Tag Archives: housing delivery test

Housing Delivery Test

Housing Delivery Test update

By Michael Hardware, Director of Planning and Property

In our last newsletter we talked about the Housing Delivery Test and the 100 or so local authorities which failed it. The test looked at housing need and housing delivery over the last three years and represented it as a percentage. Those with 95% or more obviously have nothing to worry about but those councils between 85% and 95% have now to produce an action plan to detail how they are going toe increase delivery. Those with less than 85% have also to add 20% to their housing supply and produce an action plan. Those below 25% would revert from the local plan to the NPPF and a presumption in favour of sustainable development – no councils failed this threshold.

The pressure is increased this November when the next set of figures are published when the bottom threshold is increased from 25% to 45%. This will capture a handful of councils – Savills estimates that around 16 LPAs would have failed last year’s Test had the threshold been at 45%. The real crunch will come next November when the bottom threshold is raised to 75%, which will capture a significant number of councils.

But councils have criticised this ramping-up of the bottom threshold as they have little or no control of the delivery of new homes, it is up to the developers to bring forward sites for development. This then takes us into the realms of why developers delay so long in bringing sites forward and the issue of land banking that Sir Oliver Letwin looked at last year.

He found no evidence that developers land banked, which is what the industry has always said: it is not in their interests to hold onto land once planning has been consented as most borrow to buy the land and are paying interest on that capital. Only by developing out the land the selling the homes can they release that capital to pay off the debt. The delays are mainly around reserved matters and then mobilising the project, which can both take a year or even two to conclude.

It is true that developers do control production to a degree – there is no point in flooding the market with new homes as that will just result in prices falling for everyone, which certainly would not be popular. The usual output is around 50 units per site so a typical 250-home site would built-out in five years.

Part of Sir Oliver’s recommendations to increase output was to provide multiple offerings addressing different segments of the market at the same time. These could include various affordable tenures, PRS, starter homes, open market and older peoples housing all at once. This certainly has some merit and the industry has been looking closely at this.

The Government is serious about achieving its 300,000 new homes per year and is ramping up the pressure on councils to get up-to-date local plans and to work with developers to deliver homes to meet their housing needs. It is ironic that the Government is pushing housing which impacts more in the Tory heartlands – politically, this may not go down very well at the next General Election assuming, of course, people’s minds are not still on Brexit.

Housing breakfast briefing

Crunch time as over 100 councils fail Housing Delivery Test

By Daniel Fryd, Senior Consultant

The results of the first MHCLG Housing Delivery Test – long touted as the mechanism that would hold councils to account for their failure to build new homes – were finally revealed in February.

Over 100 councils will have to take action following the results of the test, with 87 having to identify 20% more land in their local plans to build new homes on. This is clearly not an insignificant uplift, so the impact on authorities including Harlow, Mole Valley, East Hertfordshire, Guildford, Basildon and Ipswich is expected to be marked.

The remaining councils will have to put together an action plan setting out how they will ramp up delivery and meet their housing need in the future.

What is the test?

The housing delivery test is MHCLG’s method for checking whether local authorities are providing the right number homes for their area. The test results set out the percentage of new homes delivered, against the number required over the past three years.

Under the guidelines which were first shared in the revised NPPF, authorities providing under 95% need to produce an action plan, those under 85% have to add the 20% buffer, and those under 25% face the NPPF’s presumption in favour of sustainable development.

No authorities face the harshest punishment yet, but that is all set to change in November when the minimum bar is raised for councils up to 45%.

Feeling the squeeze

Seven councils are currently on course to fall below the 45% threshold which comes into force in November, unless they record a significant increase in new homes this year.

This includes Redbridge (38%), Barking & Dagenham (43%) and Thanet Council (44%), which are all among the worst performing authorities with woefully low delivery percentages.

If they do not seriously look at sensibly delivering many more homes in their area over the next year, they face opening themselves up to speculative development through the presumption in favour of development.

These measures, alongside tough MHCLG talk on intervening in the lack of local plan making, is all part of a wider government drive to increase housing numbers.

There has been much talk about whether MHCLG would choose to intervene in the local plans of councils falling way below the housing levels expected of them. Councils at Wirral and Thanet have been given directions by MHCLG to complete their plans within a specified period, and Castle Point is expected to have directions to ignore its last council and vote on the local plan and to proceed with it as it has been drafted.

What next?

Many local authorities already have a 20% buffer on land supply in the local plans they have submitted: they need to ensure delivery. Those councils which have submitted local plans with housing figures below housing need can expect modifications to increase that supply and an early review.

Considering the revised NPPF came out last year, councils who have to step up delivery and have plans close to submission have had plenty of time to ensure that their emerging plans provide a sufficient supply.

There will be an array of Examinations in Public coming in the next few months for the many emerging local plans across the country. Inspectors now have every right to put their foot down and ask for an increase in delivery in under-performing authorities.

