Read this chapter of the Housing and Economic Needs Assessment May 2022.
The National Planning Policy Framework (NPPF) is the overarching document that sets out the government planning policies for England. The NPPF thereby informs and sets the parameters for local plan policy making, which must also take account of statutory requirements and international obligations. The latest iteration of the NPPF was revised in July 2021. This revised Framework replaces the previous National Planning Policy Framework published in March 2012, revised in July 2018 and updated in February 2019 and July 2021.
It is important to state that the NPPF does not replace the statutory basis of the development plan as the legal starting point for decision making. However, Local Plans are assessed for soundness against their consistency with the NPPF.
Paragraph 7 of the NPPF states the purpose of planning is to contribute towards the achievement of sustainable development. Paragraph 7 also goes on to summarise the objective of sustainable development in line with Resolution 42/187 of the United Nations General Assembly as meeting the needs of the present without compromising the ability of future generations to meet their own needs.
The NPPF (paragraph 8) sets out three overarching objectives to the achievement of sustainable development. These are an economic objective, a social objective and an environmental objective.
Paragraph 9 states that planning policies and decisions should play an active role in guiding development towards sustainable solutions, but in doing so should take local circumstances into account, to reflect the character, needs and opportunities of each area.
Key to the NPPF (paragraph 11) is the ‘presumption in favour of sustainable development’ in plan-making and decision-taking. Plan-making should actively pursue opportunities for sustainable development and strategic policies should provide for objectively assessed needs for housing and other uses, as well as needs that cannot be met within neighbouring areas.
Paragraph 20 states that strategic policies should set out an overall strategy for the pattern, scale and design quality of places, and make sufficient provision for housing (including affordable housing), amongst a far broader list of requirements.
The NPPF (paragraphs 24 to 27) also sets out a duty to cooperate between local authorities on strategic matters that cross administrative boundaries. The Duty to Cooperate was introduced in the 2011 Localism Act and is a legal obligation. Strategic policy making authorities should prepare a statement or statements of common ground to demonstrate effective and on-going cooperation.
Paragraph 60 sets out the government’s objective of significantly increasing the supply of homes through the identification of a sufficient amount and variety of developable land. It also iterates how the needs of groups with specific housing requirements also need to be met.
Paragraph 61 states that strategic policies should be informed by a local housing need assessment. The housing need figure will be determined by way of the ‘standard method’ as set out in Planning Practice Guidance and is calculated for the purposes of Torbay’s Local Plan Update later in this Chapter (Table 2.1). The paragraph states the ‘standard method’ should be followed “unless exceptional circumstances justify an alternative approach which also reflects current and future demographic trends and market signals”. The HENA will explore the deliverability of the ‘standard method’ housing need figure within the Torbay housing market.
The size, type and tenure of housing needed for different groups should be assessed and reflected in planning policies. Chapter 9 of this document assesses the needs of the groups set out in paragraph 62 of the NPPF.
Paragraph 63 states that where a need for affordable is identified the type of affordable housing required should be set out within planning policies.
The NPPF (paragraph 68) goes on to specify that strategic policy-making authorities should identify a sufficient supply of sites to provide specific deliverable sites for years 1-5 of their plan period, and specific developable sites or broad locations for growth for years 6-10 and where possible for years 11-15 of the Plan. Local authorities are required to maintain a five-year supply of deliverable sites, with a buffer of 5, 10 or 20%. The 20% buffer is required where there is significant under delivery of housing, determined as under 85% of allocated delivery.
A Housing Delivery Test (HDT) looks back and assesses completions over the 3 previous years. Inability to demonstrate a five-year supply, or a shortfall (below 75%) against the Housing Delivery Test or the Plan being out of date for other reasons means the local planning authority (LPA) needs to proactively consider submitted schemes outside of land strategically allocated within the Plan or designated in national policy terms. The result of the HDT also determines the percentage buffer the LPA needs to maintain. Torbay needs to maintain a 20% buffer as the 2021 HDT was 75% of allocated delivery.
PPG is issued periodically by Government to provide clarity on the implementation of the NPPF. PPG sets out the standard method formula “to identify the minimum number of homes expected to be planned for, in a way that addresses projected housing growth and historic undersupply.” (Paragraph: 002 Reference ID: 2a-002-20190220). The calculation for Torbay is set out in the next section.
Paragraphs 19 to 24 of PPG set out guidance for the calculation of affordable housing need, which is broadly consistent with previous Strategic Housing Market Assessment (SHMA) guidance. Housing needs assessments will need to consider the need for particular sizes, types and tenures of homes as well as the housing needs of particular groups, which should be considered separately. There is a specific PPG on self-build and custom housebuilding and PPG on Build to Rent which should be taken into account when assessing overall housing need.
