The London Plan Viability Study (LPVS) provides that evidence base, but a closer review raises important questions as to whether the proposed affordable housing thresholds are justified given almost all schemes beyond Value Band A and B appear to be unviable.

The LPVS follows established planning and RICS guidance, using Argus Developer appraisals and Benchmark Land Values (BLVs) derived from existing use values and landowner premiums.

However, a number of the tested scenarios are only viable where grant funding and borough Community Infrastructure Levy (CIL) relief is assumed. In several cases, schemes remain unviable even with these interventions. This raises a key question: if viability depends heavily on external support, does the evidence genuinely support the proposed Fast Track thresholds?

Unclear alignment between value and location bands

A key concern is the disconnect between the LPVS Value Bands used in viability testing and the Location Bands that underpin Draft Policy HN3.

The study does not clearly explain how one translates into the other, making it difficult to understand how the proposed thresholds have been derived. The viability results suggest that only Value Bands A and B – representing the highest-value parts of London – consistently demonstrate strong viability. Beyond these areas, viability falls away rapidly, even at reduced affordable housing levels.

For instance, as shown in the map below, Value Bands A and B represent a proportion of just 12 boroughs. Therefore, the study suggests schemes including any affordable housing are only viable in roughly a third of London boroughs (12 of the 33).

Without a clearer link between the evidence and the draft policy, confidence in the proposed thresholds is weakened.

Unrealistic evidence base assumptions

The LPVS assumes grant funding alongside 80% borough CIL relief, reflecting measures introduced through the Support for Housebuilding London Plan Guidance.

The difficulty is that Draft Policy HN3 provides little certainty that either intervention will remain available over the long term, with the draft supporting text suggesting grant will be reserved for additionality. If grant funding and CIL relief are critical to achieving viable outcomes, greater clarity on their future availability will be essential.

While the development cost assumptions appear broadly reasonable, some of the Gross Development Value (GDV) assumptions look ambitious, particularly outside prime central London.

Sales values, absorption rates and off-plan performance assumptions may not fully reflect current market conditions. Similar concerns arise for purpose-built student accommodation (PBSA) and co-living schemes, where a uniform 4.25% investment yield is applied despite differences in location, asset quality and operational risk.

If values have been overstated, viability may be more constrained in practice than the LPVS suggests.

What do the results actually show?

The LPVS concludes that 35% affordable housing is generally achievable across higher-value parts of London, where grant funding and full 80% borough CIL relief are available.

However, when those interventions are removed the picture changes significantly. Value Bands A and B continue to perform relatively strongly, but most schemes in bands C and D become unviable, even at 20% affordable housing. Bands E and F are unable to support affordable housing delivery at all.

The evidence therefore suggests that viable delivery is concentrated in a relatively small proportion of London unless substantial public subsidy remains available. This has important implications for Draft Policy HN3, as more schemes may be forced down the Viability Tested Route, undermining the certainty and efficiency that the Fast Track Route is intended to provide.

The results for PBSA and co-living schemes are comparable. Viability is strongest in central, higher-value locations but becomes increasingly constrained in outer London and lower-value areas – even where grant funding and 80% borough CIL relief are assumed.

This raises questions about whether a London-wide threshold-based approach can be consistently delivered across all parts of the capital.

An opportunity for refinement

The proposed reforms in Draft Policy HN3 are a positive step forward, introducing greater flexibility and a more nuanced approach to affordable housing delivery. However, the evidence base raises several important issues.

The LPVS adopts BLVs using a recognised methodology, but limited information has been published on how the benchmarks themselves were derived. Greater transparency around BLVs, grant funding assumptions and the relationship between Value Bands and Location Bands could help stakeholders better understand and assess the conclusions. Viability within the LPVS relies heavily on grant funding and 80% borough CIL relief, and some value assumptions appear optimistic. Most notably, the evidence suggests affordable housing delivery is largely viable only in the highest-value locations if public subsidy is unavailable.

With the consultation open until 15 October, there is an opportunity to amend the proposed policies. A consideration of lower Fast Track thresholds, a more practical payment-in-lieu methodology and greater flexibility around viability review mechanisms could help ensure the final London Plan remains both ambitious and genuinely deliverable.

Further information

Contact Harry Wackett