Securing planning permission is important. Securing planning permission for a scheme that cannot generate an adequate commercial return is not.
Yet development viability is still too often considered towards the end of the design process, after the layout has largely been fixed, consultants appointed and substantial planning costs incurred.
At Bartons Planning & Development Consultancy, we take a different approach.
Financial viability should help shape the planning strategy before the application is submitted.
By integrating development appraisal, planning policy and design at an early stage, developers can understand what the proposed scheme can genuinely afford to deliver and identify adjustments that improve both its planning prospects and commercial performance.
A Planning Permission Does Not Automatically Create a Viable Development
A development can be perfectly acceptable in planning terms and still be financially undeliverable.
Development profitability is determined by the relationship between Gross Development Value, land value, construction and infrastructure costs, planning obligations, finance and developer return.
That means every design decision potentially has a financial consequence.
Increasing affordable housing changes revenue.
Reducing private sale floorspace changes GDV.
Increasing building height may improve revenue but increase construction costs.
Basements, retaining structures, highways works, drainage infrastructure and utility diversions can fundamentally alter viability.
S106 obligations and CIL can remove significant value from a development.
The question should therefore not simply be:
"Can we obtain planning permission for this scheme?"
It should also be:
"Can this planning permission actually be developed profitably?"
Viability Should Inform the Design Process
The strongest development strategies test financial viability alongside the evolving design.
Bartons can model alternative development scenarios to understand which combination of density, unit mix, tenure and planning obligations produces the strongest deliverable scheme.
For example, we might assess:
alternative unit numbers;
different dwelling mixes;
affordable housing percentages;
affordable housing tenure;
changes in private and affordable sales values;
alternative building forms;
different infrastructure solutions;
revised parking provision;
phasing options;
S106 contribution levels; and
abnormal development costs.
This enables the project team to understand where value is being created and where it is being lost.
The result is a development proposal that has been commercially tested before it reaches planning, rather than one that requires fundamental redesign after submission.
Affordable Housing Can Fundamentally Affect Viability
Affordable housing is frequently one of the largest variables within a residential development appraisal.
The difference between open-market residential values and the consideration available for affordable housing can have a substantial effect on GDV.
That impact needs to be understood early.
Where policy requirements can be delivered while maintaining an appropriate development return, that should be reflected in the appraisal.
However, where policy-compliant provision creates a genuine viability problem, developers need to understand the scale of that issue and the evidence required to support their position.
Bartons can model different levels and tenures of affordable housing to identify the point at which the development remains commercially deliverable.
This gives developers a clear financial basis from which to make strategic decisions before submitting the application.
Developer Profit Is Not an Afterthought
Development involves considerable capital and risk.
Construction inflation, sales values, interest rates, programme delays, contractor failure and unforeseen site conditions can all change during the lifetime of a project.
An appropriate developer return therefore forms an essential part of financial viability.
The purpose of a viability assessment is not simply to demonstrate that income exceeds expenditure. It should establish whether the development generates a sufficient return relative to the risk being undertaken.
A scheme producing only a nominal surplus may technically show a profit but still be commercially unattractive to a developer or funder.
Bartons therefore tests the scheme against an appropriate developer return rather than treating profit as whatever happens to remain at the bottom of the appraisal.
Understanding S106 Before Submission
Another common mistake is leaving S106 negotiations until late in the planning process.
Planning obligations can include affordable housing, highways improvements, education, open space, public realm and other infrastructure.
Individually these costs may appear manageable. Collectively they can materially change project viability.
Early appraisal allows these obligations to be considered as part of the wider development economics.
Where there is a legitimate viability issue, identifying it before or during pre-application discussions places the developer in a much stronger position than raising it for the first time when the S106 agreement is being drafted.
The objective is not simply to reduce contributions.
The objective is to establish a level of planning obligation that enables the development to remain deliverable while appropriately addressing its planning impacts.
Using Viability to Make Better Planning Decisions
A good viability appraisal provides more than a final profit figure.
It helps answer strategic questions.
Should additional units be pursued?
Would a revised housing mix improve returns?
Is an expensive design feature generating sufficient additional value?
Can the development support the proposed affordable housing provision?
Are abnormal costs making a particular part of the site uneconomic?
Would phasing improve cash flow and finance costs?
Does the land value remain supportable?
Should the planning application be submitted now, or should the scheme be redesigned first?
These decisions can be worth considerably more than the cost of the viability work itself.
How Bartons Adds Value
Bartons approaches financial viability from a developer and planning perspective.
We understand that the objective is not simply to produce a spreadsheet. The appraisal needs to inform a strategy that can actually be implemented through the planning process.
Our work can include:
detailed development appraisals;
Gross Development Value assessment;
affordable housing viability testing;
Benchmark Land Value analysis where relevant;
construction and abnormal cost analysis;
S106 and CIL assessment;
developer return analysis;
sensitivity testing;
planning strategy;
pre-application viability advice;
preparation of Financial Viability Assessments; and
negotiation with the LPA and its viability consultant.
Where viability evidence is required within the planning process, the assessment needs to be objective, evidence-based and capable of scrutiny. Bartons combines that technical requirement with an understanding of the commercial realities facing developers.
Conclusion: Design for Deliverability, Not Simply Permission
The best time to discover that a development is unviable is before the planning application is submitted.
By then, the developer still has options.
Density can potentially change.
The housing mix can be reviewed.
Infrastructure can be reconsidered.
Affordable housing can be properly tested.
Planning obligations can be understood.
The acquisition strategy may even be revisited.
Once the design is fixed and substantial professional fees have been spent, those options become increasingly difficult and expensive.
Bartons helps developers integrate financial viability into the planning and design process, allowing schemes to be developed around realistic costs, revenues and commercial returns from the outset.
If you are preparing a planning application and want to understand what your development can genuinely afford to deliver, speak to Bartons before the scheme is fixed. Good viability advice should not simply justify a development appraisal – it should help improve it.