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We’re all going on a (short-term let) holiday?

We’re all going on a (short-term let) holiday?

Alexandra Gavin & Helen Ashby-Ridgway 29 May 2024
Pre-election update:
Despite full steam ahead for changes to prevent uncontrolled growth of short and long-term holiday lets and second homes covered in our blog, below, neither the consultation outcomes nor legislation were forthcoming prior to the dissolution of Parliament. With the election around the corner there is now a question mark over whether the proposed changes are likely to take place in the form envisaged, or even at all.
Labour has previously said the current Government’s plans were not going far enough to clamp down on holiday lets, promising to go even further with restrictions if it gained power in the future.  The Shadow housing and planning spokesman, Matthew Pennycook told a House of Commons debate back in May 2023 that although Labour supports the proposals, the Government had to do more, citing that the package currently on offer “still falls short of the comprehensive suite of measures that we would like to see enacted at pace to tackle this problem”.
He added that the Government should rethink the permitted development rights proposed in the consultation and “accelerate the introduction of the discretionary registration scheme, to which they are committed, to legislate for the introduction of a new planning use class for short-term lets without delay, and to give serious consideration to other measures, whether on taxation or licensing, that will almost certainly still be required […]. That is what a Labour Government would do, and it is what we need this Government to do…In addition to supporting a licensing scheme for short-term lets in England, Labour would permit local authorities to charge council tax premiums to a maximum of 300% if elected [1].  However, there was no mention of this in the Labour manifesto when it was launched last month.
On the other hand, the Conservatives have included a commitment to controlling the growth of holiday lets in its 2024 manifesto. The Liberal Democrats have taken a similar position but with the commitment to giving local authorities new powers to control second homes and short-term lets. This party proposes to go one step further with the manifesto specifically promising to give local authorities the power to increase council tax by up to 500% where homes are being bought as second homes, with a stamp duty surcharge on overseas residents purchasing such properties. The proposal to create a new planning class for these properties is also put forward.
Although cross party support varies, the direction of travel indicates that tighter restrictions are likely to come into play no matter which Government takes the helm on 5 July.
In this year’s Spring Budget, the Chancellor – Jeremy Hunt - announced that the Government would be abolishing the Furnished Holiday Lettings tax regime from 6 April 2025 [2], meaning short-term and long-term lets would be treated the same for tax purposes [3]. The details of the Budget explained that the change would “level the playing field between short-term and long-term lets and support people to live in their local area”. It would, of course, also increase revenue to the public purse.

This was the second announcement by the Government in as many months that has an overarching intention of improving the availability of housing by limiting short-term lets. In a 19 February 2024 Written Ministerial Statement (WMS), the Department for Levelling Up, Housing and Communities (DLUHC) announced that new planning legislation restricting short-term lets in England would be introduced [4].  Explaining the rationale for the changes, the housing secretary, Michael Gove, said that in some areas “too many local families and young people feel they are being shut out of the housing market and denied the opportunity to rent or buy in their own community”. This is similar to the purported reasoning behind the restrictions on short-term lets recently brought in by the Scottish and Welsh governments (discussed below).

This followed the April 2023 consultations “Introduction of a use class for short term lets and associated permitted development rights” and “Consultation on a registration scheme for short-term lets in England” which we covered in our May 2023 blog.

At that time, the Government said that from summer 2024, planning permission would be required to rent out a sole or main home [5] for short term lets for more than 90 days per year. A new planning use class and associated permitted development rights would be introduced to enable a property to change from a short term let to a primary or sole dwelling (and vice versa).  To help areas where local authorities consider there to be acute challenges, we expect that the government would introduce the ability for councils to introduce Article 4 directions to restrict the permitted development rights thus introducing the need to make an application for planning permission to the authority where a new change of use class takes place.
In parallel, a new mandatory national register for short-term lets would be introduced. The intention is to give local authorities the information that they need about short-term lets in their area, hitherto, such information has been patchy or non-existent.  This national register may also be used to assess compliance with key health and safety regulations. 

The response to the reforms from those in the tourism industry has been mixed.  Amanda Cupples, General Manager for Northern Europe, Airbnb said that “the introduction of a short-term lets register is good news for everyone. Families who Host on Airbnb will benefit from clear rules that support their activity, and local authorities will get access to the information they need to assess and manage housing impacts and keep communities healthy, where necessary”.

The Tourism Alliance said it supported the idea of a mandatory registration scheme, but changes to planning rules were "more concerning".  The Alliance's executive director, Richard Toomer, said: "While we understand the government's desire to tackle the lack of housing in some areas, it is vital that we don't harm the visitor economy in destinations which are reliant on a good supply of tourism accommodation."
“We continue to believe that the registration scheme must be implemented first, because it's only by using the data that this scheme will supply that local authorities can know if and where there are problems and have solid information on which to base their planning decisions."[6]

The UK Short Term Accommodation Association [STAA] CEO Andy Fenner commented: “We’ve been calling for a registration scheme for years, so it’s disappointing that when it finally arrives it completely fails to address the challenges the country is facing. The registration scheme could have been game changing for tourism in England had it covered all types of accommodation but, instead, what we’ve got is a missed opportunity that’s a half-way house at best.

