Independent viability review and RICS standards

When a council instructs an independent reviewer to look at your viability appraisal, it is not buying a second opinion. It is buying a challenge, and the reviewer's professional obligations require them to give one. Understanding what those obligations are, and where the two appraisals will diverge before they do, is most of the work of responding well.

The professional framework is the RICS professional statement on financial viability in planning, which deals with conduct and reporting rather than with method. It applies to the person who wrote your appraisal and to the person reviewing it.

Why councils instruct a reviewer

An officer with a planning background is not equipped to test a residual land value appraisal, and nobody pretends otherwise. So councils maintain panels of reviewers, instruct one when a viability case is made, and recover the cost from the applicant through a fee agreement signed before the work starts.

The trigger is almost always a proposal to provide less than policy-compliant affordable housing or reduced contributions. National guidance puts the burden on the applicant to demonstrate whether particular circumstances justify departing from policy, and the assessment is the evidence for that.

The plan-led principle sits underneath all of it. Viability is meant to be tested when the plan is prepared, so that policy requirements are already known to be deliverable, and applicants should not have to make a viability case at application stage as a matter of routine. Where a case is made anyway, the reviewer will ask what has changed since the plan was examined, and "the site was bought too expensively" is not an answer that policy accepts.

The independence and objectivity duty

The RICS professional statement requires the practitioner to act with objectivity, impartially and without interference, and to report transparently. That duty applies whichever side instructed them.

Three practical consequences follow. A reviewer cannot take an instruction framed as finding a reason to refuse. A practitioner who has advised on the land acquisition has a conflict to declare and usually to decline. And a fee arrangement contingent on the outcome is not compatible with the statement.

The same applies to the applicant's appraiser, which is worth remembering when the client asks for a more helpful set of inputs. Our note on declaring conflicts of interest in planning reports covers the disclosure mechanics, and what a reviewer takes on when they sign covers the liability side.

What the reviewer tests first

Reviewers work in a fairly predictable order, and knowing it lets you write the appraisal so that the first three checks pass.

Benchmark land value comes first, because it decides the answer more often than anything else. National guidance sets it as existing use value plus a premium to the landowner, with the premium reflecting the minimum return at which a reasonable landowner would release the land, and it should reflect policy requirements including affordable housing. Alternative use value is treated with caution and market transactions are evidence rather than a benchmark in themselves.

Then the gross development value: unit mix, floor areas, values per square metre, and the evidence behind them. Values are tested against comparable transactions rather than against agents' asking prices, and a reviewer will ask why a scheme is valued above the surrounding stock if it is.

Then build costs, usually tested against published cost indices and adjusted for location and specification, with abnormals itemised rather than lumped. Abnormal costs attract the closest reading of anything in the appraisal, because they are the easiest input to inflate and the hardest to evidence without a survey behind them.

Profit comes next. National guidance indicates that a return in the range of 15 to 20 per cent of gross development value may be suitable for market housing, with a lower figure appropriate for the affordable element given the reduced risk. A 20 per cent assumption is defensible and an assumption above it needs an argument tied to the risk of the specific scheme.

Last come the mechanical inputs: programme, sales rates, finance rate, fees and the assumed obligations. These rarely decide the case on their own but they decide it in combination, and a reviewer who finds three optimistic inputs in a row starts testing everything.

Publication and confidentiality

National guidance expects viability assessments to be made publicly available, in full, so that the basis of a departure from policy can be scrutinised. The exception for commercially sensitive information is narrow, and where it applies an executive summary is expected instead.

Plan for publication from the outset. Assume the appraisal will be read by a residents' association with an accountant in it, because increasingly it is. Statements written on the assumption of confidentiality tend to contain the sentences that cause the trouble.

Responding to a review without losing ground

The instinct is to argue with everything. Resist it.

Take the reviewer's report, separate the points into those that are factual, those that are matters of judgement and those that are errors, and concede the first category immediately. Conceding a build cost point you cannot defend buys credibility for the benchmark land value argument you can.

Then deal with judgement points with evidence rather than with assertion. Comparable transactions with dates and sources. A cost plan from a quantity surveyor rather than a rate per square metre. A programme that reflects the actual planning and construction sequence.

Where the gap remains, propose a mechanism rather than restating the position. Which is usually where these cases settle.

Review mechanisms in the agreement

A review mechanism in the section 106 agreement lets the parties agree a package now and revisit it if values move. The common structures are an early stage review triggered if the scheme has not started within a set period, a mid stage review on larger phased schemes, and a late stage review before final occupation that captures surplus above the agreed profit.

Drafting matters more than the concept. The agreement needs to specify the inputs that are fixed and those that are recalculated, the formula for sharing any surplus, a cap on the additional contribution, the dispute resolution route, and who pays for the review. Vague drafting produces a second viability argument four years later with a different reviewer and no shared starting point.

A Viability Assessment prepared for submission should describe the proposed mechanism, because offering one early tends to shorten the negotiation.

Where the two appraisals usually diverge

In most cases the disagreement reduces to three numbers: the benchmark land value, the sales values, and the profit assumption. Build costs generate more correspondence and change the answer less, because both sides work from similar published data.

One honest uncertainty runs through the whole exercise. A residual appraisal is highly sensitive to small movements in its inputs, so two competent professionals applying the same guidance to the same scheme can reach materially different answers without either behaving improperly. Sensitivity testing, showing how the result moves as each input flexes, is the most useful thing an applicant can put in front of a reviewer.

Viability work is a specialist field and the assessment carries commercial and policy weight, so councils expect a suitably qualified author. AI-assisted drafting can assemble the policy narrative, structure the report and flag where inputs are missing, and the appraisal itself needs a qualified valuer who will sign it and stand behind the assumptions. Reviewers who work that way are listed in the professional directory.

This is general guidance, not legal advice. For specialist technical reports, qualified professional input may be required.

Browse all 66 PlanScope report types to see which supporting documents a viability case usually sits alongside.

PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.