As promised in February’s Housing White Paper, the Government has launched a consultation into establishing a standardised methodology for assessing housing need in local authority areas. The consultation, titled ‘Planning for the right homes in the right places’, is a key part of the Government’s plans to boost house numbers.
In the foreword to the consultation, the Communities Secretary Sajid Javid MP states the aim of the new methodology is to create “a system that is clear and transparent so that every community and local area understands the scale of the housing challenge they face.”
To create this new system, the Government proposes three components to their new methodology. First, setting the baseline, which the Government say should continue to be the projections of household growth for every local authority area.
Second, an adjustment to the baseline to take account of market signals in a local authority. The proposed adjustment is that for every 1% increase in the ratio of house prices to earnings above four there should be a quarter of a per cent increase in need above projected household growth. (So for a local authority with a projected household growth of 100 a year and a house price to earnings ratio of 8, the annual need would be 125)
Finally, a cap on the level of any increase. For authorities with an up to date local plan (adopted in the last five years) the new annual local housing need figure should be capped at 40% above the annual requirement figure set out in their local plan. However, for those authorities that do not have an up-to-date local plan, the Government proposes that the new annual local housing need figure should be capped at 40% above whichever is higher – the projected household growth for their area over the plan period, or the annual housing requirement figure set out in their local plan.
Although the methodology targets local authority areas with higher house price to earnings ratios for the most growth, Mr Javid said that the proposals would actually see local housing need figures fall in 148 local authority areas – down by an average of 28 per cent. He also told MPs that in the other 156 areas where the assessed need increases, the average rise is 35 per cent.
The Government intends to publish a draft revised National Planning Policy Framework early in 2018, based on the outcome of the consultation and responses to the White Paper.
The consultation also seeks views on the proposal in the White Paper that local planning authorities delivering the homes their communities need might be eligible for a further 20 per cent increase in fees for planning applications, over and above the 20 per cent increase already confirmed.