Planning matters

Housing issues are never far from the headlines, and one simple truth lies at the heart of the matter: we are not building enough new homes. But in addition to ensuring that sufficient new homes are delivered, we must also ensure that an appropriate mix of housing is achieved. If the emerging housing supply does not reflect the needs and demands of existing and potential future residents, there is a risk that an imbalance will emerge between the supply of and demand for certain types of residential property. The consequence would be that the prices of those properties that are more in demand would increase at a faster rate than that of the overall housing stock, exacerbating affordability issues and undermining the ability of certain sectors of the population to meet their housing needs.   The importance of achieving an appropriate housing mix is reflected in government policy, which states at paragraph 50 of the National Planning Policy Framework (NPPF): “To deliver a wide choice of high quality homes, widen opportunities for homes ownership and create sustainable, inclusive communities, local planning authorities should: “Plan for a mix of housing …; “Identify the size, type, tenure and range of housing that is required in particular locations, reflecting local demand…;” The draft NPPF launched for public consultation in March 2018 adopts a similar approach; paragraph 62 states: “Policies should identify the size, type and tenure of homes required for different groups in the community…” The current PPG provides some detail about how to identify the need for certain types of housing and the needs of different groups, but does not provide any specific guidance on how to identify the mix of different house sizes that is required. Lichfields has launched a new product, Sizemix, which provides a robust and transparent means for identifying the size, type and range of housing that is required in a local area, in line with national policy. A complex relationship Understanding the right mix of housing relies on an appreciation of the differences between housing need and demand. This difference is particularly acute in the open market sector, where households are free to occupy housing in accordance with what they want and can afford. In this context, whilst housing need draws solely on the size and structure of individual households, housing demand reflects the reality that many people will often deliberately under-occupy their homes and thereby express a demand for a property that is larger than they might specifically need. For example, a couple might only need a one-bedroom property but might want a larger property. This pattern leads to a combination of overcrowding and under-occupation. According to the latest available ONS’ standards of occupancy[1], 700,000 households in England were overcrowded at the time of the 2011 Census, of which over 400,000 were households with dependent children. A total of 3.8m households (c.20%) occupied housing in line with their needs, whilst 7m households had at least 2 spare bedrooms. Figure 1 provides a breakdown of occupancy patterns by household type. The highest levels of under-occupancy are amongst older households and couples without children, compared to the highest level of over-occupancy amongst households with children and multi-adult households. Figure 1 Occupancy patters in England by household type Source: Census 2011. Excludes social rented. Table 1 considers the relationship between household and dwelling size in more detail by illustrating the occupancy patterns of all private sector households in England. It shows that 2-person households in 3-bed dwellings form the largest household-dwelling group, with 16.1% of households falling within this group. Contrary to what might be expected, most single person households (19.9%) occupy 2 and 3-bed dwellings, with relatively few occupying 1-bed dwellings. Interestingly, a similar number of 5-bed dwellings are occupied by 4-person households as by 2-person households. Table 1 Household size by number of bedrooms Source: Census 2011. Excludes Social Rented Households Explaining the relationship between household size and dwelling type A range of factors impacts on housing requirements, in addition to household size. The fact that many people view their home as an investment means that they will often seek to buy one that they can afford, rather than the space that they actually need, even though such a property might be too large. Having spare bedrooms is viewed positively by many households; it provides flexibility for changing circumstances (such as the birth of a child) and allows visitors to stay, with both being significant factors for many people when searching for and choosing to buy a new home. Another factor that might influence the current and future demand for larger homes is the trend for working from home. There has been a steady rise in the proportion of people in employment working from home. As of 2017 this stands at 13.6% of people in employment. Increases in the number of people working from home may translate into a demand for larger housing as people seek additional space for use as an office. Whilst some changes to households result in the need for larger properties, others may create the opportunity to downsize – for example, when ‘empty-nesters’ no longer need all the space in their family home. However, as shown above, this often does not happen, with 2.4m households (84%) over the age of 65 having at least 1 spare bedroom, and just 718,000 (15%) occupying housing in line with their ‘needs’. This might relate to a lack of sufficient supply of housing products perceived to be attractive to those downsizing, but equally research suggests there is simply a strong preference from many people to remain in their existing home. The English Housing Survey shows that older households are the least likely to move, with just 2.3% of households over the age of 75 and 3.1% of households aged between 65 and 74 moving in the previous 12 months. By comparison, younger Sizemix Within the context of a need to increase the rate of house building, it is of critical importance to ensure that an appropriate mix of housing is provided to meet demand. Sizemix represents an important addition to the range of tools provided by Lichfields. It supports all involved in the development process by helping to ensure an adequate supply of the right type of houses can be delivered, in line with local requirements. Further details of Sizemix are available here. Please contact any of our offices to discuss how we might be able to assist you.   [1] Occupancy as defined using ONS standard of occupancy. Occupancy rating of -1 or less indicates overcrowding, +1 or more indicated under-occupancy.  

