Viability Assessment or Economic Impact Assessment

A Viability Assessment tests whether the scheme can carry the policy requirements asked of it. An Economic Impact Assessment argues that the scheme is good for the local economy. One is an appraisal governed by a professional standard and scrutinised line by line. The other is a benefits case with no equivalent standard behind it, and councils weigh it accordingly. Confusing the two, or offering one where the officer wanted the other, wastes a consultation period.

The shorthand that works: viability is about what the scheme can afford, economic impact is about what the scheme delivers.

Scheme finances against wider economic effects

A viability appraisal takes the gross development value, deducts build costs, professional fees, finance, marketing and a return to the developer, and compares the residual land value that remains against a benchmark land value. Where the residual falls below the benchmark, the argument is that the scheme cannot support the full policy package, typically affordable housing and financial contributions.

An economic impact assessment counts jobs during construction and in operation, wages, spending in the local area, supply chain effects and, where relevant, business rates and household expenditure. It does not test whether the scheme can pay for anything.

The two are used at different moments. Viability is deployed defensively, to justify providing less than policy requires. Economic impact is deployed positively, to add weight to the benefits side of the planning balance.

Benchmark land value and developer return

Benchmark land value is where most viability disputes live. National guidance uses existing use value plus a premium, with the premium reflecting what would reasonably persuade a landowner to sell. It is not the price you paid.

That point bears repeating because it is the single most common error in submitted appraisals. An overpaid land price is not a reason to reduce affordable housing, and guidance is explicit that the price paid is not the benchmark.

On return, national guidance indicates that a return in the region of 15 to 20 per cent of gross development value may be suitable for developers of typical greenfield or brownfield residential schemes, with a different, lower figure potentially appropriate for build to rent and for affordable housing delivery. The RICS professional statement on financial viability in planning sets the conduct expectations for whoever prepares the appraisal, including objectivity and the duty to report transparently rather than advocate.

Inputs get tested individually. Build costs against published cost data, sales values against comparable evidence, finance rates, professional fee percentages, and the assumed programme. An appraisal that survives scrutiny is one where each input has a stated source.

Jobs, spend and supply chain evidence

Economic impact work is looser, which cuts both ways. There is no professional statement telling you how to count a job, so the credibility of the assessment rests entirely on the transparency of its method.

The concepts that make an assessment defensible come from additionality guidance: deadweight, what would have happened anyway. Displacement, jobs taken from elsewhere in the area rather than created. Leakage, benefits accruing outside the study area. Multiplier effects, applied honestly rather than generously.

Gross job numbers without those adjustments read as marketing. Net additional jobs, with the assumptions stated and a defined study area, read as evidence. Construction employment should be expressed as person years rather than as a headline number of jobs, since a construction job lasting eighteen months is not a permanent job.

Where the scheme involves the loss of employment land, expect the assessment to be read against that loss rather than in isolation.

Confidentiality and what gets published

Viability assessments are expected to be publicly available, with only narrow scope for redaction of commercially sensitive material. That expectation changed practice considerably, and applicants who assume an appraisal will stay confidential are working from an older model.

Plan for publication. Assume that the land price, the build cost assumptions and the profit assumption will be read by objectors, by local journalists and by a councillor who has done this before.

Economic impact assessments are published as a matter of course and rarely contain anything sensitive, though the employment projections may be quoted back at you later if the scheme is built and the jobs do not appear.

Who reviews each for the council

Viability gets independent review. Councils appoint a district valuer or a specialist consultant, usually at the applicant's cost, and the reviewer produces a report that the officer relies on. That review is adversarial in substance if not in tone, and the negotiation that follows is between two appraisals rather than between planner and developer.

Economic impact rarely gets the same treatment. It is read by an economic development officer, sometimes by nobody in particular, and its influence depends on whether the numbers are plausible on their face. That asymmetry explains why a modest, well evidenced economic case often carries more weight than an ambitious one.

Weight at committee

Members engage with both, differently. A viability case that reduces affordable housing is politically difficult and gets tested hard in the chamber, with questions about the land price and about review mechanisms.

Build in a review mechanism before you are asked for one. An early stage or late stage review clause in the section 106 agreement, requiring reappraisal if values improve, is frequently the price of accepting a viability case at all.

Economic benefits are material considerations and carry real weight in a marginal case, particularly where a scheme delivers employment floorspace or brings a vacant building back into use. They rarely outweigh a clear policy conflict on their own.

An illustrative example: a mixed use scheme on a vacant town centre site, proposing 20 per cent affordable housing against a 35 per cent policy requirement. The viability case rests on abnormal costs for demolition and contamination, evidenced by a phase 2 report and a contractor's estimate. The economic case sets out net additional operational jobs in the commercial floorspace, adjusted for displacement from nearby units. Both documents do work. Neither would carry the scheme on its own, and the affordable housing debate is settled by a late stage review clause.

When you need both

Major regeneration schemes, town centre redevelopment, employment land release and cases argued on very special circumstances in the Green Belt frequently need both documents, because the scheme is simultaneously asking for a policy departure and offering a benefit in exchange.

Sequence them properly. The viability appraisal depends on the scheme's costs and values, so it comes after the design and the cost plan are stable. The economic assessment depends on floorspace and use, so it can start earlier. Both should be written against the same scheme description, and a mismatch between the two documents is the sort of detail an objector will find. Whether the viability argument belongs at plan-making stage or at application stage is a separate question, covered in viability at plan-making or at application stage.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. For specialist technical reports, qualified professional input may be required.

Browse the report types on PlanScope to see how viability and economic evidence sit alongside the rest of a major application pack, or enter a postcode on the home page to start. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.