Planning matters blog

The need for evidence beyond Local Plan preparation

Fiona Braithwaite 24 Feb 2020

Moving into a new decade with a new Government and Brexit a firm reality, will no doubt bring changes but some of the challenges which have influenced the last decade will continue, not least the need to create long term sustainable communities with the opportunity for people to access the housing market.

Local Plan progress continues, albeit at varying pace, and is needed to support the delivery of new homes. The Government in their manifesto continued to give their support to delivering more than 300,000 homes by the mid-2020’s. This is despite the introduction of the standard method, introduced to drive national housing delivery, which has in some areas had the opposite affect and resulted in some local authorities reducing housing requirements despite retaining ambitious economic strategies.

In 2019 across the North East, three Local Plans went through their Examinations; Sunderland, Northumberland and County Durham. All of these emerging Plans identified a requirement above the standard method, albeit by a very nominal amount and lower than previous iterations of Local Plans (See Hannah Bickerdike's blog). The outcomes of two Examinations are not yet known but having attended both, it’s perhaps the spatial strategy which will come under greater scrutiny from the Inspectors through their reports, rather than the total amount of housing being brought forward given the introduction of the standard method. The amount and type of housing brought forward to support future housing delivery is also critical.

In the North East there remains significant variation in the strength and success of local housing markets with hotspots where demand is impacting upon local prices. Contrasted with other parts which continue to deal with low demand and the wider social issues which this brings.

The North East Strategic Economic Plan (SEP) (2018) recognises the need to address the under-provision of housing stock to meet demand and respond to demographic change. What is apparent is that it remains critical that the right homes are brought forward in the right places whether these are:

Executive homes to support the economic aspirations of knowledge-based businesses which have been identified as lacking within a particular local economy;
Affordable homes to meet the needs of lower income households;
New models of housing which meet the needs of new graduates keen to move on from student accommodation but aspire to the facilities that new Purpose-Built Student Accommodation has provided whilst they were studying; or
Identifying particular gaps in the market.

To do this effectively, there is a need for evidence – evidence which understands the dynamics and characteristics of the local housing market alongside future demographic change which will impact upon future demand. This evidence helps to shape future proposals which are well considered and can be robustly justified whether these are in alignment with local policy or enable an alternative to local policy to be considered. Understanding what type and mix of housing is required to meet future need is critical to delivering long term sustainable communities. This sits alongside areas where there is an over-supply of a particular housing type which is having a negative impact on the vibrancy and success of these communities.

Lichfields recently worked alongside one local authority in the North East to assess the future potential for the growth in an urban-living housing product to help diversify the existing housing market. Lichfields helped to assess the existing housing stock in terms of type and tenure within an identified boundary and worked with stakeholders to understand existing demand for this type of housing. Lichfields through analysis of future demographic projections, alongside analysis of the market sought to identify the extent of the potential future market.

The approach developed set out the future potential of this market and highlighted the wider socio-economic issues which would need to be tackled, alongside the housing issues to support the growth in this particular housing product.

The project utilised Lichfields skills in understanding housing market dynamics and the principles which underpin Lichfields' Sizemix product.

As Local Plans in the North East are adopted, the need for evidence continues, particularly where it involves justifying proposals which underpin the planning case for future housing development. Evidence is powerful and persuasive.

We are happy to discuss existing and future developments and your requirements.

Housing Delivery Test 2019: Yorkshire and the Humber

Anna Turton 21 Feb 2020

The Housing Delivery Test provides a snapshot of national and regional housing delivery in 2019 against the number of homes required over a rolling 3-year period. It also allows progress from 2018 to be monitored and changes predicted going forward. Crucially, it is more than just a monitoring tool and has serious implications for many districts in Yorkshire and the Humber, with escalating planning sanctions applied depending on the scale of any shortfall.

Yorkshire and the Humber Results

Key 2019 results for the Yorkshire and the Humber region published by the Government this month are:

71% of Yorkshire and the Humber authorities are currently delivering sufficient levels of housing and require no action when measured against their housing requirement (defined as either the latest adopted housing requirement or the minimum annual local housing need figure/annual average household growth).
2 authorities require an Action Plan.
4 authorities require a 20% land buffer and an Action Plan.
The presumption in favour of sustainable development is not triggered by any Yorkshire and Humber authority.

