HOUSING DELIVERY TEST 2018 RESULTS
The outcomes of the first Housing Delivery Test were published and took effect on 19 February. Figure 1 shows the outcomes of the test by local planning authority; a quarter of authorities require a 20% land buffer to be applied to their five year housing land supply and/or for an action plan to be prepared, six in ten of which are in London or the South East.
Lichfields’ interpretation of planning practice guidance is that in areas where a land buffer has already been applied due to persistent underdelivery, the buffer will not increase beyond 20%, because only one of the three types of buffer should be applied depending on the specific circumstances; buffers are not cumulative (albeit that individual circumstances could lead to a bespoke approach because buffers are policy rather than law).
Figure 2 shows the anticipated outcome of the test in 2020, based on the methodology used to calculate the 2018 test and current delivery rates being maintained; a third of local planning authorities would face the presumption in favour of sustainable development, mostly in London and the South East.
Earlier in the month a National Audit Office (NAO) report had raised concerns about the standard method for assessing minimum annual housing need, and for holding local authorities accountable for the delivery of housing (see below).
How have the tests performed?
The new test marks a clear shift in the Government’s thinking regarding delivery and providing a straightforward and reasonably transparent approach to determining whether Councils are hitting their targets. Crucially, it also has real ‘teeth’, with the HDT effectively changing the route to the presumption in favour of sustainable development, triggering paragraph 11 of the Framework.
Whilst many of us are familiar with the previous approach which looked at the 5-year housing land supply, the HDT now requires us to see how successfully Councils have been at delivering their housing requirements over the past 3 years, with a series of graded ‘penalties’ depending on the extent of the shortfall, with a 3-year transition period (see Figure 1 below). Whilst the objectives and methodology of the HDT are now well known, it is helpful to consider the implications of these results and to assess how the situation might change as the thresholds for the various sanctions increase, firstly in November 2019 and again in November 2020.
The picture in 2020
If we make certain assumptions regarding housing delivery continuing along a similar trajectory over the next 2 years and trend forward the housing need calculations, we can start to provide an indication of which authorities may be vulnerable to failing the test once the threshold is revised to 75% in November 2020. Our work suggests that in 18 months’ time, around a third of all English councils could face the presumption in favour unless delivery rates begin to increase.
Going forward: The influence of the standard methodology
In February 2019, the standard methodology for assessing Local Housing Need [LHN] was introduced. The simplified methodology is based solely on the 2014 household projections, with most Local Authorities having a percentage uplift to address (un)affordability. A number of regions, especially Greater London and the South East, have faced an increase in housing requirement as a consequence. For the purposes of assessing performance against the HDT, an increase in the future requirement means that it is not just the increasingly severe threshold for the application of sanctions that will cause authorities to fall into the presumption in favour of sustainable development categories.
So What Now?
Results reveal that 680,000 homes were built over the last three years; that’s an average of c.227,000 per year. There is clearly a long way to go in order to reach the Government’s aim of 300,000 homes in order to address the housing crisis. This highlights the key weakness of the HDT: it is only effective if housing targets are ‘right’ in the first place.
Although we cannot know how many houses will be delivered in the future and can therefore only estimate future performance against the HDT, this analysis is nevertheless instructive in highlighting those authorities where a significant increase in net completions is likely to be necessary going forwards if the most severe sanctions are to be avoided.
Furthermore, the fact that the HDT brings more certainty in relation to the application of a 20% buffer is also likely to have an impact on the other route to the “tilted balance”, which relates to five-year housing land supply. In the context of the tougher approach to deliverability within the National Planning Policy Framework, this will require more sites to be identified for future development in a number of authorities. For more information on the approach to the assessment of five-year housing land supply set out in the Framework, take a look at our Insight Focus.
In conclusion, the HDT is a key monitoring tool based on previous housing delivery performance. However, the numbers produced are likely to change as the Test will reflect future fluctuations in the data and housing figures, and it will be difficult to precisely estimate housing requirements many years into the future. These estimates show that continuing to monitor changes to housing figures is essential to ensure future housing projections are sufficient and can be met.
Image & Text Source: Lichfields
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