Viability assessments at the plan-making stage, a step toward zoning? The first blog in this series of three discussed some of the Government’s proposed changes to policy and guidance on viability assessments and developer contributions[i]. In short, the proposals aim to introduce a standardised approach to appraising land values, whilst front-loading viability assessments to the plan-making stage - suggesting a subtle move toward a more prescriptive, zonal approach to planning.    In theory, such a move could potentially bring a number of benefits in light of the UK’s housing crisis.    For one, the changes could give planners and the public far greater control over what is built and the contributions expected from developers.   Funding for infrastructure could be better aligned to the uplift in local land values arising from granted permissions, whilst people living in the vicinity of new development may feel less likely to oppose it, due to there being greater certainty of the related benefits being delivered.   Taking matters one step further, a further shift toward a zonal approach could also offer the opportunity for more detailed, statutory guidance over design. Housing density, internal space standards and public realm requirements could be written into ordinances alongside or within plans, in theory at least helping ensure safe, vibrant and well-loved places are created, while speeding up the planning process for individual projects too. Design codes prescribe spatial standards for new development, helping individual schemes conform to a wider vision for an area Whilst a fully developed system of zoning is unlikely to be rolled out across England any time soon, for certain site allocations a more prescriptive approach could work well. Local authorities could take on the role of master planner, clearly indicating what kind of development is required and the associated contributions sought from specified site allocations. This could also help garner public support and provide reassurance over potentially sensitive projects, such as estate regeneration schemes or the development of Green Belt sites.   Used in conjunction with land-pooling and a plot-based approach to urban design, this zoning-type approach could also help to reduce some of the risk associated with development, levelling the playing field for smaller developers and simultaneously increasing the diversity of housing on offer, contributing to the genuinely mixed neighbourhoods the Government wants to deliver.   A culture shift in planning? Wider questions remain as to whether local authorities have the capacity or the will to take on the task, as this would require a wide range of professional expertise outside the normal remit of local planning departments.   Those drawing up plans would have to work closely with architects, urban designers, social scientists, economists and community groups, as well as those from the development industry delivering the changes. Whether some of these skills would be brought in-house or outsourced is another question, either way a major change in the culture of planning would be needed. There does appear to be a growing appetite in the development sector for change along these lines.   The recent interim report of the Raynsford Review has called for the profession to welcome a ‘new kind of creative and visionary planner into the system’, arguing that ‘planners and planning need to communicate their creative and visionary ambition’, as well as calls to reform the system of developer contributions [ii]. In the same week, the GLA-commissioned report ‘Capital Gains - A Better Land Assembly Model for London’ has called for powers to be granted to London boroughs that would allow them to designate ‘Land Assembly Zones’ [iii]. Although some London boroughs like Croydon and Hackney have taken a very pro-active approach to regeneration in their areas, this has tended to be on a site-by-site basis and is far from being comprehensive. By assembling smaller plots together, development and infrastructure could be better consolidated, whilst the cost and risk of development could -  in the right circumstances - be shared through land-pooling, in a similar fashion to that outlined above. Without a huge culture shift, further devolution and a relaxation of local authority spending restrictions, zoning in the English system is likely to be limited for now.  A long way to go At present, draft National Planning Policy Framework (NPPF) policies and Planning Practice Guidance on viability testing are not linked to any stricter controls over what can and cannot be built. Given the amount of flexibility this bestows, it makes it more difficult to set developer contributions at a level which is sensitive to market conditions, whilst delivering the community infrastructure needed and not deterring development.   With paragraph 34 of the draft NPPF stating that “plans should also set out any circumstances in which further viability assessment may be required in determining individual applications”, without any stricter controls over development in plans themselves, it seems likely that this will be an option which many applicants decide to pursue. See our other blogs in this series: Developer contributions & viability – increased certainty and a nudge toward zoning? (1 of 3)   [i] HMCLG - Draft Revised National Planning Policy Framework HMCLG - Draft Planning Practice Guidance [ii] Interim Report of the Raynsford Review of Planning in England [iii] Capital Gains - A better land assembly model for London