Affordable housing obligations are the single largest policy cost in most development appraisals and, increasingly, they are the reason otherwise viable schemes stall. Planning viability is the financial test of whether a development can meet its costs whilst providing appropriate returns for the landowner and developer. More often, it is affordable housing delivery that tips the balance.
Across the South East region, a significant proportion of consented schemes are sitting stalled, not because developers lack appetite, but because the numbers no longer work and Registered Providers are increasingly declining affordable units on many schemes, citing grant constraints or insufficient scale. Schemes that were viable at consent stage now show a substantial negative residual land value, and the planning system has no effective mechanism for dealing with viability that collapses after planning permission is granted.
The Cost-Value Gap: Why the Numbers No Longer Work
The central problem is the widening gap between development costs and sales values. Construction costs have risen by approximately 40 per cent since many current planning permissions were granted, whilst house prices have risen by only 13 to 16 per cent. With base rates moving from near zero to 3.75 per cent, finance costs are rising steeply whilst values barely move. On larger brownfield sites, deficits can approach several million pounds.
Compounding this are regulatory costs that have been introduced or increased since consent was secured. These include the Building Safety Levy, net zero requirements, enhanced accessibility standards and biodiversity net gain. CIL rates have also risen by around 50 per cent through indexation alone.
What follows is a practical framework in two parts: first, for developers with an existing consent where viability has collapsed; and second, for those bringing schemes forward who want to avoid being in that position.
If You Are Already Consented: Routes, Evidence and Pitfalls
The largest controllable cost element in most stalled schemes is the planning obligation package, where the most meaningful savings can be found. For developers with a stalled consent, there are limited but important routes for varying section 106 obligations. A deed of variation is typically the preferred starting point; a section 106A application becomes available after five years; and where a planning condition controls affordable housing, a section 73 application may offer a further route.
Each has different timescales and evidential thresholds, and choosing the wrong one can cost months. A point often missed: affordable housing can be partly controlled by a planning condition, even where it appears only in a tenure column on a plan within an approved schedule. Recent case law confirms that, in those circumstances, a section 73 application can be used to vary the requirement. It is a route that is frequently overlooked.
Negotiations rarely succeed first time, and developers who fare best tend to have identified a fallback route before discussions begin.
Framing matters: the argument that carries weight with local planning authorities is one about housing delivery, ‘without this modification, no homes will be delivered’, rather than assertions about unacceptable margins. Pragmatic concessions also help, for example, review mechanisms, alternative tenures such as Discount Market Sales, or commuted sums where on-site delivery is impractical.
A recurring pattern in unsuccessful applications is evidence framed from the developer’s perspective rather than what the site can objectively support. Following an appeal decision at Chilmington Green (January 2026), discharging obligations on viability grounds alone is extremely difficult. The stronger argument is modification: the obligation still serves a purpose, but a revised version would achieve the same objective in deliverable form.
Bringing Schemes Forward: How to Avoid Being in This Position
For developers yet to secure consent, the pattern emerging from successful schemes is consistent: viability is treated as a strategic discipline from the outset, not a last resort. Professional teams, viability consultants and specialist planning lawyers are instructed at scheme design stage rather than after problems emerge, cost evidence is site-specific rather than drawn from generic indices, and early engagement with Registered Providers is documented throughout.
Commuted sums deserve particular scrutiny. Formulaic approaches routinely produce disproportionate figures and, in our experience, a residual land value methodology that compares policy-compliant and open-market schemes can halve the sum demanded.
Looking Ahead: The Narrowing Window
These practical disciplines matter all the more because the policy landscape is shifting. The 2025 draft NPPF introduces policy DM5, deliberately narrowing the circumstances under which viability can be reopened on individual applications. Assessments must benchmark against plan evidence using standardised assumptions. The direction is clear: viability is to be resolved at the plan preparation stage. If affordable housing targets and CIL rates are set too high, then developers will be locked in with far less room to negotiate.
The implication is profound: participating in local plan examinations, challenging viability evidence, CIL rates, and cumulative policy burdens is now the primary route to securing deliverable requirements.
Whether navigating a stalled consent or bringing a new scheme forward, the message is the same: the window for correcting viability on individual applications is narrowing. Those best placed to weather these changes will be developers who have invested early in robust evidence, engaged at the plan-making stage, and treated viability not as a hurdle to clear but as a framework to navigate with proper professional support.
