02 May 2018
Since the revised National Planning Policy Framework (NPPF) and related documents were published for consultation, like many others I have been pouring over the text to understand what the proposed changes could mean for the development industry.
We’ve presented at public and private sector seminars to summarise the proposed changes and importantly, try and provide some analysis and insight into what these changes could mean, specifically for the north east of England.
The consultation, amongst its many other objectives, is seeking to speed up plan making - with one proposed change relating to one of the tests of soundness shifting from requiring a plan to be “the most appropriate strategy” (paragraph 182) to “an appropriate strategy” (paragraph 36). But could this lead to a reduction in the quality of plans in an effort to speed up production?
The language used throughout the draft NPPF and accompanying consultation documents makes clear that housing requirements are ‘the minimum starting point’. Importantly it clarifies that plan making authorities should work to ensure that cross-boundary strategic matters, such as unmet housing need, are dealt with now rather than deferred. The newly introduced statements of common ground (SoCG) are intended to assist here (they will effectively support the Duty to Cooperate).
Whilst this emphasis on housing numbers being the minimum starting point (Revised Draft NPPF paragraph 61) and the need to ensure strategic needs are planned for now (paragraph 36) are welcomed, it really isn’t clear how effective this approach will be. Ultimately, SoCG are not required in law and draft paragraph 11 (b) i and ii recognises there are constraints on meeting development needs.
Lichfields’ series of Insights and blogs on the revised draft NPPF summarise the proposed changes in more detail.
Turning to what this could mean for the north east: what became clear from speaking at recent seminars was the inherent importance of ensuring that the region’s economic strategies and aspirations are supported by appropriate housing delivery. Critically the people involved in helping to realise these aspirations - now, more than ever - must ensure there is a holistic approach taken, with plan makers needing to ensure that policies realise and plan for the intrinsic and inextricable link between economic growth and housing.
Whilst there have been no fundamental changes relating to the proposed standard methodology requirement for assessing housing need since the last consultation (‘Planning for the Right Homes in the Right Places’, November 2017), it is important to elaborate on how the housing requirements that will be generated by the methodology will only be a starting point. This is implicit in the Government setting a target of at least 300,000 new homes a year by the mid-2020’s. Yet the Government has been consulting on a standard methodology that would only deliver 87% of this total.
In the north east, delivering only the standard methodology requirement compared to the current local authority-produced assessments of housing need could lead to less land being allocated for housing delivery which could translate to around 1,370 fewer homes being built each year, as shown on figure 1. The biggest reductions would be in Darlington (60%), Middlesbrough (37%) and Newcastle upon Tyne (36%). The economic implications of this shift are potentially substantial.
A reduced level of housing growth would not support the jobs’ growth sought in the two Local Economic Partnership (LEP) areas; they currently aim to create 25,000 new jobs in the Tees Valley by 2026 (Tees Valley Strategic Economic Plan (SEP)) and 100,000 in the north east LEP area by 2024 (North East SEP).
The revision to the draft Planning Practice Guidance now refers to:
“Circumstances where an uplift will be appropriate include, but are not limited to; where growth strategies are in place…” (Draft PPG, page 26).
This is to be welcomed when compared to the previous ‘Planning for the Right Homes in the Right Places’ consultation which simply set out that:
“Plan makers may put forward proposals that lead to a local housing need above that given by our proposed approach. This could be as a result of a strategic infrastructure project, or through increased employment (and hence housing) ambition as a result of a Local Economic Partnership investment strategy” (Planning for the Right Homes in the Right Places, paragraph 46).
However, the revised wording does not go far enough to require that objective assessment of need is sufficient to deliver the housing required to achieve economic-led strategies identified by local authorities or LEPs. Without this detail, the risk remains that local authorities may shy away from delivering the housing needed to support their economic aspirations.
Coupled with the Housing Delivery Test which only introduces sanctions if 5% of the housing requirement is not met, and most significantly a new route to the Presumption in favour of Sustainable Development if delivery falls below 75% of the requirement (following the transition period), this could mean that as a region, a further 340-1,690 homes would not be built each year (if only 95% or 75% of the standard methodology housing requirement were to be delivered).
The economic ramifications of this are clear, as shown in table 1.
As many local authorities in the north east are currently preparing their plans, it is imperative that the LEPs scrutinise emerging policies and allocations, and they are closely engaged in their production, to ensure that the amount of housing planned for is sufficient to support the economic growth that this region so desperately needs.
If the north east is to achieve its economic aspirations, including job growth, then it is imperative that this happens.
See our other blogs in this series:
National Planning Policy Framework review: what to expect?
Draft revised National Planning Policy Framework: a change in narrative
NPPF consultation proposals – what could they mean for town centres?
NPPF consultations – what could they mean for designers?