 

The Welsh Experience
The challenge of balancing the availability of housing and short-term let tourist accommodation in local communities is not unique to England. The Welsh Government has already introduced similar changes to the use classes order and now local authorities are starting to consider the evidence for the introduction of the Article 4 directions to restrict movement between the uses. Whilst it’s still too early to understand the effectiveness of the changes in Wales, in our recent Insight Focus [7], Sun, Sea, Sand and Article 4 Directions, we highlight that it is vital to ensure that accommodation is available to serve tourist needs thus ensuring the continued social and economic well-being of areas that are reliant on the industry. The introduction of any Article 4 Directions should take place alongside a robust evidence base and the plan-making process to ensure the policies provide a positive framework for the delivery of both tourist accommodation and dwellings.   
The Scottish Experience
Elsewhere in the UK, the Scottish Government already has legislation [8] which permits local authorities to establish short-term let ‘control areas’. Within these control areas, the use of a dwellinghouse (including flats) as a short term let will always be material and therefore require planning permission.  Outside of a control area, it is for the Planning Authority to decide if the use of the premises as a short-term let is a material change and would require planning permission, or not.  This is normally based on the character of the property, number of rooms, number of people staying, impact on public services i.e. on-street parking or the use of communal areas and shared access. 
 
Scotland has also introduced a licensing scheme for all short term lets. However, to require a licence, applicants must demonstrate that they have planning permission, whether they are within, or outside of control areas (either by a certificate of lawful use, or a full change of use planning application). Reports of conflicting information and guidance on planning and licensing requirements issued by the Scottish Government has led to confusion and frustration among local authorities, and short-term let operators on how the legislation should be applied, particularly around short term lets that have been in operation for years.  England should certainly consider the unintended consequences of future legislation and to seek to learn from the Scottish experience.
Closing thoughts
These changes alone are unlikely to make significant dents in meeting the housing need in England or Wales, but authorities would have the ability to actively consider local challenges and would have a greater number of tools at their disposal to make appropriate planning decisions that meet the needs of local communities and visitors. It’s important, however, that local authorities thoroughly examine these issues ‘in the round’ to ensure that their actions don’t impact the tourism economy which is the lifeblood of so many of our local communities.
 

Image credit: Jaycee300s via Pexels

 

[1] Matthew Pennycook MP posting on X a link to FT article "Labour pledges to tighten right-to-buy as part of UK housing overhaul", 27 December 2023
[2] HC 560 – Spring Budget 2024 (publishing.service.gov.uk) Paragraph 3.29
[3] Long-Term Plan for Housing Update, 19 February 2024
[4] As yet undefined
[5] Restrictions in the number of short-term lets should be measured against other factors (i.e. employment, housing need and supply and other tourist accommodation stock.  Ultimately, the short-term holiday let industry should not be responsible for the housing crisis.
[6] Restrictions in the number of short-term lets should be measured against other factors (i.e. employment, housing need and supply and other tourist accommodation stock.  Ultimately, the short-term holiday let industry should not be responsible for the housing crisis.
[7] https://lichfields.uk/sun-sea-sand-and-article-4-directions
[8] The Town and Country Planning (Short-term Let Control Areas) (Scotland) Regulations 2021

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43 days to (pledge to) solve the housing crisis

43 days to (pledge to) solve the housing crisis

Simon Coop 23 May 2024
Under a grey sky and outside a black door, a day of increasing speculation culminated in the announcement of the next general election. Many dates have been spoken about: before the end of January, maybe October, possibly May. But 4th July it is.
The next six weeks will bear witness to all the usual aspects of a general election campaign: pledges and promises; public debates and private door-step conversations; arguments and accusations. There is likely to be the odd misstep and there will undoubtedly be a series of campaign-defining moments before it all ends with each of us walking into a booth, picking up a pencil and putting an “X” in the box.
The campaigns will be dominated by a large number of policy issues but, as we have already discussed, housing and planning will be one of the central domestic battlegrounds. And it is easy to see why:
 
  1. Housing delivery has remained consistently and significantly below the identified “target” of 300,000 per annum (itself a figure that is widely regarded as under-estimating what is actually needed). In 2021-22 and 2022-23, an average of 234,430 net additional dwellings were completed in England – 5.5% lower than the average of 248,180 in 2018-19 and 2019-20[1] and 28% below the Government’s target – albeit that this is comparatively high in the context of level of delivery between 2009-10 and 2013-14.
  1. The ratio of median house prices to median annual gross workplace-based earnings in England was 8.26 in 2023. This is 20% higher than the figure in 2010 and 133% above the 1997 level[2].



