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The months ahead – the south and beyond

/live/news/rsz_1chris.jpgIt might seem as if Brexit is the only thing on the minds of our politicians. But that would misjudge the situation. For the house building industry, there is a great deal more on the agenda.

With a growing political acknowledgement of the sheer scale of the housing crisis, including the publication this week of a cross-party report advocating the need for 3 million new social rented affordable homes by 2040, there is increasing recognition of the need to build a lot more houses.

That figure is equivalent to seven times the number of homes that exist in Richborough’s home city of Birmingham, which has a population of 1 million people and is markedly against recent delivery trends of just 6,000 social rented homes a year nationally. Recent research shows that 50% of affordable homes are now delivered on market housing sites. That includes all forms of affordable housing including intermediate housing.

So to achieve a figure of 3 million, for social rented homes alone, will require a huge increase in the extent of market housing or a sea change back to 100% social housing development.

The first test of this will be the immensely important New London Plan, the examination-in-public which begins later this month. The main event issue is the extent to which London’s housing need can be met, and how much Green Belt and Metropolitan Open Land is required to meet the true requirements of London.

This will see the Mayor of London pitched against the Secretary of State for Housing, Communities and Local Government. It is being billed as Khan v Brokenshire. The pre-match build-up has been intense and provocative. The Mayor’s New London Plan proposes much higher housing requirements than the existing plan. But remarkably, on 27th July last year, the Secretary of State wrote to the Mayor formally objecting to plan making clear the housing numbers are not high enough for London, stating: ‘I am not convinced your assessment of need reflects the full extent of housing need in London to tackle affordability problems.’

This has now been confirmed in the Secretary of State’s formal representations to the examination inspectors. But Khan’s team has now hit back pointing out that it is the Secretary of State’s Green Belt policy which is preventing the Mayor from adopting higher numbers. The Mayor also points to recent refusals by the Secretary of State of recovered and call-in appeals into new housing proposal in London, contrary to the recommendation of his own inspectors.

Adding to the tension are the objections from those authorities who neighbour London, who are also suggesting London should accommodate more of its housing needs. This is about London and the wider South East. But it is also a battle which is taking place right across the country. The issue is simple: we need more, Green Belt land for housing.

The heightened focus on London and the South East is partly a due to the new Standard Methodology for calculating housing need, which will start to have an increasing influence on housing applications and appeals across the country this year.

The Standard Methodology greatly simplifies the calculation of housing need for each local authority. The two main components are the latest household projections and the local affordability ratio of housing (average house prices relative to average income in the area). The latter has led to huge increases in the identified need for housing in the southern half of the country, where demand is greatest. But it has also seen huge reductions in the north.

This is leading some authorities, like Leeds, to abandon the housing requirement in their recently adopted local plans and delete proposed Green Belt allocations. Yet in doing so, and concentrating on urban regeneration sites, affordable housing delivery will collapse in the north because land values and abnormal costs on such sites mean affordable housing is often unviable. Greenfield land in the north is the only way to deliver much needed affordable housing and this point should be made clear by all developers and landowners during Local Plan promotions.

Finally, a new version of the NPPF is promised this year, less than 12 months after the present one was issued. This is because of the problems created by the latest set of the household projections (the 2016-based set) which, even with the affordability adjustments, will not deliver the 300,000 new homes a year which Ministers have now set as the new national target.

Embarrassingly, no sooner were the 2016-based household projections published last October than the Government had to issue a consultation document seeking to abandon them, in favour of reverting back to the 2014-based household projections which require more houses in most areas. This is because the latest household projections are based on much shorter past trends in household formation rates (a 10 year trend as opposed to 50 years) and are, therefore, much more influenced by the recent trends in suppressed household formation, especially amongst younger people.

The new NPPF will almost certainly require local authorities to revert back to the 2014-based household projections, which do require the delivery of more housing and will come closer to the new national target of 300,000 new homes a year.

 

Christopher Young QC, Planning and Environment barrister at No5 Chambers

www.no5.com/