Housing has now moved up the political agenda, although there have been no calls to tear up the current plan-led system: but is it working as intended?
Savills investigated the plan-making process and delivery of housing since the introduction of the NPPF, as well as looking forward to see how the White Paper could make an impact, with a particular focus on how planning interacts with the housing market.
Planning must play a larger role in supporting economic growth, Savills concluded. We need the planning system to deliver more consents where need is greatest to improve affordability and solve the housing crisis.
MAKING PLANNING WORK WITH THE MARKET
There is a shortfall of more than 90,000 consents a year in areas where demand is highest. Although the NPPF has helped to boost overall consent numbers, it has not achieved its stated goal of responding to market signals and planning for homes in areas where affordability is most stretched. Future policy must ensure consents are granted where they are most needed.
The number of full residential consents reached 293,000 in 2016. This was a 56% increase in annual consents in the four years since the NPPF was introduced. But only 210,000 new homes were completed.
It is widely accepted that to achieve an improvement in affordability, 300,000 new homes are needed in England every year. A core goal of the NPPF was to ensure the planning system delivers sufficient land of the right type in the right places to support growth. It specifies that local plans should take account of market signals and plan to build enough new homes each year to improve housing affordability.
Savills analysis of planning consents and housebuilding shows that this goal has not been met. The total number of consents has increased. But there has not been any greater increase in the areas where affordability is most stretched. The distribution of housing delivery and planning consents between areas of different levels of affordability has not changed.
This means we are not building enough homes in areas where they are most needed to improve affordability and support economic productivity. The shortfall in consents is more than 90,000 units per year in places where affordability is worse than the national average.
PLAN-MAKING IN NUMBERS
It’s been five years since the publication of the NPPF, and plan making remains slow. Only 41% of local authorities in England have adopted an up-to-date plan, up from 25% two years ago. Many adopted plans are failing to set targets that meet housing need. Adopted planning targets in England are 88% of objectively assessed need for housing.
Sixty one local authorities have lost at appeal due to not having a five-year land supply in the year to April 2017. A further 61 authorities have a published housing land supply of less than five years. Across England, local authorities have on average 5.3 years’ land supply, down from 5.4 years last year.
Assessing need based on market strength would start to address housing affordability, but could lead to big increases in housing-need numbers in and around London. Some districts will have to find additional housing land from as soon as 2018 if these figures are used in the Housing Delivery Test identified in the Housing White Paper.
IMPACT OF HOUSING DELIVERY TEST
Savills’ positive planning index has identified the top 10 local authorities which need to identify more land for housing, based on local plan status, five-year land supply, Housing Delivery Test and housing affordability. These authorities have strong links to London, but their ability to build homes is often constrained by the Green Belt.
London’s commuter belt will be most affected by the proposed Housing White Paper reforms, based on Savills’ new index drawing together four key planning metrics.
Savills assessed each local authority on their post-NPPF local plan status, five-year land supply, and how they perform on the Housing Delivery Test outlined in the Housing White Paper. It weighted the results using housing affordability in each local authority as an indication of housing demand.
All of the 10 poorest-performing authorities cannot demonstrate a five-year land supply, have a housing affordability ratio greater than the national average, and only one has a post-NPPF local plan in place. Equally, they are often constrained by the Green Belt, posing an additional challenge to site identification.
The most acute housing need is in London, and nine of the 10 poorest-performing local authorities are in the London commuter belt. Our index treats the London Plan as a post-NPPF plan, but without that, five London boroughs would be in the 10 poorest-performing local authorities.
There is great pressure to allocate land in these areas, but there is often strong local opposition to development. Local housing need and London overspill must be accommodated somewhere, and there are three main options for increasing supply:
A comprehensive review of density policies, particularly in London, including big increases in the number of homes planned near transport hubs.
Local authorities could release land through the Green Belt review process, including Green Belt ‘swaps’.
Local authorities could work in partnership – through the duty to cooperate – to allocate land to accommodate their housing need in less constrained markets. This approach would require a greater level of strategic planning, and investment in infrastructure to ensure new housing is connected to areas of unmet need.
In reality, a combination of all of these approaches would have the biggest impact.