I increasingly find myself talking about viability more than housing. That may sound odd given the scale of the housing shortage, the political attention given to housebuilding and the endless debate surrounding affordability, planning reform and development targets. Yet the longer I spend working within development, the more convinced I become that viability sits at the centre of almost every housing discussion, whether people realise it or not.
Housing attracts strong opinions because people understandably care about the homes they live in, the communities they belong to and the places they want to protect. Politicians talk about housing targets, affordability and planning reform. Campaign groups focus on design, density, green belt policy and the changing character of neighbourhoods. Developers are frequently discussed either as the solution to the housing problem or as the cause of it. What receives far less attention is whether homes can actually be built at all, which may sound like an oddly technical question to place at the centre of the housing debate, but after many years working in development I have come to think it is the question that sits underneath almost all the others.
Housing need, political ambition and planning policy ultimately matter very little if the conditions required to deliver new homes do not exist. That is essentially what viability concerns itself with. It is not a question of whether housing is needed, because we know that it is, nor is it really a question of whether policy ambitions are well intentioned, because many of them undoubtedly are. Instead, viability asks whether the conditions exist that allow development to happen, and it is those conditions that increasingly determine whether housing policy ever becomes housing delivery.
Over time I have come to think of viability as the operating system that sits underneath the housing market. Most public debate takes place above the surface. We discuss planning applications, affordable housing requirements, design standards, house prices and political promises, but beneath all of those conversations sits a more fundamental set of questions concerning whether a site can be brought forward, whether a scheme can be financed, whether the costs work, whether people can afford to buy or rent the homes being proposed and whether the risks involved can be managed.
One of the difficulties is that viability has become both a technical term and a political one. Within planning, it often appears in discussions around affordable housing contributions, obligations and development appraisals, while in public debate it is sometimes reduced to an argument about developer profits. Neither description is really sufficient. Viability is better understood as a wrapper term that covers almost everything which determines whether housing gets built.
Construction costs matter. Sales values matter. Borrowing costs matter. Regulation matters. Land values matter. The wider economy matters. The availability of mortgage finance matters. The cost of debt matters. Viability is really an aggregation of all these factors, which perhaps explains why it can simultaneously feel both critically important and strangely difficult to define. It is easy to dance around the term without ever properly explaining it, even though it often determines whether a scheme proceeds or quietly disappears.
For a subject that ultimately determines whether homes are built, viability receives remarkably little public attention. Part of the reason, I suspect, is that it sits awkwardly between politics, planning and economics. It is easier to argue about targets, design, density or affordability than it is to discuss whether a scheme can actually work. Yet the longer I spend in the sector, the more convinced I become that viability is where many of the real housing debates eventually arrive, whether we acknowledge it or not.
Read the series
Part 1: We Talk About Housing, But Rarely About Viability
Part 2: We Have Rationed The System To Death
Part 3: The Conflation Of Terrible Things
Part 4: Why Smaller Builders Matter
Part 5: Building A Better System
