The last of those, viability assessment, has so far not attracted much attention – perhaps unsurprising given the complex combination of changes to draft viability policy in the NPPF, operational changes to advice in Planning Practice Guidance (PPG), and new questions in relation to further changes to viability policy.

This post aims to lay out what has changed and to pose some questions as to what it might mean for practitioners in the months and years ahead. As ever, there is plenty to unpack and summarise.

Key changes

1. Local plan viability assessments – increased weight (plus a clearer assumption) that, after adoption, all local plan policies and planning gain requirements – underpinned by a ‘typology’ approach to viability assessment – must be viewed as realistic and deliverable.
2. Realisable risk – developers cannot now cite ‘realisable risk’ as a justification for arguing that a scheme has become unviable, either at all or against policy.
3. Review mechanisms – cannot be used as a tool to protect developer returns at the expense of policy compliance.
4. Standardised inputs – explicitly recommended as the government’s preferred approach to viability assessment. Views requested on how they should be set.
5. Grey belt sites – the blanket restriction on viability assessment is now removed, provided the scheme is either brownfield, multi-phase, or of a different type than assumed at the local plan examination.
6. Growth assumptions – Annex B of the consultation document makes reference to growth assumptions being factored into viability assessment, both to cost and revenue, but provides no guidance on how.

What are the key questions for landowners and developers?

The proposed changes, plus the consultation questions, highlight matters which require further consideration by practitioners. Namely:

1. Realisable risk – how will realisable risk be defined? Does it include abnormals, or unforeseeable market collapse? What are the ‘normal’ foreseeable risks which can be covered by the viability assessment and what are the completely unforeseen risks which cannot?
2. Overheads and abortives – how will the new standardised inputs incorporate overhead costs and failed bids? Every successful land bid appraisal also has to fund the abortive costs for failed bids as well as divisional and head office overheads. How will they be quantified in the new approach to standardised inputs?
3. Scheme variations – how will the typology approach to standardised inputs address the scheme-by-scheme variations in sales/marketing costs, abnormals, remediation requirements, professional fee levels, contingency requirements, infrastructure and section106 costs – at both local plan and planning application stage? How will the local plan viability assessment address the wide variations in s.106 costs, transport and utility requirements? Will additional scrutiny be required? Will this slow or speed up local plan preparation?
4. Benchmark land value – defining benchmark land value remains a bedrock of the new approach. As do the principles of public transparency and setting aside price-paid. However, the government’s consultation makes it clear that they are looking hard at the possibility of lowering benchmark land values via a lowering of the landowner premium. Is this feasible without disincentivising landowners in large parts of the country?
5. Developer margins – the consultation document highlights that the government is considering whether developer premiums should be specified at 17.5% of GDV and affordable housing then separated out at a 6% margin. How will this be viewed by SME housebuilders struggling to stay in business given soaring build costs, flat sales revenues and an absence of housing associations willing to purchase s.106 affordable plots?
6. Consistency – while paragraph 010 of the PPG makes it clear that the realisation of risk does not necessitate further viability assessment, the draft NPPF at paragraph DM5/2/b advises that viability assessment is justified when economic circumstances have changed. Would some clarification text be helpful to iron-out perceptions of inconsistency?

Summary

A primary purpose of the NPPF, specifically stated on page 30 of the draft NPPF, is to “support the delivery of a substantial increase in the supply of new homes”, building on the clear statement from 12 September 2025 whereby the Secretary of State, The Rt Hon Steve Reed MP, committed to leaving ‘no stone unturned’ in the quest to build 1.5 million homes.

But could the lack of a definition as to what comprises realisable risk actually create a new brake on already weak levels of housing delivery, by reducing the opportunities for developers to revisit planning consents, test scheme viability against policy, and unlock stalled sites? 

Similarly, do we need more clarity on the market evidence underpinning the discussion in the consultation document about reducing developer margins and benchmark land values?

On developer margins, there are now 85% fewer SMEs than a generation ago, according to the Home Builders Federation (HBF), and they deliver 10% of new homes compared to 40% historically. Does this evidence point to an excessively lucrative sector where profit margins need to be curtailed?

Turning to land values, they have historically tramlined house prices. However, since the current approach to viability was introduced in 2019, that parallel relationship has been severed. House prices have risen by c.18-20%, compared to flat land price inflation over the same period – clear evidence of more land value being captured. Therefore, the key question is whether the planning system can realistically extract any more land value.

It is estimated that between 2011 and 2018, approximately £12-25bn of land value was captured, at c.£10-20k per dwelling. This compares to c.£40-65bn captured between 2019 and 2025, at c.£30-45k per dwelling. Is this the right time for further challenges and demands on land value capture, given the ongoing falls in completions, starts and planning permissions?

One thing is clear – it is critically important that landowners, land promoters, and housebuilders make effective joined-up responses to the NPPF which are grounded in reality and support the acceleration of housing delivery which the NPPF aspires to.

Further information

Contact Philip Barnes and Mark Breen