Planning matters

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Size(mix) matters

Size(mix) matters

Simon Coop 24 May 2018
Housing issues are never far from the headlines, and one simple truth lies at the heart of the matter: we are not building enough new homes. But in addition to ensuring that sufficient new homes are delivered, we must also ensure that an appropriate mix of housing is achieved. If the emerging housing supply does not reflect the needs and demands of existing and potential future residents, there is a risk that an imbalance will emerge between the supply of and demand for certain types of residential property. The consequence would be that the prices of those properties that are more in demand would increase at a faster rate than that of the overall housing stock, exacerbating affordability issues and undermining the ability of certain sectors of the population to meet their housing needs.   The importance of achieving an appropriate housing mix is reflected in government policy, which states at paragraph 50 of the National Planning Policy Framework (NPPF): “To deliver a wide choice of high quality homes, widen opportunities for homes ownership and create sustainable, inclusive communities, local planning authorities should: “Plan for a mix of housing …; “Identify the size, type, tenure and range of housing that is required in particular locations, reflecting local demand…;” The draft NPPF launched for public consultation in March 2018 adopts a similar approach; paragraph 62 states: “Policies should identify the size, type and tenure of homes required for different groups in the community…” The current PPG provides some detail about how to identify the need for certain types of housing and the needs of different groups, but does not provide any specific guidance on how to identify the mix of different house sizes that is required. Lichfields has launched a new product, Sizemix, which provides a robust and transparent means for identifying the size, type and range of housing that is required in a local area, in line with national policy. A complex relationship Understanding the right mix of housing relies on an appreciation of the differences between housing need and demand. This difference is particularly acute in the open market sector, where households are free to occupy housing in accordance with what they want and can afford. In this context, whilst housing need draws solely on the size and structure of individual households, housing demand reflects the reality that many people will often deliberately under-occupy their homes and thereby express a demand for a property that is larger than they might specifically need. For example, a couple might only need a one-bedroom property but might want a larger property. This pattern leads to a combination of overcrowding and under-occupation. According to the latest available ONS’ standards of occupancy[1], 700,000 households in England were overcrowded at the time of the 2011 Census, of which over 400,000 were households with dependent children. A total of 3.8m households (c.20%) occupied housing in line with their needs, whilst 7m households had at least 2 spare bedrooms. Figure 1 provides a breakdown of occupancy patterns by household type. The highest levels of under-occupancy are amongst older households and couples without children, compared to the highest level of over-occupancy amongst households with children and multi-adult households. Figure 1 Occupancy patters in England by household type Source: Census 2011. Excludes social rented. Table 1 considers the relationship between household and dwelling size in more detail by illustrating the occupancy patterns of all private sector households in England. It shows that 2-person households in 3-bed dwellings form the largest household-dwelling group, with 16.1% of households falling within this group. Contrary to what might be expected, most single person households (19.9%) occupy 2 and 3-bed dwellings, with relatively few occupying 1-bed dwellings. Interestingly, a similar number of 5-bed dwellings are occupied by 4-person households as by 2-person households. Table 1 Household size by number of bedrooms Source: Census 2011. Excludes Social Rented Households Explaining the relationship between household size and dwelling type A range of factors impacts on housing requirements, in addition to household size. The fact that many people view their home as an investment means that they will often seek to buy one that they can afford, rather than the space that they actually need, even though such a property might be too large. Having spare bedrooms is viewed positively by many households; it provides flexibility for changing circumstances (such as the birth of a child) and allows visitors to stay, with both being significant factors for many people when searching for and choosing to buy a new home. Another factor that might influence the current and future demand for larger homes is the trend for working from home. There has been a steady rise in the proportion of people in employment working from home. As of 2017 this stands at 13.6% of people in employment. Increases in the number of people working from home may translate into a demand for larger housing as people seek additional space for use as an office. Whilst some changes to households result in the need for larger properties, others may create the opportunity to downsize – for example, when ‘empty-nesters’ no longer need all the space in their family home. However, as shown above, this often does not happen, with 2.4m households (84%) over the age of 65 having at least 1 spare bedroom, and just 718,000 (15%) occupying housing in line with their ‘needs’. This might relate to a lack of sufficient supply of housing products perceived to be attractive to those downsizing, but equally research suggests there is simply a strong preference from many people to remain in their existing home. The English Housing Survey shows that older households are the least likely to move, with just 2.3% of households over the age of 75 and 3.1% of households aged between 65 and 74 moving in the previous 12 months. By comparison, younger Sizemix Within the context of a need to increase the rate of house building, it is of critical importance to ensure that an appropriate mix of housing is provided to meet demand. Sizemix represents an important addition to the range of tools provided by Lichfields. It supports all involved in the development process by helping to ensure an adequate supply of the right type of houses can be delivered, in line with local requirements. Further details of Sizemix are available here. Please contact any of our offices to discuss how we might be able to assist you.   [1] Occupancy as defined using ONS standard of occupancy. Occupancy rating of -1 or less indicates overcrowding, +1 or more indicated under-occupancy.  