  2. Fewer than half of households under the age of 44 are homeowners and the number of concealed households (of all ages) has more than doubled since 2001 to c.353,100[3].



  3. More than 104,500 households were living in temporary accommodation in 2023 – more than double the level in 2010 and greater than the previous peak of 101,000 households that occurred in 2005[4]. Shelter estimate that 140,000 children were homeless in 2023[5].

Each of these statistics sit against the broader context regarding the increasing importance of housing within society. In considering them, it is important to look beyond data and focus on the human scale of the crisis. The supply of safe, secure and suitable housing offers physical and mental health and wellbeing benefits, economic opportunities (both directly from construction and spending by residents and indirectly from savings on the cost of health and social care and temporary accommodation that arise in cases of insufficient or inadequate housing), and the potential for environmental gain. A critical and multi-faceted rationale therefore exists for a policy agenda that promotes the timely delivery of more new homes.
Each party will publish its manifesto in due course, and these will set out their full list of policy commitments. As part of our series on the election which we introduced back in February, we will review what these have to say about planning and housing when they are available. We will also consider any additional policy announcements and analysis that might come forward as the campaign progresses. Based on our take on the issues, we anticipate that the key areas of debate are likely to include:
  1. The need to increase supply of housing – It is widely agreed that we are not building enough but how many new homes do we need? Perhaps more fundamentally, how do we determine that figure and who should take the lead in setting the target?
     
  2. The associated need to increase the supply of affordable homes – Worsening affordability is increasing the number of people and households in need of affordable housing[6]. The way in which we might increase the supply of affordable housing needs very careful consideration. Whilst everyone should have somewhere to live, it is important that the delivery of development is not hampered as a result of constrained viability arising from unrealistic policy expectations.
     
  3. The geographic distribution of housing growth – Having determined how many new homes we need, we must consider where they should go? What is the geographical distribution of housing need across the country and how do we deal with “unmet” need from our major urban areas?
     
  4. The approach to the delivery of new housing – Distinctions between the parties are likely to emerge in respect of the emphasis that is to be placed on new towns and strategic urban extensions as a means by which to address the need, and the extent to which they will promote a brownfield-first, brownfield-led or brownfield-only approach.
     
  5. The importance of establishing a balance between growth and environmental interests – This is a particularly sensitive issue and lies at the heart of the planning system. We need to deliver more homes, but how can we do so in a way that is sensitive to our natural and built heritage?
     
  6. The approach that should be taken to Green (and grey) Belt land in preventing urban sprawl and preserving the character of towns and the countryside, but without unduly constraining our ability to deliver the number of new homes that we need. Should the Green Belt be immovable and sacrosanct or is a flexible and innovative approach now required?
     
  7. The role of planning and housing in shaping economic growth– The delivery of new housing brings forward a wide range of direct and indirect economic benefits while the NPPF identifies “inadequate housing”[7] as a potential barrier to investment. What weight will be given to housing (and development more generally) as part of the economic growth strategies proffered by each party?
     
  8. As an allied point, to what extent was Rachel Reeves correct in saying that the planning system is “the single greatest obstacle to our economic success”[8] and, if her argument was justified, what can and will be done about it?
     
  9. The approach to local plan preparation as an essential tool to shape the future of individual areas across the country – An increasing number of local plans are out-of-date and their replacements are taking too long to come forward. Ensuring the timely production of robust plans that deliver the level of housing that is needed will be essential if we are to resolve the housing crisis. But what do each of the main parties propose to do to achieve this objective?
     
  10. Local planning authority resources – In the context of continued pressure on public sector resources, any changes to the planning system need to be weighed against the ability of planning departments to implement them, and tangible efforts to address the existing constraints that exist. A failure to do so could undermine the ability to successfully implement any changes to the system.

The starting gun has just been fired and there is a long way to go until that long night in July. Anything could happen between now and then, but this election provides a genuine opportunity to introduce new policies that will deliver a meaningful resolution to the housing crisis. Throughout the campaign, we will review the extent to which the topics set out above are reflected in the manifestos and policy announcements, and the extent to which the parties agree – and disagree – on the key issues. We will ignore the opinion polls but instead will maintain our focus on what the parties are proposing and what this could mean for the industry going forwards. And through it all, as we stated back in February, our only allegiance will be an objective view on what will help deliver the homes we need.
 

[1] Source: DLUHC Live Table 122: Net additional dwellings in England
[2] Source: ONS Ratio of median house price to median gross annual (where available) workplace-based earnings by country and region, England and Wales, 1997 to 2023
[3] Source: 2001, 2011 and 2021 census
[4] Source: DLUHC Statutory Homelessness Live Tables
[5] Source: At least 309,000 people homeless in England today - Shelter England
[6] Influential research carried out by Glen Bramley on behalf of NHF and Crisis in 2019 set a target for “145,000 social and affordable homes each year, including 90,000 homes for social rent”. Since the publication of the NHF report, organisations such as Shelter and the Joseph Rowntree Foundation (JRF) have also supported the 90,000 figure.
[7] NPPF paragraph 86c
[8] Mais Lecture, 19 March 2024: https://labour.org.uk/updates/press-releases/rachel-reeves-mais-lecture/

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Local Elections – barometer or aberration?

