The Broken Housing Market and the Standard Methodology David Richardson and Duncan Moors
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Speakers David Richardson Partner d.richardson@ashfords.co.uk Duncan Moors Legal Director d.moors@ashfords.co.u k David advises on a wide range of planning issues, including planning obligations and the community infrastructure levy, judicial review and statutory challenges, amendments to planning permissions, and compulsory purchase and compensation. David has spent time seconded to a development corporation advising on the regeneration of key sites in its area and the introduction of a s106 standard charge. Duncan joined Ashfords in 2016, having spent 17 years working for Teignbridge District Council. The last three years of which as the Solicitor to the Council. He is experienced in a broad range of local government matters including governance, licensing, housing, environmental health, contracts and property.
Introduction The standard method for calculating OAN what do we know? What has come of the Housing White Paper to date? Consultation round up Key housing cases: o St Modwen Developments Ltd v SoS CLG [2017] EWCA Civ 1643 o R. (on the application of Wet Finishing Works Ltd) v Taunton Deane BC [2017] EWHC 1837 (Admin) o Richborough Estates v SoS CLG [2018] EWHC 33 Latest Community Infrastructure Levy (CIL) Amendments
Standard Method of Assessing Housing Need What do we know? Current position - Full Objectively Assessed Need (FOAN) NPPF - Para 47 To boost significantly the supply of housing, local planning authorities should: use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area.. Para 17 every effort should be made objectively to identify and then meet the housing needs of an area. Summary of approach Para 47 of the Framework requires the local plan to meet the full objectively assessed needs for market and affordable housing, that is the figure determined by the SHMA required by paragraph 159 of the Framework for the purpose of identifying the FOAN. That process, guided by the PPG, seeks to meet household and population projections (taking account of migration and demographic change), and to address the need for types of housing including affordable housing.
Standard Method of Assessing Housing Need NPPG The NPPG s section on Housing and economic development needs assessments deals with housing in three sub-sections: 1. The approach to assessing need 2. Scope of assessments 3. Methodology: assessing housing need.
Standard Method of Assessing Housing Need NPPG Establishing future need for housing is not an exact science. No single approach will provide a definitive answer. Household projections published by the Department for Communities and Local Government should provide the starting point estimate of overall housing need...household projections are trend based. They do not attempt to predict the impact that future government policies, changing economic circumstances or other factors might have on demographic behaviour. The household projections may require adjustment to reflect factors not captured in past trends, e.g. Where formation rates have been suppressed by under-supply and worsening affordability Consequences of past under delivery LPAs should take a view based on available evidence of the extent to which household formation rates are or have been constrained by supply
Standard Method of Assessing Housing Need PAS - Objectively Assessed Need and Housing Targets Technical advice note 2 nd Ed. July 2015 Intro para 1.3 As pointed out in the PPG, assessing housing needs is not an exact science. Many of the questions we address have no definitive answer, and answers may change abruptly if national guidance is updated, planning Inspectors and courts of law issue new decisions, or new information comes forward.
Standard Method of Assessing Housing Need Current method of calculating FOAN principal issues LPAs have to consider and take a view on Format and scope of assessing the needs Projections and migration rates Jobs growth and economic forecasts Affordable housing requirements Extent of previous unmet need Market Signals
Standard Method of Assessing Housing Need
Standard Method of Assessing Housing Need Policy-on / Policy-off approach FOAN is on the starting point LPs must translate into land provision targets NPPG Paragraph: 004 Reference ID: 2a-004-20140306 Can local planning authorities apply constraints to the assessment of development needs? The assessment of development needs is an objective assessment of need based on facts and unbiased evidence. Plan makers should not apply constraints to the overall assessment of need, such as limitations imposed by the supply of land for new development, historic under performance, viability, infrastructure or environmental constraints. However, these considerations will need to be addressed when bringing evidence bases together to identify specific policies within development plans. Hunston Properties Limited-v-Secretary of State for Communities and Local Government (2013) EWHC 2678 QBD Admin
Standard Method of Assessing Housing Need Published February 2017 Regarding FOAN Planning for the right homes in the right places But at the moment, some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology for calculating objectively assessed need. So, we are going to consult on a new standard methodology for calculating objectively assessed need, and encourage councils to plan on this basis.' Proposed consultation on options for introducing a standardised approach to assessing housing requirements.
