Viability appraisal inputs: a schedule to agree first

Agree the viability appraisal inputs before anyone runs a residual valuation. Almost every dispute that ends in a six-month argument with a council's retained consultant is a dispute about assumptions, not about arithmetic. Benchmark land value, sales values, build costs, abnormals, fees, finance and the return sought: pin each one down, with its source, in a single schedule sent to the authority at the outset.

The Planning Practice Guidance on viability expects exactly this. It asks for transparency about inputs and for assessments to be prepared and made publicly available in full. Treat the schedule as the thing being negotiated and the appraisal as its output.

Benchmark land value and its derivation

Start here, because it decides the answer more often than anything else. The guidance sets benchmark land value on the basis of existing use value plus a premium for the landowner, with the premium reflecting the minimum return at which a reasonable landowner would be willing to sell.

Three things belong in the schedule:

• The existing use, its current income or rental evidence, the yield applied and the date of the valuation.
• The premium proposed, expressed both as a percentage and as a figure, with the reasoning behind it.
• Any alternative use value relied on, with the planning status of that alternative stated.

What does not belong is the price actually paid for the site. The guidance is direct that the price paid does not set the benchmark, because a purchaser who overpaid cannot pass the consequences to the scheme's policy obligations. Our longer note on existing use value plus a premium works through how the premium is evidenced.

Gross development value assumptions

Sales values should be current, not forecast. State the source for each unit type: comparable transactions with addresses and dates, or agents' evidence where the product is new to the area. Include the assumed unit mix and net saleable areas, because a change of one square metre per flat moves the answer.

For commercial floorspace, set out the rent, the yield, the rent-free period and the void assumption separately. For affordable housing, state the tenure split, the transfer price per unit or as a percentage of open market value, and whether grant is assumed. Grant assumptions are a frequent source of disagreement and are better settled in writing early.

Build costs and the source used

Name the source and the date. Cost information published by the recognised construction cost service, adjusted for location and for the specific building type, is the usual starting point, and councils expect to see which index and which quartile has been used. A cost plan from a quantity surveyor carries more weight on a detailed scheme, provided it is broken down rather than presented as a single figure.

Include external works, demolition, contingency and inflation as separate lines with their own percentages. Where the scheme has to meet a local energy or carbon standard, say whether that cost sits in the base rate or as an addition. Burying it in a round-figure contingency invites the council's consultant to strip it out.

Abnormal costs and their evidence

Abnormals are where credibility is won or lost. Each one needs a description, a cost, and a document behind it: a ground investigation report, a remediation strategy, a structural report, a utility diversion quotation, a highway agreement estimate.

Two tests apply. Is the cost abnormal in the proper sense, meaning outside what the published cost rates already include? And is it attributable to this site rather than to the applicant's design preference? An unusual basement to gain two extra flats is a design choice. Piling through made ground on a former industrial site is not. The evidence base from a Phase 2 investigation or a Contaminated Land Assessment is what turns an asserted abnormal into an accepted one.

Professional fees, finance and return

Professional fees are normally expressed as a percentage of build cost. State the percentage, what it covers and whether planning fees, survey costs and the levy sit inside or outside it. Marketing and sales fees, legal fees and agents' fees go on separate lines.

Finance needs the rate, the reference used, the assumed drawdown profile and the period. A scheme financed over 24 months at a stated margin above a named reference rate is arguable. A single interest figure with no workings is not.

On return, the guidance indicates that a return in the region of 15 to 20 per cent of gross development value may be a suitable return to developers for a plan-led scheme, and that a lower figure may be appropriate for the affordable housing element given its reduced risk. State which figure you have used, on which components, and why. Where a scheme is being appraised on return on cost rather than on value, say so and show both.

Sensitivity testing

A single-point answer invites a single-point rebuttal. Run and publish sensitivities on at least sales values, build costs and the programme, and show the point at which the scheme moves from deficit to surplus.

Councils increasingly ask for a review mechanism instead of a fixed contribution where the outcome is marginal. If you expect one, put the proposed trigger points, the formula and the cap into the schedule at the start. Late-stage reviews negotiated after committee tend to be drafted badly and bind for years. The way competing assumptions are tested is set out in our piece on competing viability appraisals at appeal.

Agreeing inputs with the authority before submission

Send the schedule with a covering note that asks for written agreement, disagreement or a request for further evidence on each line. Offer to meet the council's consultant. Expect to pay for that review, since most authorities recharge it.

The order that works:

1. Issue the input schedule with sources attached, before the appraisal is run.
2. Confirm which policy obligations are being tested and at what level.
3. Agree the benchmark land value approach, even if the figure stays open.
4. Run the appraisal and issue it in full, with an executive summary written for a non-specialist reader.
5. Deal with the review mechanism as a drafting exercise, not an afterthought.
6. Keep a version-controlled log of every input change and why it changed.

A Viability Assessment is a report councils expect from a suitably qualified author working to the recognised professional standard on financial viability in planning, and professional review is strongly advised before anything is submitted. Whether the exercise belongs at application stage at all, rather than at plan making, is worth settling first, and our note on viability at plan making or at application stage covers that choice.

One honest uncertainty. Nothing obliges a council to agree your inputs, and some will simply commission their own appraisal. The schedule still pays for itself, because it narrows the argument to the two or three lines that actually matter.

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

Browse all 66 PlanScope report types to see what else a major application needs alongside the appraisal.