Financial Appraisal Tool

This tool will help you to develop a financially viable affordable housing project. It can be used as a ‘living’ document and should be updated as your project develops.

Viability is pretty simple. For a project to be viable the cost of developing and managing the homes shouldn't exceed the income over the course of your business plan.

This applies whether you're developing homes for sale or rent, and whether you're a profit-hungry developer or a CLT.

Our free Financial Appraisal tool, developed by Jon Watson Consulting, helps you produce a robust project appraisal. You can take it to funders and other partners to demonstrate your project is viable and to help them understand your business case.

A member of your Board, Committee or Steering Group might take responsibility for managing the financial appraisal tool or you may prefer to use it under the guidance of a suitably qualified advisor or consultant.

You can download the tool and the guidance at the bottom of this page. But first, read our quick introduction to financial viability appraisals, and some helpful tips to get the most out of the tool.

A quick introduction to financial viability


A financial appraisal adds up all your costs and income sources over a 25-50 year business plan period and establishes whether your housing project is viable.

Capital costs are accrued as you plan and build out the homes, and include:

  • Buying land.
  • Build costs, including contractors' profits if applicable.
  • On-costs, including:
    • Professional fees: CLT technical adviser, architect, surveyor, engineer, site investigation, CDM assessor, etc.
    • Statutory fees and costs:  planning permission fee, Building Regulations fee, highways bond, services connections and bonds, etc.
    • Finance charges through the development period.
    • Sales and lettings costs, e.g. agent’s fees.

Revenue costs are accrued from the moment you complete your homes, and carry on throughout your business plan. They include:

  • The costs of letting, managing and maintaining the property.
  • Provisions for long term renewal of components, like periodically repainting fascia boards and replacing the guttering.
  • Finance charges for your long-term borrowing.

Income sources can include:

  • The sale of open market homes.
  • The sale of affordable homes, such as those with Resale Price Covenants or Shared Ownership.
  • Rental income, accounting for deductions like voids and arrears, and discounted to recognise that the same money in 30 years time is worth less than it would be today.
  • Community share issues and crowdfunding.
  • Grants such as those from the Homes and Communities Agency, local authorities and charitable foundations.

All of these costs and income sources carry risks. The higher the risk, the more you'll have to pay lenders to borrow money. Banks generally see new all housing development as high risk, and so a brand new CLT building new homes will pay higher finance charges than you might be used to.

Typically, CLTs develop a mix of homes for sale and rent. They go to a lender for debt finance to pay for the development, and then refinance over a 30 year period based on their ongoing rental income. The aim is for the to CLT fully repay its debts within 20-30 years and start to produce a surplus that can then provide long-term benefits for the local community.

The Financial Appraisal tool puts all of these factors into the mix and produces essential information for your project:

  • A summary of your costs and income sources, and your long-term funding requirements.
  • Key Performance Indicators to show whether your project is viable, and the point at which your project will repay its debts and turn a surplus.
  • Full cash flow, balance and income expenditure sheets over 50 years to help with your business planning.

How to use this tool

You can download the tool using the links at the bottom of this page. We've also provided two worked examples that you can review to better understand how it works. They're worth playing with to see how variations in - for example - the mix of affordable housing, or the interest rate on the development loan, affect the viability of the project.

Before you start, we recommend that you:

  • Read the CLT Handbook for context. You'll find it easier to understand the tool and to 'own' the model you develop if you do this. 
  • Read the guidance document, which you can download at the bottom of this page. It includes a useful checklist of information that you'll need to hand before you start.
  • Refer to the glossary for the tool, which explains many of the jargon terms used in housing finance.
  • Read our pages on funding to learn more about the various income sources. The page on private finance includes a helpful table of lenders in the sector, giving you their basic requirements which you can bear in mind when using the tool.

There are other resources you may find useful, including:

We also encourage CLTs to consider getting help from a technical adviser or consultant, particularly if you don't have strong skills in development finance and viability appraisals in your steering group or board.

Tool downloads

  • The tool - Download
  • Worked example - mixture of affordable rent and market sale - Download
  • Worked example - mixture of affordable rent and shared ownership - Download

Downloads