Local Elections – barometer or aberration?

Ross Raftery, Amy Jones & Harry Russell 22 May 2024
As we explored in our first blog [1] of this series, housing is widely expected to be a key topic for the forthcoming general election. Indeed, this has been already demonstrated with statements made by each of the main parties and the recent defection of the MP for Dover & Deal, Natalie Elphicke OBE, from the Conservatives to Labour, on grounds which principally included housing matters.

Now that the dust has settled on the results of the May local elections, we have considered whether this hypothesis has applied equally at a local level, by reviewing a range of key housing-related data points for potential trends that have influenced those results.

Our analysis focused on the councils who held ‘all-out’ elections, accounting for elections held:

  • While Labour performed strongly overall, they did not perform as strongly in the 20 authorities with the highest affordability ratios [2], seeing just three councils being held or gained [3]. The Liberal Democrats or No Overall Control were most common in these 20 areas, however this is likely to be reflective of the geography and economic indicators of those areas, which are not the typical Labour heartlands. 
     
  • The proportion of Green Belt within an authority was also not a factor which correlated with results. In the context of significant statements about future Green Belt policies, Labour still held or gained control of authorities with significant proportions of Green Belt land [4]. 
     
  • Similarly, the difference between Local Plan housing numbers and the Standard Method, or whether a new local plan is being prepared, did not correlate with election results.
Given the local nature of these elections and the multiplicity of national and local factors determining how people voted, it is largely unsurprising to find an absence of clear trends in this data. So, in this context, we have looked at a series of authorities where there might be interesting, locally-specific factors at play. These factors have included where there have been significant swings in results; where a new local plan is being prepared; and where the Conservatives maintained control.
Cannock Chase – Labour gain from No Overall Control
In Cannock Chase, where all 36 seats were contested, Labour gained control from no overall majority, winning 21 seats (an increase of 11 seats from the previous council composition) to the Conservatives’ 10 (-11)[5].

Cannock Chase is in the advanced stages of preparing a new Local Plan (due for adoption in 2025). The adoption of this is proving challenging with the council increasing its housing allocations to absorb some of the unmet needs from the wider housing market area. This is despite the authority being geographically small and constrained by Green Belt and a large National Landscape [6].

There is little evidence of either party focusing their campaigns on the emerging Local Plan, indicating that the ability of councillors to influence planning was not at the forefront of issues in this election. The swing towards Labour may be indicative of a wider malaise around the current Government or be in response to other local issues, such as the recent closure of the Amazon Fulfilment Centre which had been Cannock Chase’s largest employer, resulting in the loss of c.1,000 jobs [7],[8].
 
Dorset – Liberal Democrats gain from Conservatives
Dorset Unitary Authority was won by the Conservatives in 2019 when first established, but fell to the Liberal Democrats in these local elections. All 82 seats were contested, with the Liberal Democrats winning 42 (+13) and the Conservatives winning 30 seats (-13)[9]. The Liberal Democrat manifesto[10] for the election focused on several planning-related issues, including a pledge to double the rate of building of new affordable homes by the end of the next council and to expand the Dorset Enterprise Zone.

Information of the Conservative’s pledges in these elections has been difficult to locate, although local Conservative websites regularly promote Green Belt protection. Conservative candidates in the area chose to fight this election on local issues and their track record, distancing themselves from the national party. Indeed, 79 of the 82 candidates have chosen to call themselves “Local Conservatives” and when Conservative MPs asked how they could help during the campaign, former Council Leader Spencer Flower told them to “stay away”[11].

The result in Dorset could relate to a myriad of issues. It is apparent that Conservatives feared the results would be affected by national politics, whilst local issues relating to affordable home provision, Green Belt protection and car parking charges[12] were central to the Liberal Democrat campaign.

Bristol – No overall control hold
In Bristol, the Green Party won 34 (+10)[13] seats, narrowly missing out on an overall majority. In its manifesto[14], the party pledged to increase the city’s affordable homes target from 600 to 1,000 homes per year; prioritise ‘gentle density’ housing development; and ensure the delivery of 14,000 unbuilt residential properties with permission. The Green Party pledged to support the council’s planning department – which is currently in special measures – with funding, staff and more efficient systems. Other key policies include ‘Getting back on track for net-zero’, which they link in part to housing, and ‘Better Transport for Bristol’.
The Liberal Democrats retained its 8 seats, whilst Labour won 21 seats (-3). Labour’s manifesto ‘Building Bristol’s Future’[15] emphasised the party’s plan to bring opportunity to the city through growth. It seems that planning-related issues could have influenced the election, though the result could also reflect the base of support the Green Party has built in the city and its growing national success[16]. The Conservatives lost 7 seats.

