate
• Section 106 and Community Infrastructure Levy liabilities drawn from the authority's adopted charging schedule
• Programme and phasing, because finance costs follow the build period

Two of those lines carry most of the argument. Build cost abnormals and developer return. Expect to pay for a cost consultant's measured estimate if abnormals are doing the work, because an allowance the reviewer can describe as unevidenced will be stripped out.

The RICS professional statement on assessing viability sets the methodology that reviewers apply, and an appraisal that departs from it without explaining why starts on the back foot. A Viability Assessment is a report type councils expect a suitably qualified author to prepare, and professional review is strongly advised.

Benchmark land value evidence

Benchmark land value is where the money and the argument concentrate. The guidance approach is existing use value plus a premium to the landowner, and the premium has to be justified by evidence rather than asserted.

Pay for three things here. A valuation of the existing use, which on a working commercial site means a rental and yield analysis rather than a desktop figure. Market evidence of comparable transactions, adjusted for date, planning status and policy requirements at the time. And a reasoned premium, which is the part reviewers most often reduce.

Where the site has an existing income, the existing use valuation can cost as much as the appraisal itself. Where it is a cleared site with no income, the argument shifts to comparables and the evidence base gets thinner, which usually means more fees arguing about fewer transactions.

The authority's independent review and who pays

Authorities rarely assess viability in house. They instruct an independent reviewer, and the applicant funds it. The arrangement is normally agreed in writing before the review starts, either in a planning performance agreement or in a standalone undertaking to meet the authority's reasonable costs.

Three practical points are worth settling in that agreement.

1. The scope of the review, including whether it covers one round of comment and response or an open-ended exchange.
2. Whether the reviewer's report is addressed to the authority alone or shared with you in full.
3. What happens if the scheme changes materially, since a redesign generally means a fresh appraisal and a fresh review.

Fees for independent review vary with scheme size and complexity and are set by the reviewer, not by a published schedule, so ask the authority for an estimate before the instruction goes out. Some authorities publish review fees within their pre-application charging schedules; where they do, that figure is the one to budget from.

Build in time as well as money. A review round with one set of written responses rarely takes less than six weeks, and it runs in parallel with the determination period rather than extending it automatically, so an extension of time agreement is usually needed.

Review mechanisms and the appraisals they trigger later

The appraisal you submit is often not the last one you pay for. Where a scheme is permitted with less than policy-compliant affordable housing, the section 106 agreement commonly secures a review mechanism, requiring the appraisal to be rerun at defined trigger points and additional contributions to be paid if values have moved.

The London Plan 2021 sets the clearest version of this. Policy H5 operates a threshold approach, with schemes meeting the stated affordable housing threshold following a fast track and schemes below it following a viability tested route that carries early and late stage reviews. Outside London, many authorities have adopted their own version in a supplementary planning document.

Each review is a full appraisal with updated cost and value evidence, and each attracts a further independent review fee. A scheme with an early stage review triggered by failure to start within a set period, plus a late stage review on substantial completion, is budgeting for two more appraisals and two more review fees. Those come at the point when the development account is tightest.

Negotiate the mechanism, not just the headline percentage. Caps on additional contributions, a clear definition of the trigger, and an agreed methodology annexed to the deed all reduce the later cost. An Affordable Housing Statement should set out the tenure split and the review position together, because an officer reading them separately will assume the worst case.

Publication and the end of commercial privacy

Viability assessments are expected to be publicly available, with only narrow scope for redaction of sensitive commercial material. Plan for that from the first draft. Land acquisition terms, overage arrangements and internal hurdle rates will be read by objectors, by the parish council and by anyone comparing your appraisal with the one you submitted on the site next door.

Write the appraisal knowing it will be published and the redaction argument gets shorter.

If viability is contested at appeal

An appeal on viability is the expensive outcome. It means two appraisals, two sets of written evidence, a statement of common ground on the agreed inputs, and usually an inquiry rather than written representations because the inputs need testing in cross-examination.

Costs here are counsel, the valuation witness, the cost consultant and the inquiry programme. Set against that, the narrowing of issues through a statement of common ground before the inquiry is the best value work available, because every input you agree is an input nobody pays a witness to argue about.

An illustrative budget structure

The following structure is illustrative only and carries no figures, because viability fees are quoted per scheme and are not published in a schedule you can rely on.

The same discipline applies to the rest of the evidence base, where a line such as budgeting a noise survey and its monitoring period is easy to underestimate for the same reason: the survey itself is modest and the monitoring period is not. For the fuller treatment of the mechanism itself, see budgeting a viability assessment and its review mechanism.

PlanScope prices are published and fixed: one free report, £50 per report, or Professional at £150 per month or £600 per year for unlimited reports. See PlanScope pricing if you want a drafted appraisal structure to hand to your valuer as a starting point.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. For specialist technical reports, qualified professional input may be required. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.