Standard Method of Assessing Housing Need Criticisms of the current system Too complex The current process leaves substantial room for interpretation costly and time-consuming process which lacks transparency local planning authorities, developers and local communities often engage in disputes on the method used, which delays the process (by around six months) and adds cost; and few methods take significant account of the affordability of housing in their area
Standard Method of Assessing Housing Need Benefits of standard approach simpler, quicker, and more transparent This would speed up the time taken to prepare Local Plans and give local communities greater control of development in their area. MHCLG considers that a standard method should be based on three key principles: a) Simple there should be an easy and transparent process for local people and other interests to understand; b) Based on publicly available data which might include national data such as that from the Office for National Statistics, or robust local data; c) Realistic to reflect the actual need for homes in each area, taking into account the affordability of homes locally. High house prices indicate a relative imbalance between the supply and demand for new homes, and makes housing less affordable. The affordability of new homes is the best evidence that supply is not keeping up with demand.
Standard Method of Assessing Housing Need Stage 1 - setting baseline Projections of household growth should be the demographic baseline for every LPA area Annual average household growth based over a ten year period (requirement to review LPs) 2014 based household projections (published July 2016) Stage 2 - An adjustment to take account of market signals Household growth on its own insufficient as an indicator of demand Constrained by supply of available properties and people may not be able to find appropriate accommodation in an area in which they want to live Use of median affordability ratios published by the ONS - compare the median house prices of all open market houses sold in a year in LPA area to median earnings 2016 house price to earnings ratios (published March 2017). Areas where there is a greater gap between average house prices and average earnings will have greater market signals adjustment
Standard Method of Assessing Housing Need Step 3 - Capping the level of increase Market adjustment will lead to a significant increase in the potential housing need in some parts of the country - cap according to status of LP Up-to-date LP - annual housing need figure capped at 40% above LP annual housing requirement LP >five years old - annual housing need figure capped at 40% of higher of projected ONS household growth or the LP annual housing requirement Exceptions? LPAs are able to plan for a higher number than set out by standard method LPAs may wish to plan for a higher level of economic growth than the standard method
Standard Method of Assessing Housing Need Transitional arrangements No plan, or plan adopted more than five years ago and has not yet reached publication stage Plan has been published, but not yet submitted The new standardised method should be used, unless the plan will be submitted for examination on or before 31 March 2018, or before the revised Framework is published (whichever is later). If the plan will be submitted for examination on or before 31 March 2018 or before the revised Framework is published (whichever is later), continue with the current plan preparation otherwise, use the new standardised method. Plan is at examination stage Plan adopted in the last five years Progress with the examination using the current approach. Use the new standardised method when next reviewing or updating the plan.
Standard Method of Assessing Housing Need Reaction to the proposal Government not yet published consultation responses - due with NPPF amendments Analysis by Savills suggested 1 in 3 LPAs could lose their 5 yrs HLS. Richard Blyth, head of policy at the RTPI, told The Planner: "Given the focus placed on objectively assessed need by the government it is good to reduce the time and cost associated with arguments over methodology. However, there could be concerns around potential delays to local plans submitted after April in order to adapt to the new method. Martin Tett, housing spokesman for the Local Government Association, said there could be benefit in having a standard approach to assessing the need for housing. However, a formula drawn up in Whitehall can never fully understand the complexity and unique needs of local housing markets, which vary significantly from place to place. It is crucial that councils and communities can lead new development in their areas.
Standard Method of Assessing Housing Need Reaction to the proposal Source Savills prepared on behalf of DHCLG
Source Planning Magazine
What has come of the Housing White Paper? A round up of consultations Use of Grampian conditions Capturing Uplift in Land Value Small sites
Use of Grampian conditions Tackling unnecessary delays caused by planning conditions 2.26 We will tackle unnecessary delays caused by planning conditions by taking forward proposals, through the Neighbourhood Planning Bill, to allow the Secretary of State to prohibit conditions that do not meet the national policy tests, and to ensure that pre-commencement conditions can only be used with the agreement of the applicant. We introduced a new deemed discharge mechanism for planning conditions in 2015 and we are keen to hear more from developers, local authorities and other interested parties about how this is working and if we can streamline the process further.
Use of Grampian conditions Consultation on the use of pre-commencement planning conditions Consultation ran - 4pm on 30 January 2018 to 11:45pm on 27 February 2018 2016 consultation on improving the use of pre-commencement conditions and prohibiting the use of other conditions which do not meet the six tests in paras 203 and 206 of the NPPF. s100za inserted into TCPA 1990 by s14 of the Neighbourhood Planning Act 2017 When brought into force will prohibit the grant of planning permission subject to a pre-commencement condition without the written agreement of the applicant to the terms of the condition except in prescribed circumstances. The consultation paper sought views on draft regulations (set out in Annex A), which set out the circumstances when a pre-commencement condition can be imposed without the written agreement of the applicant.
