Financial viability in planning: conduct and reporting

Please note, this document was reissued in April 2023 as a professional standard. It was previously published in August 2019 as a guidance note. The regulatory requirements remain the same.

This professional standard sets out mandatory requirements that inform the practitioner on what must be included within financial viability assessments and how the process must be conducted.

This is to demonstrate how a reasonable, objective and impartial outcome, without interference, should be arrived at, and so support the statutory planning decision process. It also aims to support and complement the government's reforms to the planning process announced in July 2018 and subsequent updates, which include an overhaul of the National Planning Policy Framework and Planning Practice Guidance on viability and related matters.

What does our new professional standard mean?

'Financial viability in planning: conduct and reporting' comprises fourteen mandatory requirements which chartered surveyors must observe when carrying out financial viability assessments in a planning context. The effective date of this professional standard is 1st September 2019. Surveyors and regulated firms will need to ensure the terms and conditions of their instructions can allow compliance.

Chartered surveyors and viability

Chartered surveyors have had a central role in assessing viability in the planning system, particularly in negotiating planning obligations in planning applications. RICS produced 'Financial viability in planning' guidance note in 2012 to enable the viability policy contained in the National Planning Policy Framework 2012 to be applied in practice. This guidance was extensively relied upon in the sector. Government has now revised its planning policy through the National Planning Policy Framework (NPPF) 2018 and Planning Practice Guidance (PPG) 2018 (and further updates in 2019). We are in the process of revising our 2012 guidance to align with the new government planning policy and practice statements which seek to address viability much earlier in the process, at the plan making stage.

Dissatisfaction has been expressed among some stakeholders in the sector about the standards to which viability assessments are being produced. The concerns extend from public representatives, the development sector, community groups and decision makers all of whom rely on viability assessments in a key public interest area. Questions about objectivity, conflicts of interest, transparency and contingency fees among others have been raised about those working for both the private and public sectors. While not all viability assessments are undertaken by chartered surveyors, in response RICS has strengthened our advice on these areas, the professional conduct of chartered surveyors and regulated firms undertaking viability assessments and the essential information which should be reported so that informed decisions may be taken transparently.

We have also produced this professional standard in recognition of the Mr Justice Holgate's comments in the Parkhurst Road case requesting professionals to contribute to a more efficient public administration of planning. His further comments on the technical aspects of viability will be addressed in the review of our guidance note which will go to consultation over summer 2019.

Delivering development

Delivering development of all kinds is a key objective of the UK economy. Government policy consistently emphasises its importance. More specifically delivering 300,000 dwellings a year nationally is an urgent government priority. This has proven to be an ambitious target with delivery consistently falling well short of expectations. In areas of high housing need this is creating pressure on local planning authorities to advocate delivering an increasing amount of affordable housing as a proportion of private housing on market sites.

To ensure the appropriate balance is struck between the planning policy ambitions and retaining the business case for development, government policy requires a viability assessment to be carried out to ensure the cumulative impact of planning obligations does not undermine delivering the plan objectives in the round.

The purpose of the professional standard is to ensure that chartered surveyors and regulated firms recognise and adhere to their professional duties when working in a context with a significant public interest obligation combined with intense commercial pressure. This professional standard provides clear requirements for meeting RICS professional standards.

Stakeholder engagement

We have engaged extensively with stakeholders in the sector. We would like to express our appreciation of the valuable feedback we have obtained.