The only way is up

The Government’s proposals for a standardised calculation of housing needs

Housing our Nation logo

The Government has today launched a consultation on its proposed standardised calculation for objectively assessed housing need (OAN). The consultation runs until 9 November 2017 and those with an interest in land promotion, plan making and addressing the housing crisis will want to be appraised of the proposed changes.

Man ripping up OAN papers

Here we provide a summary of the new calculation and consider the application of the approach.

Our dedicated OAN team is on hand to answer any questions that you have regarding implications for your land portfolio.

Summary

After a considerable delay, the Government has delivered on its promise to present a simplified methodology, going as far as presenting an indicative new need figure for each authority in England.

While many anticipated a “get-out clause”, in reality the consultation material is clear that authorities must view any standardised housing need figure very much as a minimum, with freedom to vary upwards if robustly justified. This is a firmer stance by the Government that “the only way is up” from the starting point.

However, it is disappointing that authorities are not compelled to meet housing need where it arises, with the Government’s restated commitment to protect the Green Belt meaning that we are no further forward in the way that housing need is being met. For many of the authorities where need is highest, Green Belt designation will continue to present an obstacle to meeting needs in full. Worryingly, the Secretary of State for Communities and Local Government, when questioned in the House of Commons, appeared to conflate Green Belt with an environmental designation. This is not helpful nor does it provide the clarity that is needed on the matter of meeting housing needs in full where they arise.

We also remain concerned that the Government has failed to properly consider the spatial implications of its proposed approach. Our analysis suggests a north/south divide arising from the standardised calculation.

The local impact of the calculation is far from consistent, and in places the scale of departure from the level of need implied by current guidance is very significant.

There are also anomalies in the results produced by the standardised approach which common sense suggests cannot be right or good planning. For example one local planning authority in the North West of England is suggested to need zero new homes as a result of the application of the standardised calculation.

While we have a proposed standardised calculation, more work is needed to ensure that its application leads to good planning for places and that the needs of people and the economy are met.

Why has the Government done this now?

A range of factors have influenced the Government’s move towards standardising housing need calculations, not least:

  • A recognition that it needs to attract younger voters back to the party, with this group most directly affected by the acknowledged housing crisis;

  • The Government’s pledge to deliver 1 million new homes by 2022 with this commitment set out in their 2017 manifesto;

  • Complexity in the way that housing need is calculated at a local authority level, and widespread criticism around the effectiveness of the Duty to Co-operate in providing the housing that the country needs;

  • Confirmation in the Housing White Paper that 40% of local planning authorities do not have a plan that meets the projected growth in households in their area; and

  • The Government’s ambition to publish a revised National Planning Policy Framework (NPPF) in spring 2018.

The standardised calculation

The Government has published an indicative OAN for each English authority which applies its proposed methodology. The full table of results can be accessed here.

The methodology proposed follows a three stage approach:

  1. Starting with the average level of household growth (projected over a 10 year period by the latest official household projections) as a demographic baseline. This is to be regarded as the ‘minimum local housing need figure’.

  2. Adjusting the starting point based on the relative balance between median house prices and earnings, with a larger adjustment applied in those areas with higher ratios.

  3. Capping the level of adjustment to 40% above housing requirements adopted in post-NPPF Local Plans. Where an up-to-date Local Plan is not in place, housing need will be capped at 40% above the higher of the latest household projections or the pre-NPPF housing requirement.

Spatial implications

Nationally the new methodology provides for approximately 266,000 homes per annum across England. A marked north/south divide is shown when the outcomes of the proposed new approach are compared with the level of housing need calculated using the existing methodology, outlined in Planning Practice Guidance (PPG).

Figure 1: Difference between current and proposed housing need

Click on the image below to expand it

Figure 1: Difference between current and proposed housing need

A similar trend is also clear when the level of uplift from the latest household projections is considered.

Figure 2: Implied adjustment from household projections

Click on the image below to expand it

Figure 2: Implied adjustment from household projections

The only way is up

The consultation document makes clear that there should be very limited grounds for adopting an alternative method which results in a lower need than the proposed approach. However, a more positive position is implied for those authorities putting forward proposals that plan for a higher level of housing need. The Government intends to amend guidance to enable Planning Inspectors to conclude that a higher level of proposed need can be viewed as sound unless there are compelling reasons to indicate otherwise.

This is an “upward only” flexibility for local authorities that want to plan positively for higher levels of housing need. There is no mechanism to compel local authorities to do this.

It remains to be seen how many authorities take up this opportunity to reflect the impacts of a strategic infrastructure project, their stated economic ambitions or their commitment to support the Government’s Modern Industrial Strategy.

Does the standard approach consider type and size of homes?

The consultation documents confirm that authorities must plan for the different size, type, tenure and range of housing that is required as well as the overall number. The Government has not provided any steer on a prescribed methodology for breaking down the overall need into sizes and types of housing. However, it is committed to updating existing guidance and publishing this alongside a revised NPPF.

What does this mean for Local Plans?

DCLG wrote to Chief Planners in July to confirm that Local Plans submitted for examination before the end of March 2018 could continue to rely on housing needs evidence prepared in accordance with the existing methodology in the PPG. This indicates that the introduction of a new methodology will not have an impact on plans due to be submitted within the next six months.

The greatest impact will be felt by authorities that have not to date made sufficient progress in preparing their Local Plans. From the start of April 2018, these authorities will be required to plan to meet the need for housing implied by the new methodology. This timetable has been confirmed in consultation materials released today.

The consultation document confirms that where there is no up-to-date local or strategic plan after 31 March 2018, the Government expects Planning Inspectors to apply the proposed new methodology as a baseline for assessing five year housing land supply.

Get in touch

If you would like Turley to make representations to the consultation, or you want to understand more about the proposed changes please contact Antony Pollard, Andrew Lowe or Richard Laming.

14 September 2017