Viability in planning: back in the spotlight

A sequence of recent decisions have highlighted the current thinking around viability, and these are a timely reminder to practitioners of the vital importance of viability in the planning process.

Arun District Council - BEW Parcel SC1, Barnham

On 21 July 2025, Arun District Council resolved to grant planning permission for a new development comprised of 1,250 homes (and associated infrastructure) in Barnham.

The development proposed a 15% rate of affordable housing and reduced education contributions due to viability issues. The Council's Local Plan required 30% affordable housing on major sites.

The Council had a land supply position of 3.4 years. The Officer Report identified that this meant that the Council's Local Plan was out of date, and in that context the Report recommended approval.

That approval was subject to an acceptable Section 106 Agreement, and in this respect the Council relied on the inclusion of an upwards-only review mechanism. This review mechanism ensured that the affordable housing position was reviewed on an ongoing basis, and to the extent that the viability position changed going forward, the developer would be required to make an increased contribution to affordable housing.

The practical reality is that local planning authorities are increasingly leaning on viability review mechanisms in Section 106 Agreements to address the shortfalls in affordable housing provision in major schemes. Historically this type of drafting has normally been limited to large-scale development in London (and the Mayor of London's Affordable Housing and Viability SPG sets out the policy expectations in this respect). 

However we are increasingly seeing drafting of this type proposed for schemes of all shapes and sizes across the country, as a method of squaring the circle for authorities who are driven to deliver homes, but who also wish to secure the best possible affordable housing outcomes for local residents.

London Borough of Islington - APP/V5570/W/24/3354825

On 15 July 2025, Inspector Andrew Parkin dismissed an application on appeal for a part-residential part-office mixed use scheme of redevelopment following a debate about viability in the course of the appeal.

The original planning permission included a financial contribution towards affordable housing of £450,000; the developers then applied to vary the approved plans and documents to include a financial viability assessment, and they also sought to vary the Section 106 Agreement accordingly.

The Inspector ultimately was not persuaded that there had been significant macro-economic changes since the original planning consent and the policy context that consent was granted in.

Ultimately the parties disagreed fundamentally about the likely build costs associated with the scheme. Very limited information on similar schemes was provided to the Inspector, and he concluded that the appellant's approach was not transparent. The appellant had provided comparables, but it was not clear how similar they were to the appeal scheme in practice, and vital contextual information on tender pricing was missing.

In light of the information provided, the Inspector concluded that “there is no compelling evidence that there would be abnormal costs beyond what could reasonably be anticipated”. Very limited weight was attached to the viability assessment, the Inspector was not satisfied that the scheme was not viable with a policy-compliant affordable housing contribution, and he concluded accordingly that there was a policy conflict.

This case is an important reminder of the need to be very specific and forensic in the process of viability assessment; Inspectors will explore gaps in logic and both the underlying basis and validity of the conclusions reached in any assessment. All parties should assume that Inspectors can and will interrogate the information before them in detail and with rigour.

London Borough of Tower Hamlets - APP/E5900/W/24/3356375

This theme is borne out in other recent appeal decisions in a similar vein. 

At the Cuba Street Site in Tower Hamlets, in a decision dated 29 May 2025, Inspector Matthew Jones followed a sequence of recent Inspector's decisions considering the detail of how growth and cost forecasting should be properly embedded into affordable housing viability assessment.

The developer proposed reducing the affordable housing provision for this high-density residential-led development from 30.15% to 16.6%, but the local planning authority and developer did not agree on the methodology of assessing viability. The dispute centred around what data to use; whether the best available evidence was existing data, or more favorable forecasts of growth reaching into the future. 

The Inspector concluded that the local planning authority's approach of baking-in favorable growth forecasts at the outset, and capturing those up-front supported by a “one-way” viability uplift mechanism “would sit awkwardly” with the policy context, which emphasises the need for realism (but not at the cost of deliverability). Accordingly the Inspector concluded that the proposed reduction in affordable housing provision was policy-compliant.

The local planning authority had a very practical objective underlying their approach, which was that they had an unfavourable view of late-stage review mechanisms providing a late-stage course correction during the life of a development, and they were less interested in receiving commuted sums through this trajectory than receiving actual affordable homes. The Inspector understood and appeared to have some sympathy with this perspective, but nevertheless looking at matters through the lens of policy, he was not prepared to support baking in more favourable forecasts in lieu of using existing data as the best available evidence.

This case emphasises that the forensic assessments carried out by Inspectors of late cut both ways. The similarity between this and the previous appeal decision comes from the Inspector's detailed assessment and particular focus on matters of viability, but the difference is in whose argument was ultimately successful. The takeaway is that the approaches adopted by local authorities to assessing viability and securing viability uplift will also come under detailed, forensic and objective scrutiny against the requirements of policy and guidance.

Conclusion

Viability remains a fast-evolving field of practice, and is still a primary battleground at appeal for developers who want to deliver commercially viable housing and authorities looking to secure the best possible outcome for their communities. Accordingly there is a greater need than ever for both appellants and authorities to consider their approaches to viability in depth, in detail and holistically. All parties should leave no stone unturned in the exploration of viability, in anticipation of Inspectors doing the same.

If you have any queries on viability, please contact me or Gary Soloman, Partner, in our Planning and Compulsory Purchase team.