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14/09/2017

Javid announces methodology to assess local housing need

Words: Laura Edgar
Sajid Javid | UK Government

Communities secretary Sajid Javid has launched a consultation on the government’s proposals for calculating local housing need as the government looks to deliver measures set out earlier this year in the housing white paper.

Speaking in the House of Commons, Javid said that if lasting change is to be made, a proper understanding of how many homes are needed, and where, is required, and the existing system “is not good enough”. He said a “consistent approach” is a necessity.

The government’s proposed approach is split into three stages, notes the consultation.

For stage one, the baseline, the government proposes that “projections of household growth should be the demographic baseline for every local authority area”, using the most recent figures. Household growth would be calculated for the period over which the plan is being made. The demographic baseline would be the annual average household growth over a 10-year period. Household projections should be “regarded as the minimum local housing need figure”.

Stage two would see plan-makers using the workplace-based median house price-to-median earnings ratio from the most recent data available. A variety of industry professionals have estimated how many homes are required each year, ranging from 225,000 to 275,000 a year.

The consultation document states that to get a total housing need close to this range, “our modelling proposes that each 1 per cent increase in the ratio of house prices to earnings above four results in a quarter of a per cent increase in need above projected household growth. This achieves the overall level of delivery that most external commentators believe we need, while ensuring that it is delivered in the places where affordability is worst”.

Applying this would see a significant increase in the potential housing need in some parts of England, said the government. So stage three caps the level of any increase according to the current status of the local plans:

  • For authorities with a local plan adopted in the last five years, a cap of 40 per cent above the annual requirement set in the local plan is proposed.
  • For authorities that don’t have an up-to-date local plan, the cap is 40 per cent above whichever is higher of the projected household growth for their area over the plan period or the annual housing requirement in their local plan.

Javid said the proposals should not be “mistaken for a hard and fast target”.

“This new approach will cut the unnecessarily complex and lengthy debates that can delay housebuilding. It will make sure we have a clear and realistic assessment of how many new homes are needed, and ensure local communities have a voice in deciding where they go.”

He also announced a £25 million capacity fund to support local planning departments.

The consultation seeks views on a number of other proposals.

  • The housing white paper suggests a further 20 per cent increase on the current planning fee level should be applied to authorities that are delivering homes.
  • Setting out in the National Planning Policy Framework (NPPF) that all local planning authorities should produce a "statement of common ground", to increase certainty and transparency, and encourage effective cooperation.
  • Local authorities should set out the types and thresholds for affordable housing contributions required, the infrastructure needed to deliver the plan, and expectations for how this will be funded and what the developer is expected to contribute.

The consultation, which closes on 9 November, can be found on the Department for Communities and Local Government website.


Reaction:

Richard Blyth, head of policy at the RTPI, told The Planner: "Given the focus placed on objectively assessed need by the government it is good to reduce the time and cost associated with arguments over methodology. However, there could be concerns around potential delays to local plans submitted after April in order to adapt to the new method.”

Martin Tett, housing spokesman for the Local Government Association, said there could be benefit in having a standard approach to assessing the need for housing.

However, “a formula drawn up in Whitehall can never fully understand the complexity and unique needs of local housing markets, which vary significantly from place to place. It is crucial that councils and communities can lead new development in their areas”.

Tett continued: “Our residents are clear – new homes in their communities have to be affordable, high-quality, and supported by adequate infrastructure and sustainable local services. The only way to do this is to make sure that councils, who are closest to the communities they serve, have the powers and funding they need to deliver homes that are right for their local area.  

“This means powers to make sure developers build out approved homes in a timely fashion, adequately funding planning departments so that they can cover the cost of processing applications, and freeing councils to borrow to build quality new homes communities want and need.”

Ian Fletcher, director of real estate policy at the British Property Federation, said: “Measuring housing need is an essential component of the government’s housing policy. Developers rarely seek to push water uphill, but they want to work with communities to deliver housing within the framework of a good local plan that is based on accurate estimates of housing need. We also support an increase in planning fees if that means more resource on the ground for local authorities – for some councils, additional headcount and better staff retention will make a huge difference.”

Fergus Charlton, legal director at law firm TLT, said the three-step methodology will “hopefully cut through many planning issues by applying a consistent approach throughout”.

“When setting their housing targets in their plans, local planning authorities will apply this new procedure and hopefully provide housebuilders and developers with greater clarity regarding their rights and responsibilities. They will then have to allocate sufficient sites to deliver their target. Allocated sites are more likely to secure planning permission, thereby reducing the planning risk and increasing the likelihood of delivery.”

Charlton said the second step is more complicated than the first and “will no doubt become a focus for debate”.


Image credit | UK Government

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