Out-Law News 3 min. read

Government sets out standardised approach to planning for new homes


Plans to create a standardised approach to calculating local housing need for use by local planning authorities (LPAs) have been published by the government.

The three-stage approach, first proposed as part of the government's Housing White Paper, could lead to the delivery of an additional 66,000 new homes in England per year, according to communities secretary Sajid Javid.

A consultation, which closes on 9 November, seeks views on the new approach, along with a number of additional proposals from the white paper. These include plans for better collaboration between neighbouring LPAs, changes to make the use of viability assessments simpler and quicker, and the potential for LPAs that deliver the homes their communities need to charge increased planning fees.

Javid described the new approach as "a crucial step in fixing the country's broken housing market", which would help boost housing supply and improve affordability.

"This new approach will cut the unnecessarily complex and lengthy debates that can delay house building," he said. "It will make sure we have a clear and realistic assessment of home many new homes are needed, and ensure local communities have a voice in deciding where they go."

Over 40% of councils in England do not currently have a housing delivery plan in place that meets the projected growth in local households in their area, despite greater reliance on local and neighbourhood plans, according to the government. The new approach would require them to look at both projections of household growth using the most recent data available, as well as the ratio of local house prices to local earnings, in order to calculate local housing need.

A second step would apply in areas where average house prices are more than four times average earnings. Each 1% increase in affordability ratio above this figure would correspond with a quarter of a per cent increase in need above projected household growth. In recognition of the significant increase in potential housing need this would lead to in some parts of England, the consultation also proposes a 40% cap on the level of any increase above the housing projections set out in the local plan, assuming that the local plan is up-to-date.

The proposed system is not intended to "set targets", but rather to be used as "a starting point to ensure that it will be quicker for each local area to produce a realistic plan of its housing need and review it at least every five years", according to the government. It also recognises that LPAs may be constrained by green belt and other restrictions on development. For this reason, local authorities will be required to work together to produce a 'statement of common ground' (SOCG) setting out how they intend to work together to meet housing needs that cut across local authority boundaries.

As part of the SOCG, neighbouring councils will be expected to set out their approach to cross-boundary matters within an agreed area taking into account housing need for the area, distribution of homes, and plans to meet any shortfalls. The SOCG will not replace the existing 'duty to cooperate', which will continue to be tested at local plan examinations. The government said that it would be prepared to "take action to ensure communities and neighbouring councils are not at a disadvantage" where effective cooperation does not take place.

Both the standardised approach to calculating local housing need and the SOCG will be incorporated into a revised National Planning Policy Framework (NPPF), expected in spring 2018, according to the government. Once this is finalised, councils will then have up to a year to put their SOCG in place. The government will, however, expect publication of an 'outline' SOCG within six months. The revised NPPF will also make it clear that plans should be reviewed every five years in order to be considered up to date.

Additional expectations for local plans will be set out in the NPPF to ensure that there is a robust basis for assessing viability at the plan-making stage. LPAs should set out the types and thresholds that will be required for affordable housing contributions, the infrastructure needed to deliver the plan and expectations for how this infrastructure will be funded, including by way of any developer contribution. LPAs will also be required to set out in their plans how they will monitor, report on and publicise funding secured from developers through s106 agreements, along with how it is spent.

The consultation also proposes that LPAs which are "successfully delivering the homes that their communities need" would be permitted to increase planning fees by 20%.

Planning and housing law expert Kate Brock of Pinsent Masons, the law firm behind Out-Law.com, said that the consultation was the "next stage" for some of the concepts set out in the Housing White Paper.

"The proposals contain both 'carrots' and 'sticks' for both developers and LPAs, and so it will be important for those affected by the proposals to respond to the consultation with their views," she said.

"If the proposals come forward as outlined, and coupled with the revisions to the NPPF and planning guidance, we will see a step change in the way that housing need is calculated and viability of schemes is assessed. Transitional provisions will help with bedding down the new rules, but inevitability it will create increased pressure on the industry whilst this happens," she said.

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