Key Changes 2018 – 2019

Key changes within the region from 2018 to 2019 are:

Consequences have worsened for York with the authority falling into the 20% land buffer and Action Plan requirement from its previous ‘no action’ position.
Consequences have improved for Bradford, moving from 76% delivery and a 20% land buffer requirement in 2018 to 94% delivery and an Action Plan in 2019.
All other regional authorities remain within the same overall category as 2018, albeit some authorities have fared better than others.

Headline Messages for Yorkshire and the Humber

The majority of Yorkshire and the Humber authorities perform strongly, with some delivering housing significantly in excess of the 2019 45% NPPF footnote 7 threshold. Richmondshire achieved 863% of its (very low) requirement, Doncaster 209% and Wakefield 192%.
Housing delivery increased to some extent between 2018 to 2019 in most authorities. Harrogate’s delivery increased by 42%, Scarborough’s by 41% and Hull’s by 29%.
Several authorities continue to perform weakly and deliver insufficient levels of housing. York, Calderdale, Kirklees and North Lincolnshire are all required to apply a 20% land buffer to their five year housing land supply and produce an Action Plan; with results in Calderdale falling as low as 48%. Rotherham and Bradford must produce an Action Plan.
Housing delivery in York and Rotherham fell between 2018 and 2019, to 85% and 81% respectively, with York seeing a substantial decrease of 21%.
Authorities such as Kirklees, North East Lincolnshire and North Lincolnshire have seen limited growth between 2018 and 2019 but this may be insufficient to keep up with increasing NPPF thresholds which will rise again to 75% in 2020.

Overall, the region is performing above the average for England, although a number of the usual suspects continue to struggle. However, many authorities have been reprieved in the short term by the household projections producing lower estimates of local housing need for up to 2 of the 3 appraisal years and as a result of this, housing delivery is now outpacing local housing need figures in certain areas.

2020 Predictions

The NPPF footnote 7 housing delivery threshold, whereby the presumption in favour of sustainable development will apply for decision taking, will increase from 45% in 2019 to 75% in 2020. This could have serious consequences for several of the region’s authorities and could see them starting to lose control of speculative development in their areas. We cannot be certain how the 2020 HDT will look given that completions for 2019/20 may significantly increase/decrease for any given authority. However, working on the basis that next year’s completion rate remains broadly in line with 2018/19’s, then the following implications for the Yorkshire and Humber region may occur:

Calderdale may slip into the presumption in favour of sustainable development, even if its Local Plan is adopted later this year with the current target of 790 dwellings per annum.
Kirklees, York and North Lincolnshire are likely to continue to require a 20% buffer but all may come very close to falling below the 75% ‘presumption in favour’ threshold.

In the longer term, authorities that cannot demonstrate a 5-year housing land supply and who are failing to approve sufficient levels of housing development to meet their local housing needs will see the implications of this reflected in Housing Delivery Test results in the years to come, with the penalties for non-Green Belt authorities in particular being far reaching.

Annual Position Statements: The X-Fylde’s

Harry Bennett 12 Feb 2020

In August last year my blog looked at Annual Position Statements (APS), the updated PPG, and summarised how an LPA can ‘confirm’ (i.e. fix) its five-year housing land supply (5YHLS). The ability to fix a 5YHLS was introduced through the revised NPPF (July 2018) and there two routes to doing this:

Confirming the supply through a local plan examination (plans examined under the 2019 Framework only); and
Confirming supply post local plan adoption through the APS process (all 'recently adopted' [1] plans).

A year and a half since the process was first set out, no authorities have an adopted 2019 Framework Plan (Route 1), or an associated Inspector’s Report so we are yet to see how this is playing out in local plan examinations and appeals.

However, we do now have the first authority – Wyre Council - with a fixed supply through the APS process (Route 2). As explained in my previous blog, the APS process has a number of fixed dates and timescales which is about to come around again: the first is 1 April 2020. This blog provides an overview of the first round of the APS process, and considers what this might mean for the next round.

