Appraisal & Viability 08 min read

What Is Planning Viability?

Planning viability is the assessment of whether development can deliver the affordable housing and infrastructure contributions that planning policy requires while still proceeding, profitably for a private developer and sustainably for a housing association. In England, it is tested mainly when local plans are prepared, and on individual sites only in particular circumstances.

For housing associations, viability is more than a planning matter. Boards need it to approve investment, planning authorities test it when a scheme departs from policy, and Homes England needs a scheme's costs, income and contributions to set the minimum grant. This guide covers the planning side under the National Planning Policy Framework (NPPF) published in August 2026.

SDS · Updated October 2026

The policy framework

Planning viability in England is governed by the NPPF and the viability chapter of Planning Practice Guidance (PPG). Scotland, Wales and Northern Ireland have their own planning systems.

Viability is tested at plan stage

The NPPF puts the main viability test into plan-making. Under policy PM12, plans should set out the contributions expected from development, including the level and type of affordable housing. Those requirements should be set at a level that allows the planned development to be deliverable, reducing the need for viability assessment at application stage, and should be clear enough to be reflected in the price paid for land, with affordable housing requirements expressed as a single figure rather than a range (NPPF, August 2026).

Compliant schemes are assumed viable

Under policy DM5, development that accords with up-to-date plan policies on contributions should be assumed to be viable. Neither the price paid for land, nor a price agreed through an option, justifies failing to meet those policies (NPPF, policy DM5).

Planning Practice Guidance

The PPG explains how viability assessments should be carried out, including standardised inputs. It sets benchmark land value as existing use value plus a premium for the landowner, known as EUV+, and defines the premium as the minimum return at which a reasonable landowner would be willing to sell (Planning Practice Guidance: Viability). The NPPF requires every viability assessment to follow the PPG approach, including its standardised inputs, and to be made publicly available (NPPF, policy DM5).

What a site-specific viability assessment contains

A site-specific viability assessment is a development appraisal that tests a scheme at a stated level of affordable housing and other planning contributions. It typically includes:

gross development value from current comparable sales evidence and valuations of the affordable tenures;
construction costs supported by recognised cost data, such as the Building Cost Information Service (BCIS);
professional fees, planning and statutory costs, and finance costs;
a return to the developer suited to the scheme's risk;
residual land value compared with a justified benchmark land value.

Under NPPF policy DM5, the assessment must refer back to the viability evidence behind the local plan, fully evidence every input and assumption, and explain any differences from the plan's assumptions (NPPF, policy DM5). Sensitivity testing, showing how the conclusion changes with lower sales values, higher costs or a longer programme, strengthens the evidence.

Any appraisal tool can produce the figures. What matters to a reviewing authority is that inputs are evidenced, transparent and consistent with the plan's evidence. A tool that holds assumptions centrally and produces consistent outputs makes that easier: SDS states that ProVal stores the assumptions, defaults and overrides behind each appraisal in one place.

When a site-specific assessment is justified

NPPF policy DM5 allows a viability assessment to be submitted with an application where it shows the development cannot proceed on a policy-compliant basis, so that the scheme makes the maximum possible contribution to affordable housing and infrastructure. The circumstances may include (NPPF, policy DM5):

the development is materially different from any type tested in the plan's viability evidence;
the site's characteristics are materially different from those assumed;
the development carries costs the plan's evidence did not account for;
site or economic circumstances have changed significantly since the plan's evidence was prepared, which for economic circumstances means a recession or similar.

The weight given to the assessment is for the decision-maker. Planning authorities commonly commission an independent review of submitted assessments, and challenges usually focus on whether costs are overstated, values understated, the return too high or the benchmark land value inflated. Plans should also set out when review mechanisms will apply, so that contributions reduced below policy can be reassessed over the life of the development (NPPF, policy PM12).

For housing associations, the case usually turns on demonstrating a genuine viability constraint, for example that a scheme cannot proceed at the required tenure mix without changes, rather than on protecting a developer margin. The same standard of evidence applies.

Plan viability evidence

Local plans are supported by viability assessments that test the plan's policies across a range of typical development types and sites. Because the NPPF expects plan requirements to be deliverable and plan-compliant schemes to be assumed viable, a site-specific assessment has to show why the site departs from what the plan tested (NPPF, policies PM12 and DM5).

For housing associations this has two practical consequences. First, in areas with up-to-date plan viability evidence, arguing for a lower affordable housing contribution on an individual site will be harder, so the plan's evidence base should be read early, ideally before land is bought. Second, because requirements are meant to be reflected in the land price, an appraisal used to set an offer should assume full policy compliance from the start.

Viability and grant funding

Planning viability and Homes England grant answer different questions, and the rules keep them apart.

Grant cannot fund Section 106 homes. Funding under the Social and Affordable Homes Programme (SAHP) 2026 to 2036 cannot be used to acquire social and affordable homes secured through Section 106 agreements or equivalent planning conditions. Homes England does expect SAHP partners to support Section 106 delivery by buying those homes where they can (Capital Funding Guide, chapter 6).
Grant fills a funding gap, not a planning gap. For homes that are eligible, Homes England compares total costs with the applicant's maximised contributions, including loan debt, and sets grant as the minimum balancing sum, with value for money judged mainly on grant per home against benchmarks (Capital Funding Guide, chapter 6).
Tenures stand alone. In a mixed-tenure development, Homes England assesses each tenure's scheme separately, with no cross-subsidy assumed, even on the same site (Capital Funding Guide, chapter 6).

This matters on mixed sites, where a housing association may deliver Section 106 affordable homes alongside additional grant-funded homes. The planning viability case, the business case and the grant application all draw on the same costs and values, so presenting consistent figures to the planning authority, the board and Homes England matters.

Proval holds grant and subsidy assumptions within the appraisal and lets teams test how different funding scenarios affect viability, with the assumptions behind each appraisal held centrally.