Viability assessment or affordable housing statement

An affordable housing statement is your offer. A viability assessment is the argument for offering less. They are different documents with different authors, different audiences and different consequences, and submitting the second when you only needed the first invites a level of scrutiny you did not have to accept.

On a scheme of 10 or more dwellings in most of England, the local plan will set an affordable housing requirement as a percentage with a tenure split. If the scheme meets that policy, the affordable housing statement records what is being provided and how it will be secured, and the viability question never arises. If the scheme cannot meet it, the planning practice guidance puts the onus on the applicant to show why the circumstances justify a viability assessment at application stage at all.

The offer against the justification

The Affordable Housing Statement is a short, factual planning document. It states the number of dwellings, the number and tenure of affordable units, the percentage by unit and by habitable room, the mix by bedroom size, where the units sit in the layout, whether they are tenure blind in appearance, which registered provider is likely to take them, and how the obligation will be secured in the section 106 agreement. It also deals with any policy exemptions claimed, such as vacant building credit or a self-build element.

The Viability Assessment is a financial appraisal prepared to the RICS professional statement on financial viability in planning. It compares the residual land value the scheme can support against a benchmark land value, and concludes that policy compliant provision would leave insufficient return. It is prepared by a valuer, not by a planner, and it will be tested by a consultant the council instructs and recharges to you.

When viability evidence is needed at all

National guidance is clear that viability should be tested at plan-making stage, so that the policy requirement is one that typical sites can carry. The consequence at application stage is that the plan is assumed to be viable, and an applicant who says otherwise has to explain what is particular about this site. Abnormal costs that are properly abnormal, a listed building with a repair backlog, remediation of a contaminated site, or a change in circumstances since the plan was adopted are the arguments that land. A price paid for the land that assumed no affordable housing is not one of them.

The distinction between plan stage and application stage is worth reading properly before you commission anything, because it changes who carries the burden. We cover it in viability at plan-making or at application stage.

Benchmark land value and the inputs that decide it

Benchmark land value is the input that drives the answer. The guidance sets it as existing use value plus a premium, where the premium is the minimum return at which a reasonable landowner would release the land. Market comparables can inform it, but only after adjusting for policy compliant planning obligations. That adjustment is the whole argument in most disputes, and a valuer who simply reports the price paid will be taken apart.

Gross development value, build cost, professional fees, finance and the developer's return make up the rest. The guidance treats a return of 15 to 20 per cent of gross development value as a suitable starting point for market housing, with a lower figure of around 6 per cent of gross development value for the affordable element, reflecting its reduced risk. Those are starting points rather than entitlements, and on a small site the sensitivity that matters is usually build cost rather than return.

An illustrative case makes the point. A scheme of 14 flats on a former commercial yard carries remediation and a piled foundation solution. The appraisal shows policy compliant affordable housing producing a residual value below the existing use value of the yard. Whether the assessment succeeds turns on whether the existing use is still a live one and on whether the remediation cost is abnormal or simply the cost of building on that kind of land. Figures and circumstances here are illustrative.

Review mechanisms and how they are secured

Where an authority accepts reduced provision, it will almost always want a review mechanism in the section 106 agreement. An early stage review bites if the scheme has not been substantially implemented within an agreed period, on the basis that a consent left unbuilt may have been given on stale assumptions. A late stage review tests actual costs and values once a proportion of the units are sold, and shares any surplus above the appraisal, usually up to a capped additional contribution.

In London the London Plan threshold approach shapes this directly: schemes meeting the policy threshold without public subsidy follow a fast track and avoid viability scrutiny altogether, while those below it go through the viability tested route with early and late stage reviews attached. Outside London, individual local plans and supplementary documents set their own versions, so read the adopted policy rather than assuming the London model.

Drafting matters more than the principle. Argue about the review dates, the indexation, the definition of costs and the cap at heads of terms stage, because once the deed is engrossed those definitions govern a payment you may make years later.

Transparency, and who reads what

Viability assessments submitted with applications are published. The guidance expects an executive summary in a standard form and the full appraisal to be available, with redaction limited to commercially sensitive material and not used to withhold the assumptions. Write the assessment knowing that objectors, a local councillor and a journalist may all read it.

The affordable housing statement is read by a housing officer who is checking tenure split against current housing need evidence, unit sizes against the nationally described space standard, and whether a registered provider will actually take the units in that configuration. Small clusters of one-bedroom flats above a commercial unit, with a service charge, are the classic thing that no provider will take, and it is better to find that out before submission than at the section 106 stage.

Sequencing them before the deed

Get the order right and the application runs. Establish the policy requirement from the adopted plan and any supplementary document. Test the scheme against it in-house. If it complies, prepare the statement and open a conversation with the housing team about tenure and mix. If it does not, commission the appraisal early, share the assumptions with the council's viability consultant before the formal submission where the authority allows it, and expect several rounds.

Then agree the heads of terms in parallel with the determination period rather than after the committee resolution. An application resolved to approve but stuck in section 106 drafting is the most common cause of delay on schemes of this size, and the second most common is a review mechanism nobody modelled.

Our notes on benchmark land value and on who is qualified to prepare a viability appraisal go further into the two points that decide most disputes.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. Viability work is specialist valuation work and qualified professional input may be required.

Browse the 66 PlanScope report types and start a draft of the statement while the appraisal is being prepared. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.