In June 2019, new PPG on housing for older and disabled people was published which provides guidance for authorities preparing policies on housing for this specific group. This PPG summarises evidence data which can be utilised in assessing older persons’ needs, the different types of specialist housing available and the requirements for accessible housing.
On 24 May 2021 the then Ministry of Housing, Communities and Local Government or MHCLG (recently renamed the Department for Levelling Up, Housing and Communities or DLUHC) issued new PPG on First Homes. First Homes is a major strategic government initiative to facilitate housing market access for first-time buyers. The scheme provides homes for first-time buyers at a discount of at least 30% against the market value of a newbuild home. It effectively replaces the Starter Homes initiative which never delivered due in part to the requirement for secondary legislation which was never enacted. The First Homes product is a discount to market tenure as already set out within Annex 2 of the NPPF.
The publishing of the PPG on First Homes followed a period of consultation on the draft scheme which ran from 7 February 2020 to 1 May 2020, with the MHCLG’s response to the consultation having been included in the ‘Changes to the current planning system’ consultation published in April 2021.
The PPG confirms that First Homes are to be sold to qualifying first-time buyers with a combined household income not exceeding £80,000 (or £90,000 within Greater London). The 30% discount against market value is retained from first to subsequent purchases by way of a restriction on title.
The First Homes will be provided as a planning obligation, as part of the affordable housing obligations of the respective local planning authority, secured under section 106 of the Town and Country Planning Act 1990.
There is a discretion for local authorities and neighbourhood planning groups to require a higher minimum discount of either 40% or 50% against market value if a need on affordability grounds can be demonstrated.
PPG states that “a minimum of 25% of all affordable housing units secured through developer contributions should be First Homes.” Once this 25% First Homes requirement has been accounted for, social rent should be delivered in the same proportion as set out in the local authority’s planning policies. The remaining tenures will be delivered proportionally across the remaining affordable units.
The Council’s Local Plan Policy H2 states that the Council seeks to achieve an affordable housing tenure split of one third (c33.3%) social rent, one third (c33.3%) affordable rent and one third (c33.3%) shared ownership housing. The First Homes PPG will impact new affordable housing schemes delivered through planning obligations in Torbay as such: 25% First Homes, 33.3% social rent, c21% affordable rent and c21% shared ownership housing.
In February 2019, MHCLG published the outcome of the ‘Technical consultation on updates to national planning policy and guidance’. The Government’s policies were incorporated within an updated version of the Planning Practice Guidance (PPG) on Housing and Economic Needs Assessments (HENA).
Any Local Plans submitted for examination on or after 24 January 2019, which is the case with the Council’s emerging Local Plan Update, will be examined in accordance with the 2021 NPPF. This requires the local planning authority (LPA) to assess local housing need in accordance with the guidance in the PPG on how to conduct a HENA, known as the ‘Standard Method’. This updated guidance clarifies that the 2014-based household projections should be used to set the baseline for Step 1 of the Standard Method.
The PPG on HENAs sets out the calculation that local planning authorities should follow in order to calculate local housing need for the purposes of the allocation through local plans that are to be submitted for Examination on or after 24 January 2019. This should be calculated using the following three steps, and the calculation for Torbay is set out in Table 1.1:
The calculation set out in Table 1.1 provides for a minimum annual local housing need figure of 600.
Calculation 8.9-4= 4.9; 4.9/4=1.225; 1.225 x 0.25= 0.30625; 0.30625+1= 1.30625
Step Two Housing Need - 600
Higher Figure
Minimum Local Housing Need = 600 pa
Source: ONS 2022, DLUHC 2022. N.B. The standard method changes at least annually as new data is published. The most recent (2022) calculation is presented here. At 2021 the figure stood at 559 dwellings a year.
As indicated, the Standard Method is based on 2014-based household growth projections (Line I). The Office for National Statistics (ONS) has produced two more recent sets of sub national projections, namely the 2016 and 2018 based projections. Interim 2020 based Projections have also been published and will be finalised when the findings of the 2021 Census are available. It is noted that 2014 based demographic projections are becoming increasingly dated. In contrast the median workplace earnings (Line ii Table 1.1) input to the model is adjusted upon the release of the annual dataset. Changes in affordability ratios on annual basis introduce a degree of volatility to the Standard Method calculation. This provides challenges for strategic planmaking.
The Planning White Paper entitled ‘Planning for the future’ was published on 6 August 2020. This consultation sets out the Government’s plans for making fundamental changes to the current planning system.