APS Process

Stage 1: Notifying the Planning Inspectorate (PINS)

According to the PPG (68-012) to submit an APS, an LPA must notify PINS by the 1^st April of a given year. By 1 April 2019, nine authorities had notified PINS:

Boston Borough Council
Durham County Council
Fylde Borough Council
Mid Sussex District Council
North Devon Council
North Somerset Council
Sefton Council
Torridge District Council
Wyre Council

Stage 2: Submission of APS to PINS

However, only three authorities went ahead with the APS process and submitted an APS to PINS by 31 July deadline (PPG 68-012). These were:

Fylde Borough Council
Mid Sussex District Council
Wyre Council.

Stage 3: The outcomes

The guidance (68-012) sets out that PINS are expected to issue a recommendation on an LPA’s submitted APS in October of the same year. However, the three Inspectors reports for Fylde, Mid Sussex, and Wyre were only sent to the relevant authorities in January 2020. There is no official reason for the delay, but it may be due to the pre-election purdah. From reviewing each Inspector’s Report (note there were three Inspectors) we have three very different outcomes:

Mid Sussex District Council: Not confirmed

The Council’s attempt to confirm its supply fell at the first fence. Its local plan was not ‘recently adopted’ (NPPF 2019, Footnote 38) so it failed the first stage of the APS examination process (PPG 68-013). This being the case, the Inspector had to conclude the Council’s APS could proceed no further. There was no consideration as to whether the Council undertook satisfactory stakeholder engagement or whether there was sufficient evidence to demonstrate a five-year supply of deliverable sites.

One might ask why Mid Sussex bothered to submit its APS but in fairness, the Council had notified PINS in April 2019 of its intention to submit an APS and the relevant planning guidance on this point was only published on 22 July 2019: just over a week before the 31^st July APS submission deadline. It had most probably prepared all of its material by then so perhaps felt it had nothing to lose by chancing its arm.

Wyre Council: Confirmed

Wyre is now the first LPA to have its supply confirmed, surely a point that marks it down in posterity (or perhaps presents a question for inclusion in the planning round of a pub quiz). Its supply is now 5.18 years and will be so until 31 October 2020: this is not a debatable point at the planning application or appeal stage.

While it’s not a debatable point, it came perilously close to the edge: a surplus of just 0.18 year’s supply. The Council’s submitted APS contented it could demonstrate 5.69 years, but the Inspector recommended that 313 dwellings in total be removed from ten sites. The Inspector’s report was quite forensic, looking at each of the 39 sites that were disputed during the engagement process, scrutinising the Council’s evidence. Importantly, in accordance with the PPG (68-013) no other material other than that provided by the Council was considered.

But Wyre is safe. Its 5YHLS is now confirmed and the Council may now choose to re-confirm its supply this year.

Fylde Borough Council: Not Confirmed (To be confirmed?)

The Inspector’s recommendation was clear: the Council cannot confirm its supply as it could not demonstrate a 5YHLS.

The Council is not happy: it intends to judicially review the Inspector’s conclusion, has updated its APS, and maintains a position that its supply is ‘confirmed’ despite the Inspectors recommendation. The updated APS states:

“This final version of the document has been produced following consideration of a draft APS by the Secretary of State. In accordance with paragraph 74 of the National Planning Policy Framework (2019) (The Framework), this final version incorporates the recommendations of the Secretary of State (see Appendix 5) on the delivery on specific sites, where the position could not be agreed during the engagement process. The Council therefore considers that the 5-year supply of deliverable sites is confirmed by this Annual Position Statement, for the period 1st November 2019 to 31st October 2020, in accordance with paragraph 74.

The Inspector has gone further and made a reassessment of the housing requirement. For the reasons explained below, the Council does not agree with this reassessment, or with certain recommendations in the Inspector’s APS Report”.

