What is a Financial Viability Assessment (FVA)

A FVA is a supporting document for a planning application that provides a result and commentary for the level of planning obligation that a development scheme is able to reasonably support.

It is taken into consideration by the local planning authority to determine the amount of affordable housing contribution proposed for a development. The process is fundamentally done by using a Residual Land Value (RLV) methodology. In summary, this approach subtracts the associated costs with a development from the projected value of the scheme to arrive at the land value.

The RLV is then compared to the Benchmark Land Value (BLV) to determine whether a development scheme is ’financially viable’ or not.

When is a FVA needed?

Reflecting upon the given local authority’s planning policy and requirements, the applicant may need to provide a certain level of affordable housing.

The FVA will then be used to determine whether the applicant is able to provide the full amount of affordable housing requirement or not.

The FVA can also be used by the developer at pre-application stage to obtain an understanding of the proposed scheme’s finances. This in turn will provide insight into the most effective design to maximise profitability