Local plan viability evidence and how it sets policy

Local plan viability evidence exists so that site-specific viability argument becomes the exception. That is the explicit design of national viability guidance: plan makers test their policy requirements cumulatively at plan-making stage, and once they have done so an application that complies with those requirements is assumed to be viable. The burden then sits with the applicant to show why particular circumstances justify a viability assessment at the decision stage.

Understanding the whole plan viability assessment therefore matters twice over. It tells you where the policy requirements came from, and it tells you what you are arguing against if you want to depart from them.

Why plans are tested for viability

A plan that imposes requirements no scheme can afford does not deliver anything. National policy expects plans to be deliverable, which means the cumulative cost of the policies has to be capable of being met while leaving enough for a landowner to sell and a developer to build.

So the authority commissions an appraisal exercise that stacks every requirement together: affordable housing percentage and tenure split, the Community Infrastructure Levy rate, typical section 106 obligations, space standards, accessibility standards, energy and carbon requirements, biodiversity net gain, water efficiency, and anything else with a cost attached.

The output is a judgement about what the plan can ask for across the range of sites it expects to come forward. It is a plan-wide judgement, not a prediction about any individual site, and that distinction is the source of most disagreement at application stage.

Where the plan's requirements turn out to be undeliverable in practice, the consequence shows up in the housing trajectory, which is why the viability evidence and the supply position are connected in the way described in housing land supply and what it changes for applicants.

What a whole plan viability assessment contains

The structure is consistent across authorities even though the numbers are not.

A set of development typologies, usually a dozen or more, covering different site sizes, densities, greenfield and brownfield conditions, flats and houses, and different value areas within the authority.

Value assumptions by area, derived from transacted sales evidence and rents, usually expressed per square metre and often divided into three to five value zones.

Cost assumptions, typically build costs from a published cost index with allowances for externals, abnormals, contingency, professional fees, finance and marketing.

Policy cost assumptions, being the thing actually being tested, with the affordable housing requirement and the levy rate stepped through sensitivity runs.

A developer return assumption. National viability guidance indicates that for plan making an assumption in the range of 15 to 20 per cent of gross development value may be considered a suitable return, with a lower return applied to affordable housing, and the assessment should state what it used.

And a benchmark land value for each typology, which is where most of the argument lives.

Read the sensitivity tables rather than the conclusions. The conclusions tell you what the authority decided. The sensitivity tables tell you how close the margin was and which input was driving it.

Benchmark land value and the assumptions used

Benchmark land value is the figure a scheme's residual land value is compared against to decide whether it is viable. If the residual value exceeds the benchmark, the scheme works with the policy requirements in place.

National guidance sets out an existing use value plus a premium approach. The existing use value of the land is established, and a premium is added to reflect the minimum return at which a reasonable landowner would be willing to sell. The premium should reflect policy requirements and planning obligations rather than being set at a level that assumes them away.

Three points that recur in disputes:

• The price actually paid for the land is not a justification for failing to comply with policy. Overpaying is the purchaser's problem, and guidance is explicit about it.
• Alternative use value may be relevant, but normally only where there is an implementable permission for that alternative use. A theoretical higher-value use does not set the benchmark.
• A market value approach can be used where the transactions relied on already reflect policy-compliant development. In most areas they do not, because the market prices in a negotiated reduction, and using them circularly embeds the very non-compliance being tested.

Where the plan's benchmark land value assumptions are stated by typology, quote them. An appraisal that departs from the plan's own benchmark has to explain the departure, and an unexplained departure is the first thing a council's viability consultant will pick up.

How the evidence sets policy requirements

The chain from evidence to policy is direct, and it is worth tracing for the specific policy you are dealing with.

The assessment establishes what a typology can bear. The plan then sets the requirement at or below that level, often with thresholds so that smaller sites carry less. The Community Infrastructure Levy charging schedule is set by the same logic, in a separate examination, at a rate the viability evidence supports with an appropriate buffer.

The requirement usually appears as a percentage with a tenure split, and the Affordable Housing Statement for an application has to address it directly. Where the plan sets different figures for different value zones or site sizes, confirm which applies before drafting anything.

Once that chain is in place, the assumption of viability follows. National guidance says that where up-to-date policies have set out the contributions expected, planning applications complying with them should be assumed to be viable, and it is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the decision-making stage.

That is a high bar deliberately set. It is not a prohibition.

Arguing site-specific circumstances against the plan

The circumstances that have succeeded tend to be ones the plan-wide typologies could not have captured:

1. Abnormal costs evidenced by investigation, such as remediation to a defined specification, piling through made ground, a sewer diversion, or structural works to a retained listed building.
2. A site constraint that reduces developable area or density below the typology assumption, with a layout showing why.
3. A heritage or policy constraint requiring a form of development more expensive than the tested typology, such as a conversion rather than a rebuild.
4. Infrastructure required to open up the site that the plan assumed would come from elsewhere.
5. A value position materially below the plan's value zone, evidenced by transactions rather than by opinion.

What has not succeeded is a general assertion that costs have risen, a land price that assumed no obligations, or an appraisal using a higher developer return than the plan tested without justifying it.

Submit the Viability Assessment on the basis that it will be published. National guidance expects assessments to be publicly available other than in exceptional circumstances, and the professional standards for viability reporting require transparency and objectivity from the author. Councils expect a suitably qualified author, usually working to the relevant professional statement, and professional review of any draft is strongly advised.

Expect the council to appoint its own consultant to review it, and expect the review to be published too.

Where the evidence has become dated

Plan viability evidence ages badly, and the gap between the tested assumptions and current conditions is a legitimate line of argument.

Four things commonly move after a plan is adopted. Build costs, which can shift by double-digit percentages over a plan period. Finance costs, which change the appraisal materially on longer programmes. New policy burdens, where requirements introduced after adoption were never in the tested stack. And value, which can fall as well as rise.

Mandatory biodiversity net gain is the clearest example of a burden arriving after many plans were tested. A plan examined before the regime began tested a cost stack that did not include habitat units, off-site allocations or thirty-year management.

The argument has to be made carefully, though. Dated evidence weakens the assumption of viability but does not remove the applicant's burden, and the right response is a site-specific appraisal using current inputs and explaining each departure from the plan's assumptions line by line, rather than a general complaint that the evidence is old.

Where the evidence is very dated, the authority may also be reviewing the plan, and the emerging evidence base is then the better guide.

Using the plan evidence in a site appraisal

The method that produces the fewest arguments:

Take the plan's viability study as the starting template. Use its value zone for the site, its benchmark land value approach, its developer return and its cost base, then adjust each input only where you can evidence a site-specific reason, and show the adjustment in a reconciliation table alongside the plan's figure.

That table is the single most useful thing in a site-specific viability submission. It lets the reviewer see immediately which inputs are agreed and which are in dispute, and it reduces the review to the two or three lines that matter instead of a line-by-line rebuild.

Then deal with the delivery mechanism. Where the shortfall is genuine, a review mechanism securing a share of improved value, an early-stage and late-stage review, or a deferred contribution is usually more acceptable than a permanent reduction in the requirement, and councils have become used to them. The money that results shows up in the authority's published reporting, which is explained in infrastructure funding statements and where money went.

One honest uncertainty: the weight a decision maker gives to dated plan evidence varies a great deal, and there is no settled rule about how old is too old.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it.

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