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PANned: The existence or otherwise of an effective 5 year supply of land for housing
I’ve been watching an application for planning permission in my neighbourhood with interest. It’s a site I worked on years ago, before I moved to the area. An unsuccessful turn through the plan process alongside an application for around 1,400 dwellings led to an appeal against non-determination being made then subsequently withdrawn. The landowner and their development partner then opted to pursue a smaller development of 300 homes in the context of an apparent shortfall in the 5 year supply of effective land for housing. This again led to an appeal against the failure of the planning authority to make a decision. I haven’t had any professional involvement in this site in a long time. My interest stems partly from my history with the site, but predominantly in the hope that if it’s consented and developed then a pedestrian link to the adjacent train station might become more direct from my back garden. Selfless, I know. Earlier this week my interest piqued, but this time for professional reasons, as the appeal decision was issued. The reporter’s conclusions have shone a bright light on the implications of the Scottish Government’s Planning Advice Note 1/2020, which was issued as the industry broke for Christmas last year. 5 Year Effective Supply of Land for Housing The maintenance of an effective supply of land for housing remains a bone of contention to developers and planning authorities. The property industry has maintained for many years that the correct way to calculate whether a planning authority has sufficient land is to take the annual housing land requirement from the development plan, multiply it by 5 (representing the coming 5 years) and add on any under-delivery in previous years since the plan baseline as well as demolitions that have taken place in that time. This means that the amount of homes that were being planned for at the beginning of the plan period continue to be planned for throughout the lifetime of the plan, regardless of delays. The nature of this calculation and semantics around it have been played out for years during local plan examinations and planning appeals, with nary a consistent approach being established. In December last year, the Scottish Government sought to establish a standard calculation via PAN 1/2020. The PAN offers a simple calculation to work out the 5 year effective land supply requirement. “5 year supply of effective land requirement = (development plan housing land requirement / plan period) x 5 ” It’s as simple as that. No factor allowed to consider residual need built up as a result of under delivery since the plan’s baseline evidence was prepared, no allowance for demolitions, and indeed no allowance for over-performance in delivery. This is a very simplistic approach, but one which it was hoped would dampen some of the contention in planning for housing and bring clarity to the appeal process. The Decision Back to my neighbouring site. The appeal was dismissed and there were a number of reasons referenced, but the most striking was that in relation to the housing land supply. The reporter acknowledged that at the time the appeal was made, PAN 1/2020 had yet to be published, and agreed that using the residual method which takes into account under delivery in the early years of the plan period there was a shortfall in the 5 year effective supply. The total supply was 4.6 years, leaving a shortfall of 549 homes. However, using the PAN 1/2020 method, the shortfall vanishes and the same supply becomes something between 5.6 and 8.4 years’ supply (depending on how the HLR is calculated). The supply of land for housing hadn’t changed, nor had the housing land requirement in the development plan. The existence of a 5 year effective supply arose purely through the disregard of past completion rates and the fact that the land supply hasn’t delivered as it was supposed to. Some thoughts… Will this approach contribute to delivering much needed homes? It wouldn’t appear so. Or will it result in the same old sites being rolled forward in successive housing land audits with little to no impact on delivery? That seems to be the danger.  Under this method will the Housing Supply Target set at the beginning of a plan period definitely be delivered during the lifetime of the Plan?  It is no way guaranteed and would seem unlikely… This got me thinking and I am off now to look at the implications PAN 1/2020 might have for housing delivery in other local plan areas. Look out for some Lichfields research in the coming weeks which will explore this issue further and see what the implications are elsewhere in Scotland.    If this has piqued your interest and would like to discuss these matters with me please get in touch: Gordon ThomsonPlanning Director, Edinburgh07964912360 gordon.thomson@lichfields.uk  

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Supporting Scotland’s Growth - objective assessments of housing needs 2021