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Welsh Government Brexit projections

Welsh Government Brexit projections

Simon Coop 19 Apr 2017
With the stroke of the prime minister's pen at the bottom of a letter to the President of the European Council, Article 50 of the Lisbon treaty was formally enacted and the curve of British history was changed forever. In spite of all of the discussion of what lies ahead, very little is known for sure: when the terms of negotiation are up for negotiation, certainty remains thin on the ground. Given its relative economic position, and reliance upon £680m of EU funding each year, the potential impact of Brexit upon Wales may be even more significant than upon the rest of the UK. Many questions are being asked about what will happen, with a common theme relating to the impact upon housing need. It has been said many times since June that national sovereignty and migration were central to the outcome of the referendum. The follow-on argument is that a reduction in migration will result in a need for fewer new homes to be built. The recent release of a new set of Welsh Government household projections provides a timely opportunity to revisit the merits of this argument. Through a careful consideration of this data, and the population projections that underpin it, some conclusions can be drawn. The main focus of the discussion about the impact of Brexit upon population growth and housing need appears to have focused upon in-migration. The assumption being that greater controls on in-migration will result in a reduction in the number of people that move into this country, resulting in a consequential reduction in housing need. This perspective entirely overlooks out-migration. In order to fully understand the impact of Brexit upon population change in the UK, we must therefore focus on net migration (the difference between the number of people moving in from overseas and the number leaving the UK). The 2014-based Welsh Government projections anticipate that net international migration will amount to 3,315 people each year (14,100 in, 10,800 out). This is 28% lower than the net international migration level projected by the 2011-based population projections, a significant change that is likely to have been influenced by a number of issues, including changing international migration patterns during the recession (which affected Wales slightly later than the rest of the UK). The split between EU and non-EU international migration is 49:51, so on this basis, the EU component would represent a net in-flow of 1,690 people per year. This equates to just 1% of net EU migration into the UK. Given that net migration to Wales from the EU is already projected to be very low compared to past projections and as a proportion of net EU migration to the UK, the scale (and impact) of any further change may well be limited. As explained below, this is particularly the case given the expected reduction in out-migration to the EU. As one would expect, the picture across Wales varies markedly with Cardiff, Swansea, Rhondda Cynon Taf, Wrexham and Gwynedd expected to account for 87% of net international migration to Wales (2,970 people). By contrast, seven authorities (Conwy, Denbighshire, Powys Pembrokeshire, Monmouthshire, Vale of Glamorgan and Caerphilly) are projected to have net international out-migration of 380 persons per annum. Not only will any potential effect of Brexit upon net migration and overall population levels vary between different local authorities, the projections already anticipate a very different spatial distribution of international migration. This would have already informed the household projections and will continue to do so. Whilst the larger urban centres attract more net migration and are expected to see the highest level of household growth, there is not a direct correlation between the level of expected household growth in each local authority in Wales and the expected level of net migration. This is demonstrated by the fact that, with the exception of Powys, all local authorities in Wales are expected to experience household growth between 2014 and 2039, including those that are projected to have net out international migration. International migration is – and will remain – just one factor that impacts upon household change, alongside domestic migration, natural change, demographic profile and household formation rates are more significant in shaping household change in Wales. The issue of demographic structure is also relevant when one considers the potential impact of Brexit upon out-migration. If greater controls are to be placed upon EU citizens moving into the UK, there might also be a similar increase in barriers to British citizens moving abroad. It is estimated that between ¼ and 1/3 of British migrants living in other EU counties are retired and there is no reason to believe that the proportion of people migrating from Wales for retirement purposes is any different to the national average. In addition to potential imposition of entry requirements (potentially relating to economic activity and employment), future restrictions in access to healthcare and pension payments might also deter people retiring in Europe. The latest population projections show that, compared to a 5.1% increase in total population, the number of people aged 65 and over in Wales is expected to increase by over 42% between 2014 and 2039. If the future level of out-migration was to fall then the number of older people living in Wales would be expected to increase. The latest household projections show that older people tend to live in smaller households (commonly single person households or as couples) whilst younger people live in larger households. Immigration from the EU will continue, just as it does from the rest of the world and the biggest controls are likely to be placed upon younger people that might not have a job to go to. The projections show that. The effect of this might therefore be to exacerbate the existing trend towards an ageing population. The result of fewer people living in larger households but more people living in smaller households will clearly not be a justification for a reduction in housing need. An increase in the number of older people will equate to a need for more homes. Arguments that we will need fewer homes are misguided. In the absence of any robust evidence to the contrary, we should continue with what we have and rely upon the latest Welsh Government household projections as the starting point of our determination of future housing need.

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