The APS Inspector had concluded that in calculating the backlog of supply for the five-year requirement the ‘Sedgefield’ method (preferred method in the PPG 68-031) should be used instead of the ‘Liverpool’ method that had previously been accepted by Fylde’s local plan examining Inspector. This is a marked departure from the conclusions of a Local Plan Inspector and is a point we will explore further. The Inspector also reduced the supply by 120 units by amending the delivery of three sites and deleting an allowance for empty homes. As with Wyre, the Inspector’s report was quite forensic, with a detailed assessment of each aspect of the APS, and material submitted other than by the Council was considered. It was on this basis that the Council could not demonstrate a 5YHLS and its supply was thus not ‘confirmed’.

It will be interesting to learn on what grounds Fylde potentially seeks to challenge the Inspector’s analysis and conclusions to the Courts. If indeed any application for judicial review is approved what the outcome could be. We await to see how this matter is dealt with by the Council and inspectors at S78 appeals when determining planning applications for housing development. Will they engage the ‘tilted balance’ given the APS Inspector’s conclusions? One would anticipate that Fylde will not, and that any refusals of planning permission made on this basis may themselves be challenged by the applicant.

What does this all mean for the next round?

There are some clear headline points for the next round of APSs that will be examined:

It may sound obvious, but LPAs must be confident in their 5YHLS case when they submit an APS. With the examination of an APS being exclusively about the question of 5YHLS, examining Inspectors have the opportunity to engage solely with that topic, unencumbered by other planning issues. There is no basis (as often happens at s.78 inquiries) for Inspectors to equivocate or conclude that disputed points on 5YHLS do not need to be resolved because they are not material to the planning balance involved determining the planning application/appeal in question. Quite simply, there is no hiding place.
LPAs must ensure that the 5YHLS case is justified in accordance relevant policy and guidance and be confident their case stands based upon the evidence in the APS submission itself. Inspectors will only conclude using what is contained in the written material provided to them. Unlike at public inquiry or examination, there is no opportunity for planning witnesses or barristers to explain or elaborate upon their position on each disputed point.
Even with the enlarged 10% buffer for an APS, Council’s intending to confirm will want some resilience in their case: Wyre came very close to not being able to demonstrate a 5YHLS and had its housing supply reduced by over 300 units. Fylde also had 120 units removed from its supply and the major intervention of now having to apply the ‘Sedgefield’ method to calculate its backlog.
The chance of failure – based on the focused and forensic nature of the review - as well as the extended timescale this time round, may lead some authorities to conclude it is not worth the risk of having its supply not confirmed. The outcomes of the APS process are very black and white. Arguably, there is some safety by being in the grey area between “confirmed” and not “confirmed” if an authority’s position is marginal.
In addition, if an LPA doesn’t have a recently adopted plan it will simply be rejected. This applies to authorities that fail to have their APS confirmed, because by the next APS submission date its local plan will no longer be recently adopted.

Finally, for developers/promoters, engagement in the initial APS with the LPA is key. The Inspectors did not consider any evidence that wasn’t submitted with the APS by the LPAs. If you miss the boat on the LPA’s APS engagement process, it is too late to have your views heard.

A further Lichfields blog will follow with some more in-depth thoughts on the Wyre and Fylde APS Inspectors’ conclusions on what constitutes satisfactory engagement, the definition of the five-year requirement, and what constitutes a deliverable site.

[1] A plan adopted between 1 May and 31 October will be considered ‘recently adopted’ until 31 October of the following year; and a plan adopted between 1 November and 30 April will be considered recently adopted until 31 October in the same year (Footnote 38, NPPF 2019).

First Homes: discounted market housing that actually delivers?

Jennie Baker 10 Feb 2020

Update 27 May 2021:

The final version of the First Homes policy was announced by the Government on 24 May 2021. Please see this blog for an up-to-date overview: 7,000 discount market homes a year: a practical guide to First Homes

And this blog for an analysis of potential consequences of the policy: First Homes: dicing with the discount

Update 6 August 2020:

The Government has published its response to the initial consultation on First Homes and is now consulting on further details. It proposes that national policy (and potentially legislation, if considered necessary) will require at least a quarter of all new affordable housing units to be First Homes. Where a financial contribution is made instead of on-site provision, a quarter of the payment should be used to secure First Homes. The Government intends that First Homes will be prioritised over other affordable home-ownership products in the affordable housing tenure mix set out in development plans. First Homes would be exempt from the Community Infrastructure Levy.