With Scotland’s standard methodology – Housing Needs and Demand Assessment – well established there has been little requirement to put forward alternative ways to objectively assess local housing needs. But, with Scotland’s Local Development Plans moving to a 10 year cycle and a new National Planning Framework that will form part of the Development Plan and set housing targets it is time to scrutinise. It is time to question whether or not the approach being taken on target setting will ensure that enough new homes are planned to support Scotland’s continued growth. In July 2010 Lichfields launched “Headroom” our toolkit for objectively assessing housing needs. This was to meet the requirement of the English National Planning Policy Framework that required Local Authorities to assess and set housing targets in their local plans, there wasn’t a standard methodology in place at that time. Since 2010 it has been used by developers in over 100 locations to support planning applications and appeals, to accompany representations on Local Plan housing targets and also by Councils, which gives it wider credibility as an independent and objective piece of evidence. Setting housing targets and housing land supply targets in Scotland for the next 10 years At the end of February 2021 Scottish Government issued a letter to all local authorities inviting their input into the establishment of National Planning Framework 4 (NPF4) housing land targets. Using the HNDA toolkit Scottish Government have indicated an initial estimate of housing land requirement. The housing land requirement should be generated by consideration of housing need and housing demand with generosity applied to ensure that actual targets for the provision of new homes can be met. It is generally accepted that housing ‘need’ is an indicator of existing deficit - the number of households that do not have access to accommodation that meets certain normative standards. Housing ‘demand’ is a market driven concept and relates to the type and number of houses that households will choose to occupy based on preference and ability to pay. It is important that the housing numbers contained in NPF4 address both the housing need and housing demand if Scotland is to successfully satisfy its housing requirement. This initial indication provided by Scottish Government does not fully assess housing need and demand in Scotland. A very narrow definition of housing need is used which is that identified by the HNDA toolkit and which only considers homeless households in temporary accommodation and households which are both overcrowded and concealed. There are many other factors that should be taken into consideration when identifying housing need, we have highlighted some below. These statistics suggest that a far higher need than that that is identified needs to be planned for and that is before housing demand is considered. Housing demand also needs to be considered in terms of economic growth and household choice. This is a very narrow definition of housing need. It identifies 15,175 households in need over the next 10 years. This seems incredibly low when we consider the following factors that drive housing need.  The methodology utilises the 2018-based household projections which show significantly lower household growth than previous projections, and the combined minimum all-tenure housing land requirement it produces for Scotland is for c.14,200 homes per annum for 2022-32.  This is considerably less than the housing completions that Scotland has enjoyed for past 20 plus years as shown by Scottish Governments very own statistics on all tenure new housing completions by Calendar Year 1997-2019. This can be viewed in full here. In this period new build completions were over 20,000 per annum from 1997 to 2008 and were over 25,000 per annum from 2005-2007. The lowest completions dropped to was in 2012 when just over 15,000 were achieved but in the last 2 years completions of over 20,000 have been achieved again. The target proposed (c14,200 per annum) is way off what is currently being achieved and given that this is a housing land requirement figure not a housing supply target figure the picture is even more off. As a Housing Land Requirement figure this is 125% of the actual housing supply target required in urban areas and 130% in rural areas which means a total housing completion target of 11,275 which is less than half of the actual all tenure new housing completions in 2019. This figure has been derived, it would seem, without taking proper account of economic growth ambitions and hasn’t counted all hidden households – adult children living with parents for example who would rather have a home of their own. Lichfields Headroom Framework looks at an array of factors that contribute to housing need. Primarily this is a consideration of not just housing factors but also economic and demographic factors. This is summarised in Figure 1. Figure 1 – Headroom Framework Economics as a factor Economic factors have a big impact on housing and rarely play a proper part in target setting in Scotland but this as a mistake and means that not enough homes will be planned for and this in turn will have an impact on economic growth. It is also important to consider the importance of attracting and retaining people to fill the jobs required to support the wider economic ambition in Scotland. Without the right amount and right type of homes being provided, there is a risk the population will age considerably impacting on the economic prosperity of Scotland. In the run up to the Scottish Elections in May 2021 we have seen the main political parties setting out their stalls in terms of jobs growth with figures of up to 200,000 new jobs over the next 5 years promised. Prior to this the 2020/2021 Programme for Government set out by the First Minister in September 2020 suggested in the order of 120,000 new jobs over the same period. This level of new jobs has an impact on housing need. We have used our Headroom toolkit to model housing needs based on a range of jobs growth over the next 5 years of 100,000 to 200,ooo to reflect the various ambitions set out recently.  100,000 jobs over 5 years will require 21,200 new homes per annum to support this ambition 200,000 jobs over 5 years will require 41,500 new homes per annum The implications of this are clear… targeting only 11,275 new homes per annum will seriously curtail the ability of Scotland to deliver economic growth. If you want to discuss anything that is contained in this Blog please contact Nicola Woodward. Nicola WoodwardSenior Director and Head of Edinburgh OfficeNicola.woodward@lichfields.uk07478 154174

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