Maybe, just maybe, we’ll start to see more new homes coming forward.

New NPPF ends Government summer policy drought

by Daniel Fryd, Senior Consultant, Chelgate Local.
This article was also published on Pub Affairs.

In a day for burying Government announcements, Communities Secretary James Brokenshire revealed the new ‘National Planning Policy Framework’ (NPPF) on 24th July, providing good news for build-to-rent developers and bad news for councils dragging their feet. Read Chelgate’s analysis of the key announcements below:

On a swelteringly hot final day before summer Parliamentary recess, housing and planning professionals across the country sat with ‘bated’ breath and awaited the various MHCLG announcements they had been promised.

The Social Housing Green Paper, the revised National Planning Policy Framework (NPPF), and the Rough Sleeping Strategy were all pledged for publication ahead of the summer recess at various points over the last few months. While we will have to wait until September for the other two, Communities Secretary James Brokenshire finally published the long-awaited NPPF2  on the day before recess, before promptly sprinting out of the MHCLG door on his summer holidays.

But while NPPF2 could be seen as a rather underwhelming compilation of minor changes which have been seen before, it does introduce important new policy on areas including the housing delivery test, small sites, housing design, and build to rent:

Build to Rent

For the very first time, Build to Rent (BtR) has been officially recognised by the government as its own specific asset class. Furthering the Government’s drive towards a greater tenure mix, local authorities will need to reflect the demand for purpose-built rented homes alongside social rent and private ownership in their policies and local plans.

Significantly, changes in NPPF2 now allow Build to Rent developments to count towards the total affordable housing allocation for an area, meaning BtR sites can provide new affordable private rent homes for an area, and ease the pressure on registered housing associations to build homes.

The change should allow councils to plan more effectively for provision of affordable housing, and allows them to draw on the typically more high-quality rental homes that BtR provide to meet their housing obligations.

This will be come as some small consolation for councils left with an increasing deficit in their housing stock thanks to Right to Buy, as purpose built BtR developments can be used to provide “affordable private rent” while councils concentrate on replenishing their stock.

Housing Delivery test

One of the key new policies to enforce the Housing Need methodology, and ensure performance against local plans, is the Housing Delivery Test. From November 2018 councils will be assessed against the numbers of homes that are built in their area, rather than how many homes they planned for but have not yet delivered. To ensure councils can no longer agree local plans which set
wildly unachievable housing figures, the test penalises councils under-delivering over a three-year period.

While the policy will help MHCLG crack down on non-compliant councils failing to meet their land supply targets, councils have seen it as allowing developers to run riot. An outraged Lord Porter, Chairman of the LGA, pointed out that the test “punishes communities for homes not built by private developers”, and that national targets could see agreed local plans bypassed. If developers build less than 75% of the council’s target OAN target for new homes over three years, they will now benefit from a “presumption in favour of sustainable development.

Councils have long argued the slow build-out rate of developers has held back their delivery while they approve “nine out of 10 applications”. Developers have repeatedly contested this assertion, and while MHCLG has not committed itself either way, the findings of the Letwin Review at Autumn Budget should finally force the Government to take a policy stance on the issue.

January 2019 local plan deadline

Councils have been told for the first time they have until 24 January 2019 to submit their local plans if they want to be examined against the previous NPPF, using the old housing need figures.

Plans submitted after 24 January – exactly six months from NPPF2’s publication – will be examined under the new rules and will be held to the new housing need assessment.

Good design

Showing he practices what he preaches, the Communities Secretary has also made guidance around good design significantly more robust, in a move which could help bring an end to the days of faceless cheap developments. Recognising its importance for creating places which people want to live in and enjoy, NPPF2 places the creation of high quality buildings as ‘fundamental’ to the planning process.

Warning about how the “quality of approved development [can] materially diminish between permission and completion”, the new guidance sets out how local authorities should work with developers to ensure changes are not made to areas like materials on permitted schemes. While the viability and cost of materials is a perennial issue post-approval, the new guidance could see councils cracking down on changes.

Adopted neighbourhood plans should “demonstrate clear local leadership in design quality, with the framework allowing groups seeking such plans to truly reflect the community’s expectations on how new development will visually contribute to their area”.

Small sites

While the draft NPPF, and Oliver Letwin’s initial findings, have promoted small sites as one of the answer to England’s housing woes, the new NPPF moves away from this. Previously the document stated that “small sites can make an important contribution to meeting the housing requirement of an area, and are often built out relatively quickly”.

Under the revisions to the plan, councils must accommodate 10 per cent of their housing requirement on small sites, as opposed to 20 per cent of sites which they would have had to deliver under the draft version. While the development of small sites is clearly still part of the solution for MHCLG, this move, and the reinstatement of the previously dropped Garden City principles, could signal a move back to larger strategic sites to deliver new homes.

To find out more, and to see how we can help you, get in touch at mhardware@chelgate.com or 020 7939 7989.