Draft NPPF: heritage policy is conserved…
Draft NPPF: implications for aviation?
Draft NPPF: Business as usual?
Draft NPPF: more emphasis on healthy and safe communities
Lichfields will publish further analysis of the consultation on the revised NPPF and its implications. Click here to subscribe for updates.
15 Dec 2017
I recently attended an annual conference on care homes and retirement living. It had a record-breaking attendance, cognisant of the growing awareness within the development industry of the importance of the care and retirement living sector in helping to meet our population’s diverse housing and care needs.
A message that spanned the conference is that there is growing demand but not enough supply in the sector. Policy and planning can play a fundamental role in helping to redress this imbalance, with the conference particularly noting that demonstrating need is ever more important in the planning process. It is worthwhile saying at this point that Lichfields’ Carepacity Toolkit could assist here, by evaluating the need for housing for older people, as well as assessing the potential of sites, quantifying benefits and impacts, and assisting in enabling delivery.
Whilst reductions in public funding have had their own impact on the supply and delivery of care and retirement housing, it was positive to hear at the conference that more funders are investing in the sector, which in turn is generating more opportunity for different models.
Funders include UK-based and specialist funding, Asia Pacific funds, Middle East funds and US real estate investment trusts. Retirement living investors include AXA, Legal & General, Goldman Sachs and AIG, alongside Bupa and Oaktree. This wide range of institutions involved demonstrates that the market is maturing and allowing for different developer and operator models. These include the “Propco” model, whereby an investor rents a property to an operating company – an “Opco”. This can be viewed as a safer investment route as it relies on returns from rentals without involvement in the care operation. It is a competitive model, due to a limited number of established operators resulting in potentially lower yields.
The “Wholeco” model provides an opportunity for the investor to construct a care operation, or partner with an operator. This model provides flexibility and potentially greater returns on investment, weighed against any risk derived from investing in specialist property and operating companies.
The “Smart Second Tier” model includes refurbishing modern or first generation care facilities. Here, investors support the operator with on-going investment and receive returns through increased rental income, or a share in the operating company. But refurbishment can be difficult if the facility continues operating, due to the impact of works on residents.
The range of investors and models allows for more flexible models to be provided for the end user too. This may include flexible ownership, rent-to-rent or the provision of progressive levels of care (“progressive care developments”) within a single development. Progressive care developments enable people to move in as a lifestyle choice and while still active, in the knowledge that their new home is future-proofed to respond to their potentially changing future health and care needs. There were also examples of successful, intergenerational developments discussed at the conference, for meeting the housing needs of the full age range of the population.
All of the models for this type of development align well with the National Planning Policy Framework, which states that local planning authorities should plan for a mix of housing to address the needs of different groups in the community, including older people.
However, as with any new innovation in the development sector, and as discussed in Phil Jones’ recent blog, it is vital that both the public and private sectors increase their knowledge and evolve their understanding of care homes and retirement living, and embrace innovative approaches to meeting the country’s housing needs. This is ever more important as delivering care and retirement housing is a “people industry”, whereby different age groups have different wants and needs.
Wider social benefits that are realised from providing appropriate care and retirement housing were also promoted at the event. They include the amount of care a resident needs to receive reducing after moving in, due to the well-being benefits of enhanced social networks alongside reducing the level of worry regarding the maintenance and financial pressures of running a home.
There was also acknowledgement of the wider benefits from moves to care homes and retirement living freeing up housing stock in the general market; the knock-on effects can also help to meet the housing needs of an area.
Challenges that the sector faces within the planning system were also discussed by the majority of speakers. They included the grey area around C2/C3 use classes and financial implications relating to council policies for affordable housing provision. This is a debate that will continue, particularly if “progressive care developments” grow in popularity.
My last blog touched on the different typologies of care and use class/financial implications, as summarised below. It is important to note that the Use Classes Order does not allow for homes to change from Use Class C3 to C2 according to the residents’ needs. It is argued by many in the industry that progressive care developments should be “sui generis”, which again has implications on affordable housing policies.
The practicalities of providing care and retirement homes are important considerations for developers, operators, agents and planning officers, as with any development. For example, the location of such development is a key factor for residents, who need to be able to access services and facilities, and receive visitors. Additionally, as highlighted by operators at the conference, there is reliance on public transport by many care workers and therefore the ability for staff to travel to work by this mode is an important factor in locating such developments.
Whilst there are challenges for this ever-evolving sector and it is critical that national policy increases its focus on advising how local planning authorities could do much more in meeting need. It was encouraging to hear that the industry is already using innovative funding and development methods – and wanting to disseminate details widely.
To discuss Carepacity further, please get in touch: firstname.lastname@example.org
 Property Company Whole Company Whereby the occupier rents their existing property to allow them to rent a retirement/care property.