Stroud – No overall control hold
The Green Party had further success in the west, winning 22 (+9)[17] seats and becoming the biggest party in Stroud. In its manifesto[18], the Green Party pledged to build warm and affordable homes and picked up on local public services issues. Notably, its manifesto included a focus on “Restoring Trust” and showing that there is a “positive, progressive and professional way to do politics”. The election resulted in the highest number of Labour seats in 28 years[19], (20 (+5))[20] whilst the Conservatives faced a significant loss of 13 seats[21]. Labour pledged to build more homes, support local high streets, and prioritise the local community[22]. There is very limited information available on the Conservative campaign.

Housing and other local issues may have played a part in the shift in Stroud, though the Conservative loss against the success of the Green Party and Labour may also be indicative of wider discontent with the current Government. In response to the result, Green Cllr Catherine Braun pointed to the unpopularity of the Conservative Government as a reason for the wave of nationwide support for the Greens[23].

Epping Forest – Conservative hold
The Conservatives won 29 seats (-3) and held control of Epping Forest council, while Labour was fifth with just 1 seat (+1) [24]. Most interesting was the result for the second largest party, the Loughton Residents Association (LRA) which again secured 13 seats (+1).

A significant thread for the Conservative campaign was the fact that the council has the lowest council tax in Essex. However, the LRA manifesto[25] focused heavily on planning and housing matters, including identifying their success a reducing the allocation of new homes in Loughton from 1,021 to 445, and fighting over-development and urbanisation.

The LRA have been represented in local elections since at least 2016 and this latest result is a clear example of how local issues can have significant influence on council-level election results. However, as such local groups will not be expected to perform as well in a general election, if indeed they field a candidate, it is difficult to translate this scale of local issues to national politics.

Conclusion
Taking an holistic view of the results indicates the extent to which national politics have influenced the local elections with the Conservative party suffering heavy losses (-474) and Labour winning the largest number of new seats (+186). However, despite this overall position, the choices that people make at local elections, and the reasons for those choices, can differ very significantly to those made at a general election. Local factors will, by definition, play a greater role in the decision-making process and there is a greater opportunity for smaller single-issue parties to do well. This is highlighted in the fact that independent candidates gained an additional 93 seats. An implication of this is that it can be very difficult to identify the key factors that influenced the outcome of the election in any particular local authority.

There has been a varied focus on planning and housing issues in the authorities that we have considered but, in general, it does not appear to have been given the weight that might have been expected, given the importance of housing on the domestic policy agenda and the importance of planning as an enabler of housing delivery (or in the words of the Shadow Chancellor, as “the single greatest obstacle to our economic success”).

Time will tell whether the local election results will be reflected in the general election on 4th July. One prediction that we would make, however, is that housing and planning issues will represent a more significant policy battle ground at the general election than was the case in the local election campaign.
 
 

Image credit: Red Dot via Unsplash

[1] https://lichfields.uk/blog/2024/february/28/2024-a-general-election-year
[2] These are the ONS published median house price to workplace-based earnings ratios (March 2024).
[3] These were Cambridge, Adur and Worthing.
[4] For example, Labour gained Thurrock from NOC, and held in Chorley, Rotherham, Wakefield, and Barnsley, all of which have c.70% Green Belt.
[5] https://www.bbc.co.uk/news/election/2024/england/councils/E07000192ws
[6] Previously known as an Area of Outstanding Natural Beauty (AONB)
[7] Cannock Chase District Council:  Amazon’s proposal to close its Rugeley Fulfilment Centrehttps://www.cannockchasedc.gov.uk/council/news/articles/statement-amazons-proposal-close-its-rugeley-fulfilment-centre
[8] Financial Times Online: How did a vast Amazon warehouse change life in a former mining town? Available: https://www.ft.com/content/6aface36-2b2f-4ed3-bf3f-9af301317377
[9] https://www.bbc.co.uk/news/election/2024/england/councils/E06000059
[10] The Lib Dem Manifesto for the Dorset Council Elections. Available: https://www.sdlibdems.org.uk/2024-elections/our-manifesto-for-dorset-council-elec
[11] BBC News: Local Elections 2024: Dorset Council group leaders talk politics at the pub. Available: https://www.bbc.co.uk/news/uk-england-dorset-68928118
[12] Dorset Echo: Cutting car park charges a priority for Dorset Council. Available: Cutting car park charges a priority for Dorset https://www.dorsetecho.co.uk/news/24313208.cutting-car-park-charges-priority-dorset-council/ Council | Dorset Echo
[13] https://www.bbc.co.uk/news/election/2024/england/councils/E06000023
[14] The Green Party Manifesto for Bristol. Available: https://bristolgreenparty.org.uk/bristol-green-party-launches-manifesto-promising-hope-and-action-for-bristol/
[15] The Labour Party Manifesto for Bristol. Available: https://www.bristol247.com/wp-content/uploads/2024/04/Bristol-Labour-Group-Manifesto-Web-PDF.pdf
[16] Available: https://www.theguardian.com/politics/article/2024/may/03/green-party-adrian-ramsay-celebrates-results-england-local-elections
[17] https://www.bbc.co.uk/news/election/2024/england/councils/E07000082
[18] The Green Party Manifesto for the Stroud District Council Elections. Available: https://stroud.greenparty.org.uk/
[19] Stroud Times: Highest number of labour district council seats in 28 years. Available: https://stroudtimes.com/highest-number-of-labour-district-council-seats-in-28-years
[20] https://www.bbc.co.uk/news/election/2024/england/councils/E07000082 
[21] https://www.bbc.co.uk/news/election/2024/england/councils/E07000082 
[22] Stroud Journal: Labour launch election campaign. Available: https://stroudtimes.com/labour-launch-election-campaign/
[23] Stroud Green Party react to becoming biggest party. Available: https://stroud.greenparty.org.uk/news/2024/05/09/stroud-district-council-elections-greens-react-to-becoming-biggest-party/)
[24] https://www.bbc.co.uk/news/election/2024/england/councils/E07000072
[25] https://www.loughtonresidents.co.uk/featured-news/election-2024/election-2024-mainfesto-fairmead.pdf

