Viability evidence and what changes as scheme size grows

The viability evidence threshold most developers care about is not a unit number at all. It is a policy question: if your scheme complies with an up-to-date development plan, Planning Practice Guidance says no viability assessment should be required. Viability evidence becomes necessary at the point where you propose to deliver less than policy asks for, and the scale of the scheme then decides how much machinery comes with it.

That machinery grows fast. A nine unit scheme arguing about a commuted sum is a different exercise from a 200 unit scheme where the section 106 agreement will carry a review mechanism, an audit right and a profit share.

When viability evidence is expected

Government guidance puts the weight of viability testing at plan-making stage. Local plans are supposed to be tested for deliverability before adoption, so that individual applicants inherit a set of policies already shown to work on typical sites. Where a proposal accords with all relevant policies in an up-to-date plan, the guidance is that no viability assessment should be needed.

Applicants still bring viability cases, and they usually do so for one of three reasons: abnormal costs the plan could not have anticipated, a site with an unusually high existing use value, or a change in market conditions since adoption. The first is the strongest. Contamination remediation, a demolition sequence, a diversion of a trunk sewer, all of these are documented and quantifiable.

The weakest argument is the price paid for the land. Guidance is explicit that the price paid is not a relevant justification for failing to comply with policy, and officers repeat that sentence in committee reports more often than any other line in the viability chapter.

Benchmark land value and the evidence behind it

Benchmark land value is established on the basis of existing use value plus a premium to the landowner, and the premium has to be justified by evidence rather than asserted. A Viability Assessment that opens with a market value drawn from comparable land sales, without adjusting those comparables for policy compliance, will be challenged straight away.

Existing use value is the value of the land in its current use, assuming no prospect of the development in question. For a working industrial yard that is a real investment value with a tenant and a yield. For a paddock it is agricultural value plus hope value stripped out. The arithmetic behind the residual side of the equation is covered separately in our note on residual land value, and the premium question in our note on existing use value plus a premium.

Scale changes the evidence base rather than the principle. On a single plot you might have one comparable and a valuer's opinion. On a 15 hectare urban extension you will have a phased land appraisal, a sensitivity analysis across sales values and build cost inflation, and a landowner who has already agreed an option price the council will never see.

Starting from a policy compliant scheme

The appraisal has to be run first on the scheme that meets policy in full. Affordable housing at the plan percentage and the plan tenure mix, the full contribution schedule, the design standards. Only then do you show what the residual value looks like against the benchmark.

Running the appraisal on the scheme you want to build, and presenting the shortfall as a fact, is the error that costs most applicants a committee cycle. Officers ask for the policy compliant run because it tells them the size of the gap, and without it the negotiation has no starting point.

Where the shortfall falls on affordable housing, the Affordable Housing Statement has to explain the tenure split being offered and how it responds to the identified need, not simply report the reduced number.

Review mechanisms as schemes get larger

Below the major development threshold of 10 dwellings or 1,000 m2, review mechanisms are rare. They start appearing on schemes large enough that the build programme spans a market cycle, which in practice means anything phased over more than two or three years.

The table describes the pattern across English authorities rather than any one council's policy. Local plan viability policies set the actual triggers, and they differ, so read the adopted policy before assuming a review will be imposed.

An early stage review bites where a permission has not been implemented within a defined period, usually because the scheme has been held rather than built. A late stage review runs after substantial completion, once actual sales values and actual costs are known, and shares any surplus above the agreed profit.

Publication and redaction

Viability assessments submitted with an application should be publicly available. Guidance allows for limited redaction in exceptional circumstances, and commercial confidentiality is not, by itself, enough to justify withholding an appraisal. Developers who assume the numbers stay private are frequently surprised.

Plan for publication from the start. Keep the sensitive material, such as a signed option agreement, out of the appraisal and reference it instead through a valuer's statement. We have looked at how councils handle this in practice in our note on published and redacted viability evidence.

Who assesses the appraisal and who pays

Councils rarely hold the valuation skills in house, so the appraisal goes to an independent assessor. The cost of that assessment can be recovered from the applicant, and guidance anticipates it. Expect the council to ask for an undertaking covering the fee before the review starts, and expect the review to add four to eight weeks to determination where the appraisal arrives late.

The assessor will interrogate build costs against a published cost index, sales values against local evidence, finance rates, professional fees as a percentage of construction, and the developer's return. For plan-making purposes, guidance suggests a return to the developer in the range of 15 to 20 per cent of gross development value, with around 6 per cent used where the development is affordable housing. Those figures are benchmarks for testing, not entitlements, and an assessor will move off them where the evidence supports it.

Standardised inputs help. Where an appraisal follows the structure the guidance describes and the relevant professional valuation standards, the argument narrows to two or three contested numbers rather than forty.

Where a small scheme avoids the exercise

Affordable housing contributions should not be sought on developments that are not major development, other than in designated rural areas where a local plan may set a threshold of five units or fewer. That single sentence removes the viability question from most small sites.

Schemes below the threshold still face the Community Infrastructure Levy, which is non-negotiable and not subject to viability argument once a charging schedule is adopted. Levy relief exists for self-build, social housing and charitable use, and each relief has strict procedural steps, including a notice that must be served before work starts, which catches people out.

Where an application releases employment land, expect a separate evidence requirement: marketing evidence over a period set by the local plan, plus an assessment of the loss against employment land supply. That is a different test from viability, and passing one does not help with the other.

See PlanScope pricing if you want to draft the supporting statements around a viability case before your valuer finalises the appraisal.

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.