What the NPPF means for residential development viability

The new National Planning Policy Framework (NPPF) brings some important changes for the development viability process – in particular where and when viability is likely to be tested.

Viability assessments are used to establish whether a development is financially viable, by looking at the value and costs of a proposal, which includes establishing the maximum reasonable proportion of affordable housing alongside wider planning policy requirements.

At a glance

• There is greater emphasis on resolving viability at plan-making stage, but the final framework also gives clearer recognition to circumstances where site-specific viability remains part of the planning process.
• Site-specific viability remains available where a scheme or site differs materially from the assumptions underpinning the development plan, unforeseen costs arise, or site or economic circumstances have changed significantly.
• Strategic sites require particular attention. Upfront infrastructure expenditure, phasing and finance can have a substantial effect on residual land value and cannot always be adequately reflected through generic typology testing.
• The Green Belt Golden Rules now provide a specific route for viability assessment in defined circumstances, including strategic sites and certain previously developed land.
• Plan-making viability becomes more important. Developers and landowners should engage earlier, while LPAs will need robust evidence if greater reliance is to be placed on policy requirements at application stage.

Site-specific viability remains relevant

Within NPPF 2026, the Government continues to favour resolving viability at plan-making stage, providing greater certainty over affordable housing and other developer contributions.

The starting point remains that Local Plans should establish viable policy requirements and that development complying with an up-to-date plan should ordinarily be capable of delivering those requirements.

For developers and landowners, this means considering viability earlier, particularly where sites have significant infrastructure requirements, abnormal costs or long delivery programmes.

For local planning authorities, greater reliance on plan-stage viability places greater importance on ensuring that the evidence underpinning policy is realistic and supports delivery.

However, Local Plan viability assessments necessarily rely on assumptions and representative development typologies. They cannot anticipate every abnormal cost, infrastructure requirement, funding arrangement or subsequent change in market conditions.

The new NPPF therefore recognises circumstances where site-specific viability evidence may be appropriate. These include schemes which differ materially from the development tested at plan stage, unforeseen costs and significant changes in site or economic circumstances.

Green Belt and the Golden Rules

The new NPPF also makes an important change for development subject to the Green Belt Golden Rules, relating to affordable housing, infrastructure improvements and green space enhancements.

A site-specific viability assessment may now be submitted where full compliance cannot be achieved in defined circumstances. These include previously developed land where relevant costs were not accounted for at plan-making stage, strategic sites, and development which is materially different from the type tested in the viability evidence supporting the development plan.

For strategic land promoters, this is a significant change.

Major sites can require substantial expenditure on roads, utilities, schools, drainage and other infrastructure well before sufficient development receipts are generated. The timing of those costs, and the finance required to fund them, can have as much impact on viability as their headline value.

This does not provide a general means of reducing the Golden Rules requirements.

Where site-specific viability is justified, the development will still be expected to make the maximum possible contribution towards affordable housing and infrastructure. Any significant reduction will require robust evidence and justification.

There is also a clear land value implication. A Green Belt site may represent a substantial planning opportunity, but that does not automatically translate into traditional expectations of residential land value once affordable housing, infrastructure and other policy requirements are taken into account.

Early viability testing will therefore be critical before land value expectations and commercial terms become fixed.

Strategic development and infrastructure

The treatment of strategic development also warrants particular attention.

Generic typology appraisals can struggle to reflect schemes where major infrastructure expenditure occurs early and development receipts are generated over many years.

The timing of expenditure matters. Bringing forward a major road, school or utility connection several years before the corresponding development receipts can create a substantial funding and finance requirement, materially affecting residual land value and overall deliverability.

Developers and promoters should therefore ensure that strategic sites are tested using realistic cashflows, infrastructure triggers and delivery programmes during the plan-making process.

Where an allocation is expected to fund significant infrastructure alongside affordable housing and other policy requirements, LPAs should similarly consider the cumulative effect of those obligations rather than testing individual requirements in isolation.

Land value and deliverability

The greater emphasis on plan-stage viability brings land value assumptions into sharper focus.

The established principle remains that the price paid for land cannot itself justify a failure to meet planning policy. Equally, development must generate sufficient value to provide an appropriate return to the landowner and developer if sites are to come forward.

A positive residual value does not, on its own, demonstrate that a policy position is deliverable. The residual must be sufficient to bring the land forward and provide an appropriate return for the developer, having regard to the circumstances of the development.

This becomes particularly relevant for strategic sites and locations where substantial new infrastructure is required.

Public funding and intervention

Public funding can materially change the viability position of difficult sites, particularly regeneration, brownfield and infrastructure-heavy development.

Grant funding or other public sector intervention may help bridge a viability gap that could not otherwise be addressed through the development itself. Where this occurs, the appraisal needs to consider the funding alongside affordable housing, infrastructure and the wider package of planning obligations.

The amount, timing and conditions attached to public funding will often be specific to the individual development and may not have been known when the Local Plan viability evidence was prepared. Site-specific appraisal and negotiation will therefore continue to have a role in establishing an appropriate and deliverable package.

What does this mean in practice?

For developers, promoters and landowners, viability should form part of the planning and land strategy before key commercial assumptions become fixed.

Sites with significant abnormal costs, infrastructure requirements or unusual delivery characteristics should be tested early. Where appropriate, these issues should also be raised through the Local Plan process rather than left until an application is submitted.

This is particularly relevant for strategic Green Belt opportunities, where the Golden Rules, infrastructure requirements and landowner expectations need to be considered together.

For local planning authorities, greater reliance on plan-making viability places a corresponding burden on the quality of the evidence.

Development typologies, infrastructure requirements, benchmark land values, delivery programmes and market assumptions should reflect development that can realistically come forward.

Sensitivity testing will also be important. Development plans have a long life and the market conditions prevailing when viability evidence is prepared are unlikely to remain unchanged throughout that period.

Our view is that the new NPPF places greater emphasis on viability at plan-making stage without removing the need for site-specific assessment.

In short, viability has not disappeared from the development process. More of the discussion has simply moved upstream.

Strutt & Parker advises developers, landowners, promoters and local planning authorities on development viability across England. Our viability specialists work alongside our development, planning and valuation teams, providing advice on site-specific and strategic development viability, affordable housing, developer contributions and land value. For further information, please contact a member of the Strutt & Parker Development Viability team- Steve Pozerskis (Head of Viability), Tim Mitford-Slade (Head of South Valuations) or David Couch (Head of North Valuations).

For a wider look at the implications of the NPPF from Katie Lamb, Head of Planning, read: The 2026 NPPF – first impressions