Planning matters

A new Government, a new direction – in this case, a new National Planning Policy Framework (NPPF) and a significant U-turn in policy away from the provisions related to Housing Land Supply (HLS) compared to the December 2023 version: Paragraph 76 I hardly knew thee.

In short, most of the changes to the calculation and operation of HLS in the new NPPF are as per the consultation draft NPPF issued in July and reverse the amendments that were introduced in December 2023:

1. The protections afforded to qualifying authorities under former Paragraph 76 have been removed. All LPAs must now be able to demonstrate a 5YHLS (now set out at Paragraph 78).
2. The 5% buffer of previous NPPFs is back (Paragraph 78a).
3. The 20% buffer for under delivery, as measured by the Housing Delivery Test (‘HDT’), remains (Paragraph 78b) – note that a new 2023 HDT was published alongside the new NPPF.
4. Annual Position Statements are no more, nor the corresponding 10% buffer.
5. The transitional arrangement allowing some LPAs progressing local plans to only need to demonstrate a four-year HLS is also gone.

The only new change introduced as part of the 2024 NPPF (compared to the July consultation version) is an additional route to the application of a 20% buffer. This has been adopted as part of wider plan-making transitional arrangements: aiming to ‘close the gap’ in delivery between a pipeline of sites based on adopted (or soon to be adopted) housing requirements that are significantly below the local housing need figures that are based on the new standard method ahead of new plans addressing that need coming forward.

Paragraph 78c provides details of this new route to the 20% buffer which would apply from the 1^st July 2026 where:

1. 1. The local plan housing requirement was i) adopted in the past five years (July 2021 to July 2026) against a previous NPPF, or ii) is more than five-years old and the related strategic policies have been reviewed and are considered up-to-date; and,
   2. The adopted annual average housing requirement is 80% or less of the most up-to-date standard method figure.

It should be noted that this new buffer is not cumulative with the 20% buffer for under delivery (paragraph 78b) but it would apply irrespective of the (local planning authority’s) LPA’s HDT measurement. Furthermore, the assessment of whether the adopted requirement is 80% or less against the standard method should be based on the average annual requirement across the whole Plan period (footnote 42). This means it would catch LPAs with stepped housing delivery trajectories with much greater requirements in later years.

For the purposes of paragraph 78c, the percentage measure is also to be applied in aggregate in joint local plan areas. This will have implications for some authorities that form part of a joint plan area which will be caught by the 80% threshold when assessed in combination, but where – if judged in isolation – the authority would pass the 80% test.

We are now largely back to where we were prior to the December 2023 NPPF in terms of calculating a 5YHLS. All LPAs must now demonstrate a 5YHLS (a positive change for housing delivery) and while the 5% buffer coming back is welcome it won’t change the dial much. (i.e. very few, if any, LPAs will now not be able to demonstrate a 5YHLS owing to the 5% buffer being added).

What will have a profound effect on LPAs 5YHLS position is not the changes to the methodology of calculating 5YHLS, but rather the update to the standard method for LPAs without an up-to-date plan. Most LPAs requirements have increased and have done so significantly. Once ‘healthy’ 5YHLS positions may now simply be wiped out or pre-existing shortfalls made far more acute. This will be most impactful for those LPAs in the South East where (1) there are exiting known difficulties in bringing forward supply and (2) the new standard method has an slightly greater tilt towards this region compared to the revised standard method consulted upon in July (see our separate blog on the new standard method).

This will also catch LPAs with emerging plans that are well progressed or at examination (especially given these LPAs previously benefited from the four-year HLS provisions).

Focusing in on the new 20% buffer route and its potential impact for those LPAs with a plan adopted since July 2021:

1. 1. While it will only apply from July 2026 it could start to have an impact now for those LPAs with an existing shortfall or a marginal supply. To avoid the presumption, said LPA will need to be pragmatic and start building up its deliverable supply now. The Government’s consultation response clearly states the timeframe proposed for its introduction is to enable LPAs to make provision for it. Whether in practice this happens is another matter.
      
      
   2. It won’t change the dial within those LPAs that can demonstrate a healthy supply (6+ years) under its adopted requirement. Nor will it in areas that already can’t demonstrate a 5YHLS. This means the policy won’t result in an uptick in housing supply within these areas despite said LPAs having a new standard method figure significantly in excess of its adopted .
      
      
   3. For those LPAs at examination or that are about to submit plans for examination shortly, Inspectors will need to be mindful that the Council will have a 20% buffer applied period – i.e. if a plan was submitted now, it may not be adopted for 9-12 months. Its Plan period will likely start from 1^st April 2025 or 1^st April 2026. While on adoption a 5% buffer might be appropriate, from July 2026 the Council would need to apply the 20% buffer.

Reviewing this new policy, its aim is to ‘close the gap’ and boost housing output in areas where an adopted or soon to be adopted plan seeks to deliver homes at a rate significantly below the new standard method figure. It tries also to balance this against not discouraging existing plan-making in these areas.

Noting the need to boost supply immediately, there were other options available to the Government that could have had a greater and more immediate impact on supply in these LPAs. For example, the new 20% buffer could have been cumulative with either the existing 5% buffer or the 20% buffer where there has been under delivery; or these Council’s 5YHLS requirement could have had to be based on the new standard method instead.

In the context of the Government’s 1.5 million home target – that really requires permissions to be granted now – one might say the policy adopted doesn’t go the hog to achieve the boost to supply required in areas with adopted or soon to be adopted plans delivering significantly below the new standard method. However, the Government must also balance this against what is (or at least meant to be) a plan-led system: one where if more greater sticks were brought to bear, LPAs might simply throw in the towel in terms of plan making.