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What is a Financial Viability Assessment? 

A Financial Viability Assessment is the process of assessing whether a site is financially viable, by looking at whether the value generated by a development is more than the cost of developing it.  

 

Paragraph 59 of the National Planning Policy Framework (NPPF) states that it is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage. This can include: 

 

  • Unallocated sites of a wholly different type to those used in the viability assessment that informed a local authorities Local Plan. 
  • Where specific infrastructure or site costs is required. 
  • For particular types of development which vary from the standard model of developments for sale (i.e. built to rent or housing for older people); or 
  • Where recession or significant economic changes have occurred since the plan was brough into force. 

An assessment will look at the key elements of a development, including gross development value, development costs, land value, and developer’s return. 

 

How can DHA’s viability team support your development? 

With over 40 years of collective experience in planning and development, the team are well regarded in providing expert advice on affordable housing, Section 106 obligations and CIL, in order to enhance development sites for landowners and developers. 

 

In 2024, the team successfully provided viability advice on over 2,500 residential units and commercial floorspace, across 20 local planning authorities in London and the Southeast. 

 

Our key services include: 

 

  • Feasibility studies and option appraisals – initial viability testing to establish the most viable options for a site. 
  • Financial Viability Assessments to support planning applications and pre-application discussions. 
  • Affordable Housing Viability Testing including advising on the viability of planning policy, on and off-site delivery and financial contributions in-lieu of on-site provision. 
  • Advice and preparation of Early and Late-Stage Review Mechanisms. 
  • Providing expert advice at planning appeals. 
  • Advising on CIL, planning obligations and Vacant Building Credits 
  • Enabling development and heritage schemes 
  • Section 106 negotiation – working with solicitors to advise on planning obligations, affordable housing provision and review mechanisms. 

Working closely with our Development Viability team, DHA’s Land team can also provide advice on the disposal of affordable housing.  

 

Please contact our head of Development Viability, Danielle Lawrence for more information on where the team can assist with your development. 

Case Studies 

  • Medway– The site had an extant permission for 50 apartments with a policy compliant level of affordable housing. DHA prepared a viability assessment for a revised submission for 61-units to demonstrate (1) that the revised scheme was more viable and (2) that the scheme was unable to provide any affordable housing, and a reduced level S106 contributions 
  • Southwark - As part of a conversion of a private school to provide 4 x residential apartments, policy required 35% of the units to be delivered as affordable in the form of a financial contribution. We were successfully able to demonstrate that the scheme was unable to support any financial contributions.  
  • Tonbridge & Malling – As a result of identified remediation costs, we were instructed to produce viability evidence to demonstrate a reduction in planning obligations on a 9-unit scheme. This included providing evidence at appeal, which the Inspector supported. 
  • Tower Hamlets – As part of an application for the redevelopment of a petrol station to 20 residential units, we prepared a Financial Viability Assessment which confirmed that as a result of remediation costs associated with the development, the scheme would be unable to provide any affordable housing or S106 contributions. 
  • Bromley - The Council accepted our position that a scheme for demolition of an existing building/redevelopment of the site to provide 14 dwellings and one commercial unit, would be unable to provide any affordable housing or S106 contributions.  
  • Ashford – DHA prepared a financial viability assessment to confirm that a mixed-use scheme for 250 dwellings and commercial floorspace could not provide the financial contributions being sought by the Council.  
  • Sevenoaks – Provided viability advice to a Registered Provider to reduce planning obligations on a scheme for 22 affordable homes.  
  • Wealden – Our client had part implemented a scheme for 78-units but was unable to progress as they could not find an Affordable Housing provider to take on the affordable units. We prepared a Viability Assessment which demonstrated that due to infrastructure associated with the development, the scheme would be unable to provide any affordable housing. The S106 Agreement was subsequently varied and the developer able to progress the development. 
  • Lewisham – DHA provided detailed viability advice for a scheme in Lewisham for the demolition of 2 existing dwellings and construction of 20 apartments. 
  • Maidstone – In support of a planning application for the conversion of two listed barns, DHA prepared a viability assessment which demonstrated that the proposed use was the most suitable option for the heritage assets. 
  • Crawley - We were able to demonstrate that an extra care scheme would be unable to provide any affordable housing (policy requirement 40%) or S106 contributions. 
  • Sevenoaks – As part of the redevelopment of a builder’s merchant and construction of 13 dwellings, we prepared a viability assessment in relation to the affordable housing 
  • Rother – In support of a Deed of Variation, the team produced a Financial Viability Assessment to remove affordable homes from a 20-unit scheme. 
  • Swale – DHA prepared an Assessment to demonstrate that the proposed development for a conversion of an agricultural barn to residential was the most viable option for the site. 
  • Wealden – Through the application of Vacant Building Credits and negotiation with the Council, we were able to argue a reduction in the affordable housing contribution of a 14-unit scheme. 
  • Thanet – As part of an application for the conversion and extension of 3 buildings within a Conservation Area to provide 41 units, we provided an assessment which successfully demonstrated the need for a reduction in affordable housing.  
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