A First Homes exception sites policy, which would replace the existing exception sites policy, is also proposed.

The Government has also announced that a 1,500 unit pilot of First Homes will be included in its affordable homes programme.

Accordingly, some elements of the overview of the proposed First Homes policy set out below are no longer up-to-date, so please refer instead to our guide Affordable housing: First Homes enter the mix.

_____________________________________________

Off the back of a lacklustre take-up of Starter Homes (number delivered = zero), the Government has launched a consultation on ‘First Homes’, a form of discounted market housing. The consultation closes on 3 April 2020.

First Homes are to be aimed primarily at first time buyers who are young and local (including local key workers living elsewhere), but there will be exceptions, including serving members of the Armed Forces and recent veterans. And where the development is comprised solely of housing aimed at a particular sector there may still be a requirement for First Homes. The new product will be enforced, and to some extent its conditions designed, by local authorities – the extent will depend on the combination of policy and law used to introduce it.

The consultation document puts forward a series of options for various conditions and controls relating to First Homes, albeit Government’s preferred approach has been made plain by the consultation document, its press release and press interviews with the Secretary of State.

The premise of First Homes is to diminish opposition to new housing developments, on the basis that local people will know that they might be able to afford to live in the development where perhaps historically they would not.

Below is a summary of what the consultation says on each of the questions set out below, with some commentary:

What would the discount off a new home be?

A minimum 30 per cent discount off market value with an acknowledgement that this may not be sufficient in certain areas, so local authorities will have the discretion to apply higher discounts. No maximum discount is proposed. The consultation says that applying higher discounts would be on a site by site basis. An evidence-based blanket approach to higher discounts across an area would presumably be possible through a local plan or supplementary guidance if First Homes are introduced via policy rather than law, but the document does not indicate this.

Does only the first owner benefit from the discount?

The full discount would be retained in perpetuity by placing restrictive covenants on the homes. However, if the owner defaulted on their mortgage the lender would receive the home without the covenant and the discount would be lost.

How will the planning system be changed in order to deliver First Homes?

Two options are put forward: 1. a new planning requirement in law or policy for the delivery of First Homes; or 2. changing the current national entry-level exception site policy to a First Homes exception policy.

New law or policy

Option 1 comprises two sub-options: a) prescribing that a given percentage of affordable homes secured through a s106 agreement should be First Homes; or b) prescribing that a percentage of all units delivered on housing sites of 10 units or more are to be First Homes.

The Government believes (perhaps cynically, but accurately) that Option 1a) might discourage some local authorities from using s106 obligations to deliver affordable housing, which would mean fewer First Homes being delivered. Option 1b) is considered to provide greater assurance of delivery but might impact viability and reduce the potential for other developer contributions on certain sites.

The Government estimates that if 40% of affordable homes secured by s106 agreements were First Homes, then 12,000 First Homes would be delivered (it appears to be a per annum figure). This would increase to 16,000 if 60% of affordable homes were First Homes and 19,000 if 80% of affordable homes were First Homes.

The Government acknowledges potential the trade-off between First Homes and other affordable housing tenures and that site viability means that affordable housing requirements are not always met. Accordingly, legislative changes to ensure the First Homes policy “cannot be sidestepped” are being considered, but because this would this would reduce local discretion the Government is asking whether policy changes would suffice.

Delivery through amending the exception sites policy

An alternative is to amend the exception sites policy at para 71 of the National Planning Policy Framework (NPPF) as follows:

“a. specify that the affordable homes delivered should be First Homes for local, first-time buyers;

allow a small proportion of market homes on a site where essential to ensure the development will be deliverable; and
remove the threshold on site size set out in footnote 33 of the National Planning Policy Framework but retain that they should be proportionate in size to the existing settlement”.

The current exception site policy does not permit a proportion of market housing.

