#NPPF2024 - what we thought about… (2) housing numbers
So, for an intro into this modest mini-series, including an origin story for the concept of “woke-ism” that might just surprise you, have a look at #NPPF2024 - what we thought about… (1) the “Grey Belt” - here.
Here we are. You’re back. Part 2. If you’re sitting comfortably…
What did we make of: the new approach to housing numbers?
And, while we’re at it, I’m going to crow-bar another linked topic into this segment. As “transitional provisions” sounds a bit too arid for a blog post of its own, they’re going in this one. Because, as you’ll see, for lots of authorities, the transitional provisions are going to be where the battle ground really lies.
A reminder - a smattering headline responses of the great and the good are at:
British Property Federation (“BPF”): here.
The Countryside Charity (“CPRE", aka the Campaign to Protect Rural England): here.
The Home Builders Federation (“HBF”): here.
The Land, Planning and Development Federation (“LPDF”): here.
The Local Government Association (“LGA”): here.
The Planning Officers Society (“POS”): here.
The Royal Institute of British Architects (“RIBA”): here.
The Royal Institution of Chartered Surveyors (“RICS”): here.
The Royal Town Planning Institute (“RTPI”): here.
The Town and Country Planning Association (“TCPA”): here.
In short summary, what does the consultation have on offer on this stuff:
For starters, the December 2023 changes are reversed, i.e. (i) no more immunity from 5 year housing land supply challenges for authorities with recently adopted local plans, (ii) no more 4 year housing land supply, (iii) re-introduction of a 5% buffer.
But the biggest change on housing numbers isn’t in the NPPF at all. It’s the proposed shift to the way that local housing need is calculated. To recap: at the moment, the basis for “local housing need” is the 2014 household projections. Which is bolstered for affordability (albeit subject to an arbirtrary cap to protect the least affordable areas from having to meet their needs). To that you add, among other things, an artificial, never-yet-evidenced “urban uplift” which Robert Jenrick introduced in the heat of previous mutant algorithm wars to keep the numbers away from the shires. That approach gets us up to an overall target of around 306,000 new homes a year nationally additional homes per annum, of which around 99,000 are to come from London (albeit in real life it’s been a recipe to fail, not least because London’s delivery is nowhere near even half that much, and because permissions for just over 300,000 homes are never going to deliver 300,000+ actual new homes for reasons e.g. that Lichfields explained here).
The new proposal is to drop that with a “stock-based” approach. In other words: you start with how many houses exist in your area at the moment. You aim to increase that level every year by… 0.8%. You increase further still in areas which where house prices are more than four times higher than earnings, i.e. to account for unaffordability. Overall, this new approach adds up to around 372,000 new homes a year, of which 81,000 are in London.
Broad-brush then: overall numbers go up pretty considerably (albeit by closer to 25% than the 50% reported in last week’s paper). London’s target comes down by almost a fifth (albeit, again, around double above what London has actually delivered in any year in the last 20 years+, and way over the target in the London plan). Also, it’s not like every London Borough’s target is dropping - Kensington and Chelsea’s goes up by over 200%, Westminster’s more than doubles, with other massive rises in Islington, Lambeth, Hammersmith and Fulham and Wandsworth. Anyhow, every other region in the country has its housing targets boosted. And that means that the vast majority of local planning authorities - some 90% - will see an increase in their local housing need numbers, and over 2/3 of authorities will see their number go up by over 200 homes a year: see this analysis from Lichfields here. An analysis which concludes that these considerable bumps in housing targets may get us to 300,000 homes a year by the end of the first 5 years of a Labour government (which would mean building to level we haven’t reached in decades), but will not be enough to achieve 1.5 million homes over that period.
When do these numbers kick in? For decision-taking (aka 5 year housing land supply purposes), they kick in immediately unless your local plan is less than 5 years old, in which case land supply will be judged against the requirement in that plan (which includes, of course, the London Plan). For plan-making, it’s more involved. To summarise (look at the first Annex to the draft NPPF for the detail):
From 1 month post-publication, all plans which set out new housing requirements will need to follow the new NPPF, unless (a) the plan has been submitted for examination already, or (b) it’s reached a Regulation 19 consultation, but the housing requirement is less 200 homes a year or less below the new local housing need figure.
If (a) above applies, and the submitted plan has a housing requirement more than 200 homes a year below local housing need, an immediate review will be required after the plan is adopted.
OK. So. What did we think about all of this?
Let’s take this new “mutant algorithm”:
Well. There’s a fair bit of opposition. Obviously…
For instance, the CPRE really hate it. And it’s a fundamental objection that they raise (along with others like the LGA), i.e. they challenge the premise that increased supply leads to increased affordability. One for the economists, I suppose. Definitely not one for the planning lawyers. But it does make you wonder - if as an industry, we can’t even agree on something as foundational as this (i.e. do the normal rules of supply and demand apply to housing or not?), well… what hope do we have?
The TCPA and CPRE say that a stock-based approach is too crude, reflective of “demand” but not “genuine need” (we need a whole other blog post about the supposed difference between those two things - I’ve been mulling it over for years, and I still don’t understand it), and the answer lies precisely in the complicated, convoluted demographic data that the Government is seeking to ditch.
The LGA thinks the formula needs more flex to allow authorities to factor in a range local circumstances or alternative approaches which, I suppose, might seem fair enough unless you’re interested in designing a clear, predictable and robust national approach to determining local housing need.
The POS calls it a “huge mistake”, raises the spectre of lots of authorities failing the housing delivery test as a result and falling into lots of speculative applications, and says the real answer is in strategic planning.
And the TCPA, CPRE and others want to make it clear that these “mandatory” targets are only mandatory starting-points. Not mandatory requirements to actually meet. Well. Again. What hope, you may wonder, for the Government’s 1.5million target. What hope for any of us.