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Aiming low? How are housing targets in emerging local plans responding to the December 2023 NPPF?

Aiming low? How are housing targets in emerging local plans responding to the December 2023 NPPF?

Matthew Spry & Leah Pickup 09 May 2024
An updated NPPF was published in December 2023[1], including within a number of changes to policy for how local planning authorities (LPAs) set their housing requirements within Local Plans.  This followed consultation on a set of proposed changes[2] announced in December 2022 which were regarded by many – not least those outside Government who supported the changes - as being likely to reduce the level of new housing supply. Key elements of the proposed policy were removing the requirement for Green Belt review and weakening provisions for neighbouring areas to take on unmet need. 
In February 2023, Lichfields produced analysis for the Home Builders Federation (HBF) and Land and Planning Federation (LPDF) that estimated the impact of the potential changes on the number of homes that would be planned for by 2030, concluding that it might lead to a fall in supply (compared to recent rates of delivery) of 77,000- homes per annum, to just 156,000, well short of the 300,000 national ambition. This factored in the ongoing difficulties being faced by London in meeting its need (under-delivering against it's London Plan target which in turn was less than its need). 
At the Levelling Up, Housing and Communities select committee in April that year[3], the then planning Minister, Rachel Maclean MP was asked about the risk of the changes leading to a fall in housebuilding, with Andrew Lewer MP (a member of the committee) suggesting the proposal would mean a “gargantuan Titanic iceberg sized hole” in the Government’s ambition to boost housebuilding. The Minister responded that
“We’re very clear that we want to see those numbers of houses built […] and the way that we will achieve that is by having local plans and making it quicker, easier, simpler, clearer for local authorities to get the local plans in place.”
The Department’s analysis of the NPPF proposals[4] says that:
“On average, authorities without an up-to-date Local Plan would have 14% higher housing supply if their housing supply (as a proportion of existing housing stock) were as much as those with an up-to-date plan. Care should be taken about assuming an entirely causal relationship as there are likely to be unobserved factors associated with having an up-to-date local plan, such as how well-resourced a planning department the authority has and whether it has a favourable attitude towards supply. But overall, the analysis points to the possibility of increased Local Plan coverage helping deliver more homes.”
So, the Government’s argument is that if the NPPF changes lead to more local plans being produced, this will boost housing supply compared to what would be achieved without these plans.
Housing targets in local plans are an important factor in determining the number of homes that are built each year[5] and achieving the 300,000 national ambition relies upon housing targets in Local Plans aggregating to something around that number. This is because local plan targets are used to determine the amount of land that is allocated and/or permissioned. They help LPAs with judgements over how the impacts and benefits of development are balanced, how large developments should be, how many should be provided and where, what infrastructure is needed to support them, and if they warrant public sector investment. Without targets, experience tells us that many Local Planning Authorities who are, at best, ambivalent about housing delivery, will simply stop new homes being provided.
The stalling of local plans became something of a trend in 2022 – 2023[6] as LPAs responded to the prospect of changes in national policy, particularly the abolition or softening of housing targets.
However, as the Government’s intentions crystallised, a number of LPAs began to make demonstrable progress on their plans, with a small flurry of Regulation 18 or 19 draft blueprints produced for consultation over the past six months. What – if anything – do these emerging plans say about the approach being adopted by LPAs on housing targets in light of the Government’s new policy?
We have identified 25 Draft Local Plans (Reg 18 or 19) outside London[7] that have been produced in the past six months and include a proposed housing requirement figure. Of these 25, 15 had previously produced an earlier Reg 18 Local Plan with a specific requirement figure proposed or preferred[8]. These 25 have a combined Standard Method local housing need figure of around 25,000 per year, represent 12% of total national local housing need outside London (206,566).
Table 1 below shows what these 15 LPAs are proposing in terms of housing targets, and how these compare to net housing additions over the past three years, the Standard Method for local housing need, and the housing target that was proposed in its previous draft Reg 18 Local Plan.
The standard method housing need figures used in our analysis are based on the latest demographic and affordability data; these figures may therefore be different for the Standard Method figures used by the LPAs at the time they prepared their draft plans.
Table 1 – Summary of Local Plans with targets in earlier draft Reg 18 Plans.