The Government estimates that this approach would lead to 4,000 First Homes per year being delivered. The Government is considering allowing other affordable housing tenures to be built under any new First Homes exception site policy where sufficient First Homes had been provided in an area to meet demand.

Amending the Community Infrastructure Levy Regulations

The CIL Regulations would be amended to provide a CIL exemption for First Homes. The CIL Regulations may also be amended to ensure that CIL charging rates “are not set at a level that would prevent current levels of affordable housing delivered through s106 obligations from being delivered in future”.

Can any new property be bought with the discount?

To avoid the purchase of “exceptionally expensive” property being subsidised, a cap on the market value of a property that could benefit from the First Home discount might be put in place. If set at a national level local authorities could still introduce a more targeted, lower price cap to reflect local circumstances. An alternative is to introduce regional caps, but the consultation raises concerns that this may not sufficiently reflect local markets, and caps set at a sub-regional level are considered potentially inflexible.

Who will be eligible for a First Home? And how will demand be managed?

Young, local, first time buyers predominantly and also serving members and “recent” veterans (to be defined) of the Armed Forces. The definition of local will be determined locally, with reference to current residency or work location. The consultation acknowledges that older people’s housing would not be suitable for first time buyers and suggests that this is an example of a circumstance where non first time buyers might be eligible – it does not suggest that First Homes would not be required in such a development. The Government may set an income cap on eligibility, and where demand still exceeds supply local authorities might review an applicant’s income and assets in more detail, in a bid to seek out those most “in need”. However, unlike Starter Homes, there is no suggestion that First Homes would have to be bought with a mortgage or with a minimum loan-to-value on a mortgage.

Related to this, the Government says “it will be important to ensure that decisions about who is prioritised are made in a fair and transparent way, which avoids price inflation and counter-offers”. It suggests selecting those to benefit from the scheme on a first-come, first-served basis, or use of local eligibility criteria perhaps reflecting income and assets. Unsurprisingly then, the consultation encourages ideas on how to prioritise demand.

What if there is no local demand?

Prioritisation of those with local connections and first time buyers (and presumably others who are eligible for First Homes) will be time-limited.

Will local authorities be provided with additional resources to support the scheme?

The Government is minded “to leave the details of the administration to local authorities” and asks how local authorities can be supported and whether additional costs are likely. There would be a model First Homes agreement, which would reduce the need for lenders to understand local models. It is difficult to imagine that the Government really considers it likely that there would be negligible costs for local authorities, at least during set up of the controls.

Can First Homes be offered for rent?

On the face of it, no. However, the Government proposes that owners of First Homes may let their property for up to two years without seeking the local authority’s permission and for longer periods at local authority discretion. The example given for when longer term letting might be authorised is where the owner is in long term residential care. The consultation asks what is an acceptable period of time (including never) to rent out a home without local authority permission. It is proposed that serving members of the Armed Forces would be able to let their property out while on an assignment more than 50 miles away. It is not clear how letting periods would be monitored or enforced both from a cost perspective and given that it may require the eviction of a tenant.

Are First Homes eligible for Help to Buy?

No.

Why is the Government introducing this measure?

In an interview with Talk Radio Mr Jenrick said:

“We think this will get more homes built across the country. The big housebuilders support it because they, like us, think that this will build popular support. You see a housing estate going up near you, you will know that this is an opportunity for you, your children or your grandchildren to get on the housing ladder with a discount that on the average home will be £100,000”.

Does the Government comment on the potential impact on other affordable housing tenures?

The Equality Impacts section of the consultation acknowledges that delivery of First Homes via s106 agreements could impact the numbers of homes delivered for other affordable housing tenures. In response, the Government claims the prospect of additionality:

“However, increasing contributions through entry-level exception sites will lead to the development of additional First Homes as this land would not otherwise have been used to build housing in the short or medium term. This will increase the development of First Homes while mitigating the impact on provision of other types of affordable housing tenures”.

The exception site approach might not directly squeeze out other tenures (it would remove the current exception site policy for all forms of affordable housing), but is not plan-led.

MHCLG, First Homes: Consultation on the delivery and design of First Homes

Planning matters

The need for evidence beyond Local Plan preparation