On the other side of the fence…
The HBF and LPDF responses point to the obvious and glaring flaws with the current standard method (which puts a 1/3 of the nation’s housing target in London at a level it hasn’t reached for decades, so it’s a recipe for failure), and points to the positives of a stock-based approach which is simple, predictable, stable, and ensures a genuine boost to numbers. They rely on research from Lichfields to show that increasing targets in this way would cause a reduction of some 650,000 units in the backlog of housing need by 2029, an increase in the delivery of affordable housing of around 130,000 additional units within the current Parliament, and a reduction in the number of concealed households by 520,000.
RICS support the change - noting that “no calculation method will be perfect” but that the proposed approach has a “better prospects of addressing the housing crisis” than the current one.
What about the RTPI - the planners’ voice. Do they support the change? The answer: “maybe”. Quote unquote. “Maybe”. Huh? Well, they agree with the principle of a simpler method, and that a stock-based method makes sense. On the other hand, they’re concerned about anomolies. And think, like others including the POS, that the answer lies in strategic planning.
What about those transitional provisions? When those numbers are going to kick in.
This matters, folks. On the one hand, the Government doesn’t want the new NPPF to totally up-end proper plans which are in their later stages toward adoption. Fair enough, right? But there’s another side to this: all over the country, in the last couple of months authorities have been fast-tracking - sometimes at breakneck speed - their local plans through Reg 18 and Reg 19 consultation processes in a desperate rush to get a plan, any plan, submitted to the Planning Inspectorate prontissimo for examination before the new NPPF is adopted. In an effort to, you guessed it, avoid having to plan for these tough new numbers. Again, what hope for our 1.5million target. What hope indeed. Alas. Here’s looking at you, St Albans, who - having not adopted a plan in 30 years (yes, that’s 30 years) - are now trying to move from Reg 18 to Reg 19 to submission in a matter of a few weeks. They’re not alone. Wiltshire. Dacorum. Lots of places. Everyone who even remotely can is trying to avoid the new NPPF. Isn’t it heartening? So.
What did we think about it?
The CPRE support the transitional arrangements. Full stop. The TCPA think transitional arrangements of this kind are not generous enough - they think any plan which has gotten to a Reg 18 consultation should be allowed to press on happily under the current NPPF (which would mean, of course, that in hundreds of authorities the new NPPF’s approach won’t bite for years, if ever). The TCPA, RTPI and the LGA think the 200 dwelling figure is arbritrary, and needs re-thinking. The RTPI, POS, TCPA and LGA all say the transitional provisions are a bit confusing and need clarification.
The RTPI think the transitional provisions are too stringent, and that Reg 19 plans which have 200+ shortfalls should be allowed to press on under the existing NPPF, and then do an early review (just for a bit of context, the St Albans local plan was itself only adopted on the basis of the requirement for an early review, and 30 years later… well… we’re still waiting).
The HBF notes that 120 plans are on the cusp of submission, which means wide-scale undercutting of the proposed new approach to local housing need. So what’s on the table is “baking in” lower numbers into the system for many years to come.
The LPDF and HBF append research from Lichfields on the implications of the transitional arrangements - the headline is that around 30% of LPAs with a local plan adopted within the past five years alongside plus around 50 LPAs that could expect to benefit from the proposed transitional arrangements will be operating for the foreseeable future under the existing standard method targets. What does that mean? It means, in the end, missing the Government’s 1.5 million ambition by several hundred thousand homes.
My 2 cents… for the little that it’s worth:
We’re either serious about increasing housing supply or we’re not.
Now. Whether we are or not is, in the end, a political decision. But it’s a decision this Govenrment has already taken. This Government was swept into a landslide victory on a manifesto - which I wrote about here - that promised 1.5 million homes over this Parliament. That’s what it’s after. Building on a scale we’ve not come close to for many, many decades.
Getting there, or even close, is going to be massively difficult. Obviously. Doing it sustainably in the long term is going to require rolling out strategic planning at a regional or city-wide scale, but we’re nowhere near achieving that nationwide. Not yet. It’s going to require universal local plan coverage, but again - we’re nowhere near that either. And it’s not always the case that “any plan is better than no plan”. Not when local plans have been so successful in baking in housing targets that suppress what the true levels of need actually are.
I don’t express any views on the economics bit - i.e. is housing a market like other markets that responds to the laws of supply and demand, would more homes lead to more affordable homes etc. I leave that to the academics. But I can tell you one thing for sure: you can’t build 300,000 homes without planning permission for significantly more than 300,000 homes a year, and you can’t achieve planning permission for 300,000+ homes a year without bolstered housing targets. You can’t do it. It won’t happen.
So. What do I think? I think that whatever your views are on whether the stock-based approach is a good idea, the real problem is that under the draft NPPF we’ll never find out if it’s actually going to work or not. It won’t be allowed to take effect, not widely enough or quick enough to make any difference - definitely within this Parliament, and probably far beyond it. And that is because the policies on 5 year housing land supply and the transitional provisions allow very much lower housing numbers to be baked in, including in London for now under the existing London Plan. You want change? Real change? Fast change? You’re interested in 1.5 million homes - really? Well, ok. Then these so-called mandatory numbers are going to have to get an awful lot more mandatory much, much quicker.
In the end, if you’re after a litmus test, if you want to cut through the headlines to see whether the final as-adopted NPPF really is interested in doing something radical… skip right to the back. Any good lawyer will tell you - it’s all about the footnotes and the annexes. And in this case: it’s all about those transitional provisions.
More to come on the NPPF consultation. For now - stay well, #planoraks. Enjoy this prime Autumnal site-visit weather (I’m about to put on my wellies myself and head out into the mud). And, whatever else you do, do your lever best to #keeponplanning.
