UK development appraisal: agree the purpose before the numbers

Ask which question the appraisal must answer

A developer deciding whether to buy land needs to test an investment using its proposed scheme, delivery approach and return requirement. A planning adviser considering viability is working within the relevant planning framework. A valuer giving an opinion of value has a defined assignment, basis and date. Reusing a model may be sensible, but reusing its conclusion without checking the instruction can mislead the next reader.

RICS explains that scope, purpose and basis matter when determining what a figure represents; a label alone does not settle whether advice is a valuation. Start the brief with the client, intended use, property interest, information date and decisions expected from the report. Record who is permitted to rely on it and the limitations agreed for that instruction.

Sources: RICS: When is a figure a valuation? Understanding scope, purpose and basis under Red Book

Name the jurisdiction behind planning assumptions

The National Planning Policy Framework published on GOV.UK applies to England. Its current publication page identifies an August 2026 framework. Do not assume that an older English template, paragraph reference or planning allowance governs a present instruction elsewhere in the UK. Identify the relevant nation, local authority, adopted policies and site-specific obligations with the planning team.

England's Planning Practice Guidance on viability describes a planning assessment using development value, costs, land value and developer return. It also addresses the evidence and presentation expected for that purpose. These are planning-context considerations, not a universal commercial investment hurdle. Read the current framework and supporting guidance together, and resolve the requirements applicable to the particular submission before fixing the model specification.

Sources: Ministry of Housing, Communities and Local Government: National Planning Policy Framework; Ministry of Housing, Communities and Local Government: Planning Practice Guidance: Viability

Reconcile GDV, areas and costs

Gross development value, or GDV, needs a defined scheme and valuation or forecast basis. Identify which homes or commercial areas are sold, which are retained, and how each component contributes. A capitalised rental value is not automatically a cash receipt. A project mixing tenures or uses should show the separate quantities, pricing evidence and timing rather than multiplying every square metre by one headline rate.

Create a bridge between the design schedule and the areas used for revenue and construction cost. Check whether quoted rates include the same scope, price date and treatment of taxes. Distinguish main works, abnormal works, infrastructure, professional fees, marketing, financing and the obligations that actually apply. Allowances must not disappear simply because a source quotation excludes them; equally, the same item must not appear twice under different headings.

Give each assumption an evidence owner

A practical appraisal needs a chain from the physical proposal to the commercial result. Ask the design team to reconcile the schedule, the cost consultant to identify the estimate's scope, and the sales or letting adviser to explain the relevant comparables. Assign planning, legal, financing and tax questions to the people responsible for confirming them. These are proposed project responsibilities, not a prescription for every professional appointment.

Keep a short instruction register beside the model. Record an assumption, the evidence used, its status and the decision affected. An unresolved planning condition should remain visible as a condition, even if the analyst also models an alternative programme. This avoids presenting a numerically complete appraisal as if every dependency has already been resolved.

State the return and land conventions

Before comparing two appraisal outputs, identify whether the land amount is a known input or a residual being solved. Then define the return: profit on cost, profit on revenue, project IRR or equity IRR. Two models can use identical revenue and construction figures but produce different land amounts because the required return or cost inclusions differ.

For a small invented commercial screen, £12m of receipts less £10m of total costs produces £2m surplus. That is 20% of cost but 16.67% of receipts. Neither ratio is a planning-policy benchmark. If the costs are incurred well before receipts, neither also establishes a dated return or the capital needed along the way. The purpose of the calculation is to expose the denominator, not to prescribe an acceptable margin.

Issue conclusions that stay within the instruction

RICS treats development-property valuation as an area requiring attention to uncertainty and the assumptions behind the proposal. A commercial residual may help negotiate a land offer, but it does not by itself settle the market value or the planning treatment of that land. Keep those assignments distinct and explain which conclusion the current report actually supports.

Present the recommendation with the tested alternatives, current evidence and conditions that could change it. For a commercial decision, show the relationship between profitability, delivery and funding. For a planning submission, agree its content and treatment with the appointed planning and viability team. For a valuation, work to the instructed professional scope. Preserve the model and evidence version behind the issued report so the next review can explain change rather than merely print a new figure.

Sources: RICS: Valuation of development property