How do we meet rising housing needs in Wales?

 

As a result of the change in methodology, it is not possible to directly compare the change in affordable housing need between the two sets of estimates. A comparison is, however, possible of the change in market housing need over the first five years of each set of estimates. The annual central estimates for 2025-2030 of 5,680 dpa are 47% higher than the central estimates of 3,856 dpa 2019-2024 that inform the dwelling estimates in Future Wales.

 

The Welsh Government notes that the increase in the Estimates of Housing Need in Wales reflect higher projected household growth in the 2022‑based household projections compared with the 2018‑based projections used previously.

 

The 2019 based estimates noted a split between estimates of need between market and affordable homes of 52% market and 48% affordable in the first five years. This tenure split is also set out in Future Wales. These figures are in Lichfields view misleading in that they are not comparing like for like trend estimates for market and affordable housing. Instead, the affordable element includes an assumption that all existing unmet affordable housing need would be met in the first five years. The affordable housing need estimate therefore included a ‘policy on’ aspiration whilst the market housing estimate was purely a trend based ‘policy off’ figure.

 

The 2025 based estimates notes that the split between market and affordable homes required is 65% market and 35% affordable.  Lichfields understand that this difference reflects and the fact that existing unmet need has not been re-distributed and added onto the estimate of affordable needs. Lichfields welcome this change in approach in that it gives a better and more transparent understanding of estimates of future housing need by tenure without ignoring the very significant unmet housing needs.

 

---

Households to dwellings

The Welsh Government website for the 2019 based projections states:

 

 

As the national development framework, Future Wales is the highest tier of development plan and is focused on solutions to issues and challenges at a national scale. Strategic and Local Development Plans are required to be in conformity with Future Wales and must be kept up to date to ensure they and Future Wales work together effectively.

 

 

Para 5.35 then states:

 

  

As the most up to date projections, Lichfields assume that all emerging LDPs and the SDPs will need to properly account for the new dataset.

 

In line with the requirements of the DPM Lichfields anticipate that the housing requirements in emerging RLDPs will need to reflect not only a conversion figure from households to dwellings but an adjustment to reflect the wider policy aspirations of the plan. This will be especially important in those LPAs that Future Wales define as part of the National Growth Area. Here it must be assumed that the outcomes sought by RLDPs in terms of economic growth and social equity will result in household growth and associated dwelling delivery above a continuation of past trends.

 

Any policy led uplifts to the housing requirement figures in RLDPs will also need to address the existing unmet needs identified through their housing market assessments.

 

There is a risk that LDPs may need to take a brief pause to understand the implications of the recent 2025 based household estimates. We note that as part of both the forthcoming examination of the Cardiff and Monmouthshire RLDPs that the Inspectors have already requested the Council review the implications of the 2022-based household projections on the submitted RLDP.

 

Any brief delay to the RLDP Examination process is in Lichfields view justified to ensure a sufficient supply of housing is secured in the short and medium term rather than awaiting the next round of RLDPs, which based on current rates of review will be at least 7-10 years away.

 

 A key issue of concern expressed in some sectors including by Welsh Government has been around the issue of ‘land banking’. This issue formed part of a wider ranging review by the Competition and Markets Authority (CMA) who reported back in February 2024. The CMA found that:

 

 

The CMA view then is that the primary issues surrounding delivery of new housing in Wales is the functioning of the planning system and not land banking.

 

In relation to the planning system the CMA found that:

 

 

The CMA proposed several recommendations for reform to the planning system:

 

 

 

Option 2.3: Streamlining the planning system to significantly increase the ability of housebuilders to begin work on new projects sooner and bring forward marginal projects which may have previously been non-viable due to the costs of taking them forward.   

 

Welsh Government published its response to the CMA study in October 2024 and was seemingly of the view that no changes to the planning system were required. Certainly, no significant changes to the planning system have subsequently been enacted to promote increased housing delivery.

 

In Lichfields view this was a missed opportunity, and it is an issue that should be addressed by which ever administration is responsible for planning following the Senedd elections in May 2026.

 

The lack of up-to-date LDPs in Wales and the protracted time taken to undertake reviews is in Lichfields view the main reason for poor housing delivery. Wales like the rest of the UK has a plan led system. The difference in Wales is that there is no fail safe to ensure housing delivery is maintained if there isn’t an up-to-date plan.

 

In the last five years (2021-2025) only two new LDPs (Bridgend and Flintshire) have been adopted in Wales whilst most of the remaining are stuck in the preparation stage for significantly longer than the 3 ½ years prescribed in the DPM. Over half of the LDPs in Wales are now time expired and fail to provide a positive basis for future housing delivery.  

 

Since TAN1 was revoked in March 2020 there is no policy mechanism to support developers in coming forward with new sites to remedy the poor delivery. Lichfields considers that a proper monitoring and action policy (with appropriate triggers and actions in the event of under delivery) will be essential so that Wales is able to deliver the quantum of houses that is required to meet identified need. The existence of such a mechanism would also give impetus for Council’s to ensure up to date LDP coverage.

 

The 2025 based estimates identify the need for 8,700 new homes per year over the next 5 years which is not only significantly above the previous estimates but nearly double the housing completion levels in 2023/24 and 2024/25 respectively.

 

These annual estimates are a minimum in that they don’t account for existing unmet need which unlike the 2019 estimates is expressed as a separate standalone figure. The estimates of housing need are essentially aggregated from the Nov 2025 household projections. They fail to apply any conversion factor from households to dwellings as required by the DPM. This would increase the estimates further by approximately 4%.

 

Lichfields welcomes the new estimates of housing need as they highlight the important outcome of the most recent household projections and provide a better basis for addressing the housing crisis in Wales. The DPM confirms that emerging LDPs and the SDP should use the latest household projections as a starting point for establishing their housing requirement figures. It will be important for those LDPs that are being reviewed to take account of this up-to-date information.

 

Given the ongoing delays to preparation of RLDPs Lichfields advocate for a policy mechanism to allow sustainable, well located housing sites to come forward in the interim based on proper monitoring of delivery. Otherwise, delivering anything near the numbers identified in the estimates of housing need will remain extremely challenging.