Viability at appeal and confidential appraisals

Assume your viability appraisal will be published. National planning guidance starts from the position that viability assessments should be prepared on the basis that they will be made publicly available, other than in exceptional circumstances, and that even then a summary should be published. At appeal that presumption hardens, because the appeal file is a public document and the Planning Inspectorate publishes what it receives.

For anyone preparing a Viability Assessment to support a reduced affordable housing offer, the practical consequence is straightforward. Write it for a hostile reader who will quote it back at you, and put nothing in it you would not defend in a public hearing.

The presumption of transparency

The transparency position in national guidance was a deliberate change of direction. Before it, viability appraisals routinely arrived marked confidential and were assessed by the council's consultant behind closed doors, with the public seeing only a conclusion. Councils were criticised for it, and the guidance now expects the inputs, the assumptions and the outputs to be in the open.

The guidance also standardises much of what used to be argued. Benchmark land value is derived from existing use value plus a premium, informed by market evidence but not set by an offer the applicant actually paid. A return to the developer in the region of 15 to 20 per cent of gross development value is described as a suitable assumption for market housing, with a lower figure appropriate for the affordable element. Check the current text of the guidance before quoting any of those figures, because the chapter has been revised more than once.

The effect of standardisation is that fewer inputs remain in dispute. Most disputes now come down to benchmark land value, build cost and sales values, and that narrowing is what makes a statement of common ground worth the effort.

Requests to withhold commercial information

Applicants do ask for redaction, and the request is not automatically refused. It is, though, rarely granted in the form applicants want.

Two legal frameworks sit behind the decision. Planning information held by a council is environmental information under the Environmental Information Regulations 2004, so a request for it engages an exception for commercial confidentiality that is subject to a public interest test, with a presumption in favour of disclosure. At appeal, the Inspectorate's own procedural rules and practice govern what goes on the case file, and material a party relies on is expected to be available to the other parties and to the public.

Requests that succeed tend to be narrow and specific: a named contractor's tender sum, a confidential funding rate, an option price subject to an enforceable confidentiality clause. Requests that fail are the broad ones. An appraisal marked confidential in its entirety, or a redaction of the land price where land price is the very thing in dispute, will not be accepted, because the decision maker cannot reach a reasoned conclusion on evidence the other side cannot test.

How inspectors approach the issue

Inspectors approach viability evidence sceptically, and appeal decisions consistently give little weight to figures the appellant will not open to scrutiny. The pattern is easy to state: evidence that cannot be tested attracts reduced weight, and reduced weight on a viability case usually means the policy compliant obligation stands.

The judicial treatment of benchmark land value in the Parkhurst Road litigation reinforced the point that a price paid for a site, where that price assumed a lower level of affordable housing than policy requires, is circular and cannot set the benchmark. Treat that as indicative of the approach courts and inspectors take rather than as a formula, because each case turns on its own evidence.

Where an authority refuses to accept an appraisal and the applicant appeals, the burden sits with the appellant. An appraisal that supports a departure from the affordable housing policy set out in an Affordable Housing Statement has to carry that burden with material an inspector can interrogate.

Preparing an appraisal for public scrutiny

Structure the document so that scrutiny is easy and the sensitive material is contained.

1. State every input in the body of the report with its source and date, including gross development value, build costs, professional fees, finance, marketing, contingency and developer return.
2. Put anything properly confidential in a separate, clearly identified appendix, so a redaction request covers one appendix rather than the whole document.
3. Use published cost sources for build costs and say which index and which base date you used, with the adjustments applied for location and specification.
4. Evidence sales values from comparables identified by address and date, rather than from an internal appraisal figure.
5. Provide the appraisal as a working model, or at minimum as a full print showing the cash flow, so the reviewer can follow the arithmetic.
6. Include a sensitivity analysis across the two or three inputs that actually move the answer.

The sensitivity analysis is the part applicants most often omit and the part that most often helps them. If the scheme is unviable across a realistic range of sales values and costs, saying so with the range attached is far stronger than a single point answer that invites an argument about one number.

Agreeing inputs with the authority

Most viability disputes narrow quickly once both sides put their numbers on the same page. Ask for that process early, ideally before refusal rather than after.

Where an authority instructs its own reviewer, offer the model rather than waiting for a request. A reviewer who has to rebuild your appraisal from a printout will rebuild it conservatively.

Statements of common ground on viability

A viability statement of common ground does three things. It records the inputs both parties accept, which takes them out of the hearing. It isolates the disputed inputs and states each side's figure and the reason for it. And it sets out the effect on the residual of moving each disputed input, so the inspector can see what turns on what.

Produce it as a table, not as prose. An inspector reading a viability case at a hearing wants to know which three numbers are in dispute and what the scheme looks like under each party's version, and a well-made table answers that in a page.

Where the outcome is a reduced obligation, expect the council to seek a review mechanism so that improved values later in the programme are captured. That mechanism is a negotiation in its own right, covered in overage clauses and review mechanisms in a section 106.

Practical drafting to reduce disputes

Write in a way that survives quotation. Avoid adjectives in the appraisal narrative. State figures with units and dates. Reference every source in a way the reader can follow without asking you for it.

Be careful with the vacant building credit and any other mechanism that reduces the obligation before viability is even reached, because councils scrutinise them closely and an appraisal that bakes in a contested credit compounds two arguments into one. The reasons councils resist it are set out in the vacant building credit and why councils resist it.

And accept one honest uncertainty in the document rather than presenting the appraisal as definitive. Viability at a point in time is a forecast. An assessment that says so, and shows the range, reads as professional. One that claims precision to the nearest pound across a five-year programme does not.

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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