A Worked Financial Viability Assessment Example (Step by Step)
Most guides explain what a financial viability assessment is. Very few actually show you the maths. This post walks through a worked example — a simple, hypothetical scheme — so you can see exactly how the numbers decide whether a development can deliver its affordable housing.
The whole assessment comes down to one comparison: the residual land value (what’s left after costs and a developer’s return) against the benchmark land value (the minimum the land is worth). If the residual clears the benchmark, the scheme is viable. If it doesn’t, something has to give. For the framework behind this, see our complete guide to financial viability assessments in planning.
All figures below are illustrative and rounded, for explanation only.
The scenario
A developer is bringing forward 20 homes on a brownfield site. The local plan seeks 35% affordable housing. The site has a modest existing use value, giving a benchmark land value (BLV) of £450,000 on an EUV+ basis.
The question the FVA answers: can the scheme deliver 35% affordable housing and leave enough value to clear the £450,000 benchmark?
Step 1 — the appraisal at 35% affordable housing
| Private sales (13 × £500,000) | 6,500,000 |
| Affordable (7 × £165,000 transfer value) | 1,155,000 |
| Gross development value (GDV) | 7,655,000 |
| Build cost (20 × 90 m² × £2,500) | (4,500,000) |
| Abnormals (contamination / demolition) | (350,000) |
| Professional fees (11% of build) | (495,000) |
| Contingency (5% of build) | (225,000) |
| CIL + non-affordable S106 | (300,000) |
| Finance | (480,000) |
| Marketing & sales (3% of private GDV) | (195,000) |
| Developer profit (17.5% of GDV) | (1,339,625) |
| Residual land value | (229,625) |
The residual is negative — well below the £450,000 benchmark. On these inputs, the scheme simply can’t carry 35% affordable housing and a viable developer return. That is exactly when an FVA is justified: the policy-compliant level can’t be delivered, and the assessment has to show by how much.
Step 2 — testing a reduced affordable-housing level
If the affordable element is the thing making the scheme unviable, the FVA tests what the site can support. Here’s the same scheme at 20% affordable housing (4 affordable, 16 private):
| Private sales (16 × £500,000) | 8,000,000 |
| Affordable (4 × £165,000 transfer value) | 660,000 |
| Gross development value (GDV) | 8,660,000 |
| Build cost | (4,500,000) |
| Abnormals | (350,000) |
| Professional fees | (495,000) |
| Contingency | (225,000) |
| CIL + non-affordable S106 | (300,000) |
| Finance | (500,000) |
| Marketing & sales (3% of private GDV) | (240,000) |
| Developer profit (17.5% of GDV) | (1,515,500) |
| Residual land value | 534,500 |
Now the residual (£534,500) exceeds the £450,000 benchmark. At 20% affordable housing the scheme is viable.
Step 3 — finding the viable point
So 35% doesn’t work and 20% does — which means the site can support an affordable percentage somewhere between the two. The FVA pins down the exact point where the residual land value equals the benchmark land value. That figure is the negotiated affordable-housing level the scheme can actually deliver.
Because viability can improve once a scheme is built out (sales values rise, costs land lower than feared), this is almost always locked behind a Section 106 review mechanism — if the scheme outperforms the appraisal, the council claws back additional affordable housing or contributions.
How to read each input
- GDV — evidenced from actual completed sales of comparable new-builds, not asking prices. Affordable homes are valued at their transfer value to a registered provider, far below open-market value — which is why a higher affordable percentage pulls GDV down.
- Build cost — benchmarked (e.g. to BCIS) and site-specific. The biggest single cost line.
- Fees, contingency, finance, marketing — standard percentages, but each has to be justified for the actual scheme.
- Developer profit — here 17.5% of GDV; the reward for taking the build and sales risk. Distinct from the landowner premium inside the BLV.
- Benchmark land value — the EUV+ figure the residual is measured against. Get this wrong and the whole result is wrong.
Important caveats
This is a deliberately simple, hypothetical example. A real FVA needs site-specific evidence for every input, a sensitivity analysis (testing how the result moves if values or costs change), and full compliance with the RICS professional standard. The headline numbers in any real case will be scrutinised line-by-line by the council’s independent reviewer — which is why how you evidence each figure matters as much as the figure itself.
If you need a defensible appraisal built for a real scheme — or an opposing FVA reviewed — see our financial viability assessment service or get in touch with our team.
Frequently asked questions
Take the gross development value (total income from the finished scheme) and subtract all development costs — build, fees, finance, contingency, planning obligations — and the developer’s profit. What’s left is the residual land value, the amount available to pay for the land.
The scheme can’t viably deliver the obligations being tested (usually affordable housing) while leaving enough value to justify buying the land. The FVA then tests what level of obligation the scheme can support.
Under the PPG’s plan-making assumption, 15–20% of GDV for market housing, with a lower figure for affordable housing. The December 2025 NPPF consultation proposed 17.5% for market housing, but that isn’t yet adopted.
Affordable homes are sold or transferred to a registered provider at a value well below open-market price, so increasing the affordable proportion reduces total GDV — which is why it’s the input most often flexed in a viability negotiation.
The council appoints an independent reviewer (often the District Valuer) who runs the same residual method and challenges each input. The numbers have to be evidenced and defensible, not just internally consistent.
Need a real scheme appraised — or an FVA reviewed?
Our RICS Registered Valuers build defensible viability appraisals — and independently review opposing ones — for schemes across London and the South East.