5 Key Factors That Influence a Financial Viability Assessment

If you’ve ever wondered what makes a development proposal genuinely stack up under planning scrutiny, you’ve probably got one eye on the numbers. Developers, landowners and planners all know there’s a price to pay and a test to pass before a scheme can move forward with full obligations attached.

That’s where a financial viability assessment comes in. It’s a tool local authorities use to see whether a development can afford the expected contributions and still remain deliverable. Done well, it clears up uncertainty. Done poorly, it can hold up a scheme for months.

Below we’ll talk through the main factors that tend to have the biggest influence on these assessments and why they matter in the real world.

What Is a Financial Viability Assessment?

A financial viability assessment, sometimes shortened to FVA, looks at whether a development can pay for what’s expected of it, things like affordable housing, infrastructure contributions, or other planning obligations, without making the whole project unworkable.

Planners ask for them because policies are quite clear on what developments should deliver. But policy also recognises that not every site or scheme can bear every cost without risking delivery. The assessment is the evidence that shows where that balance sits.

In simple terms, you lay out costs, values and obligations in a recognised format and see what’s left over. If it’s less than a reasonable profit margin, you’ve got a case to discuss. If it isn’t, then the authority might reasonably insist the scheme fulfils full policy requirements.

That’s general, yes, but practitioners know the devil is in the detail.

1. Land Value and Acquisition Costs

The first big number in any viability review is land value.

Not just what you paid for it, but what it should be worth in its existing use and what a “willing buyer, willing seller” scenario suggests under current market conditions. There’s a benchmark land value that varies from place to place and that figure sets the baseline for the whole assessment.

A developer who pays too much out of optimism can find themselves on the back foot right from the start. Local authorities don’t typically adjust their expectations just because a particular bidder paid a certain price. What matters is whether that price was fair when set against market evidence.

For example, land bought at auction on a whim often causes problems in the viability model. It might look fine to the buyer, but when you sit down with a surveyor and planner to explore contributions, there’s very little room left after that high land cost.

Acquisition costs also include fees, legal, agent, stamp duty and so on. They might not be the biggest chunk of the budget, but in tight schemes they can tip the balance and a proper assessment needs to include them.

2. Construction and Development Costs

Next up are the costs of actually building the thing.

This isn’t just the line item contractors give you for brickwork and roofing. It covers professional fees, groundworks, services connections, preliminaries, contingencies and allowances for things that often crop up once you start digging.

A good viability report doesn’t gloss over these figures or grab a headline rate off an industry table. It tries to capture what is likely to happen on the specific site you’re working on.

Take a site with poor access or unstable ground. On paper it looks like an easy housing scheme, but once you start surveying the sub‑soil, you realise there’s a need for deeper foundations or extra drainage which pushes the cost up. If these site constraints aren’t factored in, the assessment will paint an overly optimistic picture.

And when build costs inflate, as they have at various points over recent years, even schemes that looked viable at one point can fall out of balance if assumptions aren’t refreshed.

That’s why the construction cost line in any viability assessment needs to be transparent, justified and backed by up‑to‑date evidence.

3. Gross Development Value

Gross development value, or GDV, is next. It represents the total expected income from selling or renting the completed development.

GDV is influenced heavily by location, current market conditions and how attractive buyers or tenants find the finished product. A few years ago, a certain type of flat might have been highly sought after, but markets change, sometimes quite fast.

Say a developer is planning a mixed‑use scheme with both residential and retail units. If the retail market softens and demand drops, the income from that part of the scheme might not be as strong as originally projected. That impacts overall viability.

The key is that GDV should reflect what’s realistic right now, not what you’d hope for in a perfect world. Too often assessments fall into the trap of using aspirational figures rather than evidence‑backed ones and that’s an easy point for planners to challenge.

It’s one thing to be optimistic, but when you’re presenting an assessment that’s meant to justify relaxed obligations, you need to be conservative and credible.

4. Planning Obligations and Section 106 Contributions

This is often where the rubber meets the road in negotiating a viability case.

Section 106 obligations might include affordable housing, contributions to schools and healthcare, improvements to greenspace or transport infrastructure and in some places, there’s also a Community Infrastructure Levy to pay. Those costs are real and they can be significant.

When a policy says a development should include X percent affordable homes, but the numbers don’t allow it without killing the profit, that’s when an FVA is submitted. The assessment shows why full compliance at policy levels isn’t workable for that scheme.

It’s important to remember that just saying “we can’t afford it” isn’t enough. The assessment has to show, with real figures and sensible assumptions, how each contribution affects residual value and why the balance is tipped.

For example, a site that’s viable with 20% affordable homes might not be with 40%. The assessment needs to show that shift and planners will look closely at those figures and how they’ve been justified.

5. Profit Margin Expectations

Profit isn’t a dirty word here, it’s part of what makes developments happen.

Developers take risks. They tie up capital, borrow money, deal with market shifts and face delays. That’s why viability assessments include an allowance for profit. In most private schemes, a margin somewhere between 15 and 20 percent of GDV is a reasonable expectation.

If a scheme only offers a 10 percent return, most funders and developers see that as too thin, there’s little buffer for risk. That can make a viability case look shaky because it suggests the project might struggle to get off the ground.

At the same time, assuming too high a profit margin just to make an obligation look tougher to meet won’t fly either. Those assumptions get tested. Councils and independent reviewers have a sense of what’s realistic in the local market and they’ll push back if the margin assumption isn’t supported by evidence.

Profit isn’t just about greed, it’s about recognising that development carries inherent uncertainty.

Why Transparency Makes a Difference

One common issue with many viability assessments is that they gloss over assumptions. Figures are presented, but the reasoning behind them isn’t always clear.

Local planning authorities expect transparency. They know these models can be manipulated, knowingly or not and they’ll question anything that looks out of step with market norms. That’s why every input in a financial viability assessment needs to be explained, justified and defensible.

Working with an experienced surveyor means you’re not just putting numbers in a model. You’re explaining them in a way that makes sense to planners, councillors and even third party reviewers who might look at the case later.

A credible, well‑explained assessment spends less time arguing over basics and more time focusing on realistic solutions.

How Blackacre Surveyors Support Your Viability Case

At Blackacre Surveyors, viability assessments are built on real evidence and practical insight. We tailor each report to the specifics of the site, the market and the planning context.

That means not just plugging numbers into a template, but talking to you about uncertainties, negotiating strategies and how to present your case clearly, whether it’s for a typical planning application or a more complex appeal.

We also provide expert witness support when needed. If a viability case goes to public examination or committee debate, having a clear, confident voice explaining your assumptions can make all the difference.

Our goal is to help you deliver successful projects without unnecessary delay or uncertainty.

Moving Forward With A Viability Assessment

A viability assessment of your finances is a practical tool; it’s about reality, not wishful thinking. From land value to profit margins, each piece of the puzzle affects the overall picture.

Getting it right helps your planning dialogue feel grounded and credible. If you’re preparing an assessment and want clear, expert support, Blackacre Surveyors is here to help.