The report, “Development Viability – Housing”, lays out the commercial practicalities that determine whether land earmarked for housing can practically reach completion. It signifies how increasing costs, infrastructure demands, planning obligations, policy expectations and the state of the market can impact whether sites are practically delivered.

The report arrives against a backdrop of rising concerns over held-up housing sites, a depleting level of adequate housing land, and ongoing pressure on the beginnings and completion of housing developments. 

HFS has called for viability to be taken into account more consistently by policy makers, planning authorities and elected decision-makers in order for Scotland to successfully address the housing crisis. 

A site only becomes viable when the income produced from development is enough to cover the full costs of delivery. This costs are made up of an acceptable land value, construction, finance, professional fees, developer contributions, infrastructure, policy requirements and an appropriate return.

The report also asserts that viability is not static. Sites that seem to be able to reach delivery at the allocation stage can later become undeliverable because costs increase, policy requirements change, the state of the market changes or new technical information comes into play.

Kevin Murphy, director of Planning at Homes for Scotland, said: “Scotland’s housing emergency will not be resolved unless there is a stronger understanding of the commercial realities of development. 

“This is essential to turn housing ambitions into much-needed homes on the ground. High expectations are one thing  but these must be deliverable. If the combined cost of policy, infrastructure and planning requirements makes sites unviable, the result is not better places, it is fewer homes of all tenures because it simply doesn’t make financial sense to build them – whether in the private or social sectors.”

Murphy added: “We want to work constructively with the Scottish Government, local authorities, Heads of Planning, planning committees and elected members to support a more consistent, transparent and deliverable approach to housing land supply.”

The report recommends that viability should be taken into account earlier and more regularly during Local Development Plan preparation, with more information being brought forward about infrastructure costs, developer contributions and policy requirements.

It also recommended early communication between planning authorities and home builders to tackle any uncertainty, aid decision-making and identify delivery risks at an earlier stage.

HFS also said that Local Development Plans need to allocate a bigger number and variety of sites than the minimum needed, because not every allocation will stay viable.