A major theme in these proposed reforms concerns how the financial viability of developments is treated in the planning process; particularly how viability assessments are used to justify a flexible approach to developer contributions such as affordable housing and infrastructure.
Why Viability Matters
In planning practice, viability assessments are technical evaluations used by developers to determine whether a proposed project is financially feasible. They do this by comparing total projected revenues (Gross Development Value) against all development costs, including land, construction, abnormal costs, infrastructure, finance, planning contributions (such as affordable housing) and profit.
Viability assessments are often undertaken at application stage to negotiate the ‘maximum viable’ level of contributions in order to enable development to come forward.
Viability assessments are therefore an important tool, enabling planning policy to operate flexibly by recognising variations in site- and scheme-specific circumstances across the market.
The 2025 NPPF reforms focus on tightening and clarifying when and how viability assessments can be used.
Key Changes in the 2025 NPPF Consultation Draft
1. Presumption of Viability for Policy-Compliant Proposals
One of the most significant proposals is that development proposals should be assumed viable if they align with up-to-date local plan policies and national decision-making policies. In other words, if a development is consistent with what is set out in the Local Plan, it should be treated as viable unless exceptional evidence demonstrates otherwise.
This represents a shift away from routine viability negotiations at the decision-making stage, with the Government taking the view that viability should already have been tested through plan-making, where developers and councils are expected to set realistic expectations.
2. Use of Viability Assessments in Limited Circumstances
The draft NPPF proposes that site-specific viability assessments should be limited to the following circumstances:
- Where the proposed development is significantly different from the Local Plan typology
- Where there is a substantial difference in site characteristics
- Where unforeseeable costs need to be incurred
- Where there has been a significant change in economic circumstances since the Local Plan was adopted
Whereas the 2024 NPPF prohibited the use of viability assessments on grey belt sites under the ‘Golden Rules’, the 2025 consultation draft indicates that site-specific viability assessments may now be justified in certain circumstances, for example:
- Where sites comprise previously developed land
- Where the development is multi-phased or located on a strategic site
- Where the development type differs fundamentally from the assumptions used in the viability assessment that informed the Local Plan
This proposed change creates a clearer opportunity for developers to use viability assessments on grey belt land, provided the above criteria are met.
3. Stricter Requirements for Submitted Viability Assessments
Where a viability assessment is submitted with a planning application, the draft NPPF proposes a higher level of transparency and standardisation:
- Assessments must be publicly available and not treated as confidential
- All inputs and assumptions must be fully evidenced, including sales values, costs, profit margins and land value
- Any differences from assumptions used in the Local Plan evidence base must be clearly explained and justified
These requirements are intended to streamline the process and bring greater consistency to viability assessments.
4. Restrictions on Using Land Purchase Price
The proposals specifically state that land purchase price or option agreement price should not be used to justify non-compliance with planning policy.
While this is not entirely new—Planning Practice Guidance (PPG) already restricts reliance on purchase price—it represents a tightening of requirements by explicitly extending this restriction to option agreement prices.
5. Standardised Inputs
The revised NPPF and associated documentation include proposals to incorporate standardised inputs into viability assessments, such as agreed benchmark assumptions for costs, profit and other variables. This could reduce the scope for debate at application stage.
Although subject to consultation outcomes, this reflects a move toward greater consistency and transparency. However, over-standardisation risks reducing the effectiveness of viability assessments on inherently complex sites and schemes, which often feature unique constraints. Sufficient flexibility must therefore be retained for viability assessments to function effectively.
6. Review Mechanisms
While not mandatory, the revised NPPF encourages the use of viability review mechanisms to capture unexpected returns and redirect them towards additional affordable housing provision.
This approach is already established in London and is likely to be used more widely elsewhere. While the policy intention is clear, such mechanisms are often unpopular with developers due to the uncertainty they introduce and the additional risk they can create. By capping potential returns, review mechanisms can also complicate funding arrangements.
7. A Shift to the Plan-Making Stage
Under the reforms, viability testing is increasingly expected to occur at the plan-making stage rather than at application stage. Local Plans should set clear, fixed expectations for developer contributions, supported by up-to-date viability evidence, so that compliant applications do not need to revisit viability negotiations.
This aligns with the Government’s objective to reduce protracted negotiations by addressing viability earlier in the system, where there is greater transparency and strategic oversight. Given the variation in development sites, typologies and land markets nationwide, it remains to be seen whether this approach will materially speed up the planning process.
Potential Implications
For Local Authorities
Local Plans will need to be underpinned by robust and up-to-date viability evidence, as the emphasis on viability continues to shift decisively toward the plan-making stage. This evidence must be comprehensive, realistic and capable of reflecting the development typologies that are actually likely to come forward in each area. As markets evolve, this is likely to require a broader range of typologies to be tested, including ‘living’ sector uses such as Build to Rent, Co-Living, Purpose-Built Student Accommodation and Retirement Living. Plans will also need to set clear and transparent expectations for affordable housing and other planning obligations, reducing the scope for site-by-site negotiation at application stage.
For Developers
Developers may find that there is significantly reduced scope to renegotiate planning contributions at application stage, with viability assessments only likely to carry weight where exceptional circumstances can be clearly demonstrated, such as where proposals depart materially from Local Plan typologies. As a result, there will be a much greater emphasis on early engagement with Local Plans and the viability evidence that underpins them, with developers needing to address viability risk at the outset of a project rather than relying on arguments later in the process.
Conclusion: A Shift Toward Certainty and Plan-Led Decisions?
The 2025 proposed revisions to the NPPF present a notable shift in the way financial viability is treated in the English planning system. Fundamentally, where a Local Plan is not ‘up to date’ with regard to development contributions, there would appear to be much greater scope to allow for the use of site-specific viability assessments.
However, where Local Plans and the viability evidence underpinning them are ‘up to date’, there is likely to be less scope to use site-specific viability assessments.
As this article has explored, the Government’s intentions are to fundamentally speed up the planning system to deliver housing, economic growth and improve transparency. As ever, it is important that a balance is struck between simplification and flexibility.
Significant updates to the Government’s PPG are also proposed in 2026. Stakeholders should watch closely for this updated guidance, which will set out more clearly how these principles will work in practice.