Source: Lichfields Analysis

Notes:

[i] Oxford City Council – The earlier draft local plan annual requirement is based on policy H1 option a as it is clear option b to meet identified need is not practically possible;

[ii] Three Rivers – The June 2021 consultation does not set out a definitive proposed housing requirement for the plan, but sought to make provision for around 550 homes per annum over the plan period;

[iii] Dacorum – It is not clear what the housing requirement is in the local plan consultation document, but the link to the Sustainability Appraisal establishes the housing requirement under scenario 4;

[iv] East Hampshire – The local plan annual requirements relate to East Hampshire district,  including the South Downs National Park; and

[v] Chelmsford – The earlier draft local plan annual requirement included a buffer which was removed in the proposed annual requirement.

The analysis reveals that:
  1. Of these 15, six have cut their housing targets by more than 100 homes per year. None are proposing a material increase on their previous emerging targets.
     
  2. The big reductions compared to earlier draft plans are: South Staffordshire -170 per annum; Three Rivers -280 pa; Horsham  -223 pa; Hertsmere -170 pa; Canterbury -103 pa; Chelmsford -200 pa. All but one did so with the benefit of seeing the final December 2023 NPPF.  
     
  3. In total, these 15 plans are proposing c.11,400 homes a year, compared to c.12,700 a year previously; a reduction of 10%.
     
  4. The housing need in these 15 Local Authorities equates to 13,630 homes per year, so these plans are undershooting the Government’s measure of housing need by 16%. Six of the 15 Local Plans are proposing not to meet their Standard Method local housing need figure. Only one, Chelmsford, is proposing to exceed its LHN by >50 per annum.
     
  5. Bristol – which is one of the 20 largest cities with the 35% urban uplift to its Standard Method – is planning to maintain its previous proposed target, but will undershoot its housing need by 1,450 homes per annum. The new NPPF says the urban uplift share of this unmet need will not be expected to be met in neighbouring areas[9] and in any event the surrounding districts are dominated by Green Belt which in the NPPF update is not required to be reviewed when preparing a plan[10].
     
  6. Over the total plan periods (which vary but are a minimum of 15 years), the 15 Local Plans will be undershooting their housing needs by 40,000 homes (total housing targets over plan periods of 245,233 against total housing need of 205,223).
     
  7. The Local Plans are in aggregate proposing more homes than were built on average in the past three years, although some (South Staffordshire, West Suffolk and Test Valley) would be doing less.
     
  8. Some of the reductions in housing delivery are perhaps explained by a perceived shift in Green Belt policy: Three Rivers, South Staffs, Hertsmere. In others (e.g. Chelmsford, Canterbury, Horsham), Councils have elected to do only what is required to meet their own minimum housing need figure and are choosing not to pursue extra growth or cover off unmet housing need from their neighbouring areas.
For the other ten Local Plans, where there is no single proposed local housing requirement figure in an earlier draft Local Plan, the analysis is set out in Table 2 below.
Table 2- Summary of Local Plans without targets in earlier draft Local Plan.

Source: Lichfields Analysis

Notes: 

[i] Wolverhampton – The local plan annual requirement is based on the preferred option H3;

[ii] South Oxfordshire/ Vale of White Horse – The local plan annual requirement is based on the preferred option using the standard method, with an increase to allow for existing agreed unmet need from Oxford City;

[iii] Lewes – The local plan annual requirement is the mid-point of the range considered for the housing requirement of 271dpa to 468dpa; and

[iv] Thurrock – The local plan annual requirement is based on The South Essex Housing Needs Assessment (June 2022) as stated in the consultation document. 

This set of 10 plans draws out some interesting dynamics in current plan making:
  1. Wolverhampton is one of the 20 urban centre uplift LPAs where the standard method housing need is increased by 35%. Like Bristol, it plans to undershoot its need, by 581 homes, and there is no expectation this uplift will be met in neighbouring areas. A challenge for the new West Midlands Mayor, perhaps, who might take a different stance to his predecessor, particularly on Green Belt.
      
  2. South Oxfordshire/Vale of White Horse has an emerging proposed target of 1,572, exceeding its Standard Method figure by 360 homes. However, neighbouring Oxford City has unmet need, and – more significantly - the previous (now abandoned) Growth Deal (in 2014) made by the Oxfordshire authorities and the government, had local plans for the combined area of just under 1,950 per annum[11] (based on the housing need associated with economic growth and delivery of infrastructure funding) so the emerging proposals represent a reduction on previous plans.
      