The Government has long intimated that the current planning system is not fit for purpose. In fact, the Prime Minister’s foreword to the paper describes the current planning system as “outdated and ineffective”.
The White Paper sets out the Government’s proposals within three pillars:
Key proposals within Pillar One involve the simplification of land use plans through the incorporation of a zonal approach to land allocation, categorized as:
Pillar One also proposes to refocus local plans towards the identification of land use and away from individual development management policies which will be predominantly established at the national level.
The White Paper proposes that local plans should be subject to a single statutory “sustainable development” test. This would replace existing tests of soundness and abolish the Duty to Cooperate. A statutory timetable of no more than 30 months will be introduced for key elements of the plan-making process.
Proposal 4 is set out as follows: “A standard method for establishing housing requirement figures which ensures enough land is released in the areas where affordability is worst, to stop land supply being a barrier to enough homes being built.” This method would factor in constraints and opportunities in respect of land identification.
The proposals within this Pillar focus upon design quality and the environment. This includes the introduction of locally prepared design codes supported by a new national body and embedding a design champion at a senior level within each local authority. The Government has subsequently appointed Nicholas Boys Smith, Create Streets founder, to head up the national design body.
While supporting high quality and sustainable development in the appropriate location, there will be enhanced protections in respect of environment, ecology and heritage.
The Government has proposed the removal of the Community Infrastructure Levy and the planning obligation system and their replacement with a nationally set “value-based flat rate charge (the ‘Infrastructure Levy’)”. This would include homes created through permitted development.
The White Paper states that the new Infrastructure Levy would aim to raise more revenue than the current system. Site specific viability issues and how these would be addressed is not referred within the White Paper.
The White Paper suggests that the Infrastructure Levy would aim to facilitate a higher level of onsite affordable housing, while also proposing that local authorities would have greater powers to determine the use of developer contributions.
While these proposals require primary and secondary legislation, the ambition is to enact these changes and for local planning authorities to have a new Local Plan based on the zoning approach in place by the end of this Parliament.
The 2021 Queen’s Speech originally indicated that a Planning Bill taking forward many of the proposals in the White Paper was likely to be introduced in Autumn 2021. The stated purpose of the Bill is to “modernize the planning system so that more homes can be built”.
However more recently progress on the Bill has stalled. In September 2021 the Cabinet reshuffle saw Robert Jenrick replaced by Michael Gove as new housing secretary. This was followed by confirmation that the Ministry of Housing, Communities and Local Government would become the Department for Levelling Up, Housing and Communities (DLUHC). At the time of writing, DLUHC is now in place and has overseen the allocation of the first £1.7bn tranche of the levelling up fund.
The planning reforms set out in the White Paper were deeply unpopular with some Conservative MPs. Michael Gove has subsequently paused planning reforms and, according to some publications, has ordered a complete review of proposals. Rhetoric from Government, including the Prime Minister, seems to indicate a renewed focus on brownfield sites which would fit with the Government’s levelling up agenda.
As set out previously, the White Paper proposes a “A standard method for establishing housing requirement figures which ensures enough land is released in the areas where affordability is worst, to stop land supply being a barrier to enough homes being built.” The housing requirement would factor in land constraints and opportunities to use land more effectively, including through densification where appropriate, to ensure that land is identified in the most appropriate areas and housing targets are met.
This (new) standard method would be a means of distributing the national housebuilding target of
300,000 new homes annually, and one million homes by the end of the Parliament, which is a Conservative Party Manifesto commitment. The new standard method would potentially be a requirement figure, taking into account constraints as well as need, and possibly the size of the existing settlement.
The White Paper is silent on the fine details of how the housing requirement would be calculated.
While there was a possibility of more details in the Devolution White Paper, it was announced in
May 2021 that it would be replaced by a “Levelling Up White Paper” led by the Number 10 Cabinet office. The Levelling Up White Paper has since been published on 2 February 2022 but is also silent on the workings of a new housing requirement. It remains possible that some proposals will be set out in the up-coming Planning Bill.
Determining the housing requirement is often the most controversial aspect of the plan-making process. The Standard Method places significant weight upon the affordability ratio for the local authority. It appears from the statement from the White Paper at paragraph 2.45 that this will continue. The assumption that affordability is resolved by increasing supply is based upon economist Kate Barker’s review of housing supply back in 2004. Driving housing numbers has been a key policy for successive governments. While there is clearly a supply/demand imbalance, critics will argue that it is overly simplistic to expect increasing supply alone to resolve the affordability crisis. Further to that an issue that many local planning authorities are grappling with is the deliverability of sites that have been allocated and permitted.