A site can accommodate several homes on a sketch and still be a poor acquisition. The useful question before committing is whether a deliverable scheme can support the land price after realistic costs, planning requirements and uncertainty are included.
For an SME developer, an early appraisal should produce a decision: proceed, investigate a specific issue, renegotiate or walk away. Its value lies in identifying what could change that decision before more money is committed.
Start with the decision you need to make
Write down the proposed use, likely number and type of units, intended exit, acquisition deadline and maximum exposure to investigation costs. Distinguish information you have verified from the vendor’s expectations and your own working assumptions.
A sales brochure’s suggested capacity is a starting point for testing. Ask what evidence supports it. Is there an extant permission? Does the approved layout fit the land being sold? Are conditions, obligations or access arrangements unresolved? A previous approval for a different scheme needs careful examination rather than automatic reliance.
Keep a short decision log. Each important assumption should have an owner, a source and a next step. “Drainage allowance to be confirmed by civil engineer” is more useful than an unexplained contingency buried in a spreadsheet.
Test the usable site rather than its gross area
A feasibility layout should reserve space for the things that make a scheme work: access, turning, refuse collection, cycle and car parking where required, private and shared amenity, drainage, retained trees, habitat and service infrastructure. Consider neighbouring windows, levels and the relationship between gardens and habitable rooms.
Ask a solicitor to examine title, rights of access, restrictive covenants and third-party interests. Ask the relevant technical advisers to assess highways, drainage, ground conditions and utilities. These checks answer different questions; an attractive architectural layout cannot confirm legal access or the capacity of a sewer.
For a constrained plot, test two credible layouts rather than polishing one optimistic scheme. A lower-density option may offer better rooms, simpler construction and fewer dependencies. Compare the commercial consequences before deciding that the highest unit count is the strongest proposal.
Price the scheme against its planning context
Review the development plan, site history and relevant design guidance. Identify likely contributions and obligations early, including affordable housing where applicable, infrastructure and biodiversity requirements. Their application depends on the site, proposal and current policy. Avoid importing thresholds or rates from another council.
Planning viability has a specific role. Government guidance expects policy requirements to be considered when land is bought and makes clear that the price paid for land does not justify failing to comply with those policies. A commercial appraisal for your acquisition decision is therefore not a promise that a later planning viability submission will reduce obligations. Read the government’s viability guidance.
Where Community Infrastructure Levy applies, check the charging schedule, floorspace calculation and any relevant relief or exemption procedure. Do not assume a potential exemption automatically removes the liability. Check the CIL guidance.
Build a cost plan that exposes the difficult items
Start with evidence-based sales or rental assumptions for the proposed product. Then include construction, abnormal works, professional fees, surveys, application costs, finance, sales costs, tax advice, contingency and your required return. Keep acquisition costs visible alongside the land payment.
Separate ordinary construction allowances from uncertain items such as remediation, retaining structures, utility diversions and off-site works. Obtain proportionate specialist advice on the items most capable of changing the deal. An inexpensive desk study can sometimes identify the need for a much larger investigation before exchange.
The government’s housing-led project guidance describes the residual approach: development value is considered against build costs, other costs, finance, land and profit. The arithmetic is useful only when the inputs reflect the actual scheme. See the financial viability guidance.
Test the assumptions with a simple downside case
Consider this illustrative calculation, not a Horizon project or a market benchmark. A six-home proposal has an assumed gross development value of £2.40 million. Costs excluding the land price and developer return total £1.65 million. A target return of £360,000 leaves £390,000 for the land price before any additional acquisition costs not already included.
If value falls by 5%, the £120,000 reduction leaves £270,000 for the land price on the same fixed-return assumption. If costs also rise by £100,000, that figure falls to £170,000. The example deliberately keeps the return fixed to show the sensitivity; your appraisal should explain whether returns are measured against value, cost or another basis.
Run separate tests for fewer saleable units, a slower programme and higher finance costs. Do not combine every imaginable problem into an unusable forecast, but understand which credible change would make your offer unaffordable.
Leave the appraisal with an actionable conclusion
Before committing, ask whether the remaining uncertainties are acceptable under the proposed contract. Your solicitor can advise on suitable acquisition arrangements; the design team can identify the further work needed to test capacity and planning risk.
A useful early appraisal ends with a preferred option, its principal constraints, a range of outcomes and a priced next stage. It should also make clear what has not yet been investigated.
If you are assessing a site, contact Horizon Architecture to discuss the architectural feasibility work worth doing before you commit. Bring the site address, boundary information, available drawings and your intended development. A focused initial brief makes it easier to agree a proportionate scope.
England guidance checked 6 November 2026. This article is general information, not site-specific planning, legal, valuation or financial advice.
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