  3. Bournmouth, Christchurch and Poole – who are under-shooting their local housing need - make some criticisms of the Standard Method and suggest their own assessment (based on lower migration) is closer to their proposed target, but fundamentally cite constraints, including an untouched Green Belt as a reason for not hitting the standard method local housing need figure.
      
  4. Lewes – which is envisaging not meeting its standard method figure – is constrained by the South Downs National Park in the south of its district. It has identified some additional sites, and looked at options for growth in other parts of the district, but having considered the options claims it does not have sufficient land capacity. Time will tell whether that is a defensible position.
     
  5. Of the other plan areas, few are proposing materially more housing than the standard method, with only Arun in excess by >50 homes per annum.
When considering these 10 plans in combination with the 15 plans already considered above, the key findings are:
  1. In total, these 25 plans are proposing just under 20,900 homes a year.
     
  2. The housing need in these 25 Local Authorities equates to around 25,000 homes per year, so these plans are undershooting the Government’s measure of housing need by 17%. 10 of the 25 Local Plans are proposing not to meet their Standard Method local housing need figure. Only four are proposing to exceed their LHN by >50 per annum.
     
  3. In general terms, this direction of travel (areas with Green Belt not releasing enough land for housing, the 20 big cities with the urban uplift not meeting their 35% extra need, surrounding areas not picking up the slack) tends to support the thesis we predicted in the February 2023 analysis for the HBF/LPDF.
     
  4. Of course, it might be said these initial figures nevertheless support Rachael Maclean’s argument at the select committee: that, in encouraging these 25 plans to be produced, it will boost housing delivery compared to low recent housing delivery in these areas (the emerging targets across all 25 plans are some 19% higher than what has been achieved in recent years[12]). But then of course we know that the baseline is often no development being proposed at all, that at least 11 of these areas were already advancing plans proposing more than they do now, and it does not follow that the combined increase on recent build rates will be sufficient to meet the national goal.
      
It is too early to say what these emerging plans will do for actual housing delivery. For one thing, none have yet been examined or adopted. A number will not in fact benefit from the perceived protections of the new NPPF, being subject to the transitional provisions[13] so might find themselves having to increase their housing requirements. Further, any change in the approach between previous draft plans and what is now proposed may not be directly related to changes introduced by the NPPF in December. A factor weighing on housing delivery is what happens after the plan, with the removal of requirements to demonstrate a rolling five-year land supply in the event the plan’s trajectory proves inadequate[14].
However, we can say that if these plans progressed on this basis, and the pattern was replicated across the rest of the country[15], with local areas tending to undershoot or only do the minimum, with the 20 largest urban centres seemingly not on track to achieving their 35% urban uplift, and with unmet need going largely unaddressed, it would put 300,000 homes per annum firmly out of reach.
 
Blog updated on 20th May 2024.

[1] The NPPF can be found here
[2] The draft NPPF with indicative changes for consultation can be accessed here
[3] The transcript of the evidence session is here
[4] Within the Impact Assessment for the LURA available here
[5] For an analysis of the role of housing targets – see this blog here (written at the time when the short-lived Truss government pondered the removal of housing targets.
[6] See our blog on local plan delays here
[7] We have excluded London LPAs from our analysis because housing targets are set by the London Plan
[8] This excluded Reg 18 Local Plans with options for housing requirements presented for consultation, where no figure is identified as ‘preferred’ except where the proposed annual requirement is even lower than all the options considered in the earlier draft local plan for annual requirement figures, as is the case in Horsham
[9] NPPF para 62 says: “This uplift should be accommodated within those cities and urban centres themselves except where there are voluntary cross boundary redistribution agreements in place”
[10] NPPF para 147 says: “Once established, there is no requirement for Green Belt boundaries to be reviewed or changed when plans are being prepared or updated”
[11] Based on the Local Plan target for VoWH (819 per annum, including an allowance for Oxford’s unmet need) and South Oxfordshire Local Plan phased target of 1120 per annum for 2026-2032 and 1,110 from 2032-35 (see the joint housing delivery strategy here)
[12] 17,418 net additional homes were built in the 25 LPAs in the past three years compared to the emerging target of just under 20,900
[13] The new Framework (published on 19 December 2023) will only apply for the purpose of examining plans, where those plans reach regulation 19 of the Town and Country Planning (Local Planning) (England) Regulations 2012 (pre-submission) stage after 19 March 2024
[14] The evidence suggests optimism bias is prevalent in five-year land supply calculations and that, without the requirement to demonstrate a rolling five year land supply and the corrective mechanism available via NPPF para 11(d), it is possible actual delivery will undershoot targets by 20% - see here
[15] As the 25 plans considered represent 12% of total national local housing need outside London (206,566). London itself is planning to undershoot its housing need by some 46% and is delivering even less – see here.

 

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