Viability appraisal inputs and assumptions: a section outline

A planning viability appraisal is a residual land value calculation with its assumptions written down, and the structure barely changes between schemes. Getting the viability appraisal inputs planning officers and their reviewers expect in the right sections, each with its evidence attached, is most of the work. The arithmetic is not where appraisals fail. The justification for each input is.

What follows is a section order that works, with the evidence each section needs.

Gross development value and its evidence

Open with the revenue, because everything else is measured against it. Set out the schedule of accommodation unit by unit with areas, then the value applied to each, then the total.

The evidence that supports it is a comparables schedule: completed transactions where possible, asking prices clearly labelled as such, with dates, addresses, areas, specification and the adjustments made to reach your figure. Comparables from a different submarket, or from a different point in the cycle without adjustment, are the first thing a reviewer attacks.

For affordable housing, state the tenure split, the assumed registered provider bid as a percentage of open market value or on a capitalised rent basis, and whether grant has been assumed. For commercial floorspace, give the rent, the yield, the rent-free period and the void assumption, and show the capitalisation.

Ground rents, car parking sales and any other revenue belong here too, labelled separately so they can be stripped out.

Build costs and the cost base

Give the cost base and its date. A recognised published cost dataset, a cost plan from a quantity surveyor, or a tender return are all acceptable, and each carries different weight. A single all-in rate per square metre with no breakdown carries the least.

Set the section out as:

1. Base build cost by element or by use, with the source and the date.
2. External works and site infrastructure as a separate line, not folded into the rate.
3. Abnormal costs, each evidenced by survey rather than allowed as a percentage.
4. Contingency, with the percentage stated and the basis explained.
5. Any inflation allowance, with the index and the period.

Abnormals are where double counting happens. A demolition allowance inside the base rate and again as an abnormal, or a contingency set to cover ground risk that is already priced as an abnormal, will be found. List what each line covers.

Policy costs sit here or in a separate section, and they should be itemised: the Community Infrastructure Levy at the published rate for the use and area, section 106 contributions as the council requests them, biodiversity net gain delivery, and the cost of any sustainability requirement above the regulatory baseline.

Benchmark land value and existing use value

This is the section reviewers turn to first. National guidance expects benchmark land value to be based on existing use value plus an appropriate premium to the landowner, informed by market evidence, and it is explicit that the price actually paid for the land is not in itself a justification for failing to meet policy requirements.

So the section needs three parts. The existing use value, derived by valuation with its own evidence. The premium, with a reasoned basis rather than a convention. And a cross-check, usually against market evidence for comparable sites with planning policy requirements applied.

Where an alternative use value is advanced, show that the alternative use is realistic: that it would be permitted, that there is demand, and that it could be delivered. An alternative use value based on a consent that would never be granted does not survive review.

The concept itself causes confusion, and the way it interacts with the residual calculation is set out in benchmark land value and what it means in planning and in residual land value in a viability assessment.

Developer return and how it is justified

State the return, state what it is applied to, and state why.

The Planning Practice Guidance indicates that a return in the region of 15 to 20 per cent of gross development value may be considered a suitable return to developers for a typical scheme, while accepting that a different figure can be appropriate in particular circumstances. Where you depart from that range, tie the justification to the risk profile of this scheme: the length of the programme, the sales exposure, the ground risk, the planning risk, whether the affordable element is forward funded.

For commercial development a return on cost is often more appropriate than a return on value. Say which basis you have used, because mixing the two across a mixed-use scheme and quoting a single percentage is misleading even when unintentional.

Blended returns on mixed-tenure schemes should be shown by component. A reviewer wants to see the open market return and the affordable return separately.

Finance, fees and other costs

Professional fees as a percentage of build cost, with the percentage stated. Finance at a stated interest rate applied to a stated drawdown profile, including interest on the land from acquisition. Marketing and sales costs, letting fees for commercial, legal fees on disposal, and any agency fee on the land.

Two common errors. Finance calculated as a flat percentage of total cost rather than on a cash flow, which usually understates it on a long programme and overstates it on a short one. And fees applied to a cost figure that already includes fees.

Sensitivity testing

Run it and publish it. A single bottom line invites a single counter-figure. A sensitivity table shows where the conclusion holds firm and where it is finely balanced, which is a far better basis for negotiation.

Test values up and down, build costs up and down, the benchmark land value at the council's figure as well as yours, and the programme extended. Then state the point at which the scheme becomes policy compliant, because that is the number the negotiation will settle on.

Where an early-stage or late-stage review mechanism is proposed, show how the appraisal would be re-run at that point and on what inputs.

Transparency and publication

Write it expecting publication. National guidance expects viability assessments to be publicly available, with commercially sensitive material limited to what is necessary and justified.

Practical consequences: include an executive summary that a non-specialist can follow, show the appraisal output in full rather than as a summary table, supply the model in a working form so the reviewer can follow the formulas, and put narrowly sensitive items in a short annex with a reasoned request to withhold them.

Then make the policy case in the Viability Assessment and carry the resulting position into the Affordable Housing Statement so the two documents agree on tenure, mix and delivery.

One honest caution. An appraisal is a snapshot built on assumptions about a market nobody can forecast, and presenting it with more certainty than it has invites the scrutiny it then fails. State the assumptions, test them, and let the sensitivity analysis do the arguing.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. A viability assessment is a report type where councils usually expect a suitably qualified author, and professional review is strongly advised. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.