Use of Grampian conditions MHCLG expectations LPAs and applicants will discuss range of conditions at an early stage Expect LPA to share with the applicant pre-commencement conditions (PCCs) at the earliest possible opportunity Applicant to confirm agreement to PCC where acceptable Proposals If applicant does not accept PCC, LPA can issue a notice which must include: a) the text of the proposed PCC; b) the full reasons for the proposed PCC; c) the full reasons for the proposed condition being a PCC, and d) the date by which any response must be received which must not be before the last day of the period of 10 working days beginning with the day after the date on which the notice is given
Use of Grampian conditions Applicant s response - 4 options: a) to provide written agreement to the terms of the proposed PCC, in which case the LPA may grant planning permission subject to that PCC. b) to indicate that they do not agree to the terms of the proposed PCC, in which case the local planning authority may then either: i. grant planning permission without the PCC, ii. seek written agreement to an alternative PCC, or iii. refuse to grant permission (if it considers that the disputed PCC is necessary to make the development acceptable in planning terms). c) to provide comments on the proposed PCC, in which case that condition cannot be imposed. Further negotiations could follow which may result in agreement. The LPA could subsequently issue a further notice triggering a new date for a response. d) to not respond (i.e. remain silent). If there is no response by the date given in the notice the LPA may grant planning permission subject to the terms of the PCC specified in the notice.
Capturing uplift in land value
Capturing uplift in land value Government aim to reform the system for capturing land value to create a fairer balance for those interested in and benefitting from infrastructure development. Autumn Budget 2017 proposals Removing pooling restrictions on 106 contributions for areas where viability is low and on large strategic sites Allowing LPAs to set CIL rates which better reflect the increase in land values between existing and proposed use changing indexation of CIL rates to house price inflation, rather than build costs Making it easier and quicker for LPAs to set and revise CIL and to to set a higher zonal CIL rate in areas of high land value uplift, for example around stations The CLG Committee invited responses by Friday 2 March 2018
Housing supply and small sites Autumn Budget 2017 the Government said it would consult on measures to require LPAs to bring forward 20 per cent of their housing supply as small sites. It was said that this would "speed up the building of new homes and supports the Government s wider ambition to increase competition in the housebuilding market. It also supports the custom build and self-build aspirations which were Restated in the Housing White Paper. Consultation draft of the revised NPPF intended to be published before the end of March 2018 with the ambition of producing a final version in the summer...
St Modwen Developments Ltd v SoS CLG [2017] EWCA Civ 1643 A para 47 (and footnote 11) NPPF case: To boost significantly the supply of housing [LPAs] should: identify and update annually a supply of specific deliverable sites illustrate the expected rate of housing delivery through a housing trajectory. A para 49 NPPF case: Relevant policies for the supply of housing should not be considered up to date if the [LPA] cannot demonstrate a five year supply of deliverable housing sites Main issue at stake: to get into (or out of) a para 49 situation, how far does deliverable require you to go in terms of the likelihood of the site coming forward? The parties were apart, in terms of deliverable sites, by circa 10K homes.
St Modwen how did it end up in Court of Appeal? Two schemes refused permission by LPA (E. Riding Yorks); o Site A: up to 510 dwellings. o Site B: up to 390 dwellings + 7.7 hectare employment use. Nov 2013 Sept 2014: (Recovered) appeal inquiries into the refusals. Jun 2015: SoS dismisses appeals. St Mods launch s288 challenge. Apr 2016: Ousely J in the High Court dismissed the challenge on all four grounds. Nov 2016: Lindblom LJ in CA grants permission to appeal: When I did so, I said that the argument presented [by St Mods] seemed more elaborate that it need be. I accepted, however, that there were matters fit for consideration by this court in particular the concept of a supply of specific deliverable sites in paragraph 47 of the NPPF.
St Modwen seven grounds but three issues 1. The SoS misinterpreted (or misapplied) para 47, and the concepts of supply and delivery, and his reasons were not clear and adequate. IE Para 49 was concerned with the probability of delivery. 2. The SoS misdirected himself or gave inadequate reasons, regarding the LPA s housing trajectory. 3. The SoS erred in law in his conclusions on the LPA s record of housing delivery. decided against a warning from Lindblom LJ emphasising limits to Court s role in construing policy [see Suffolk Coastal/Hopkins Homes]; AND excessive legalism infecting the planning system [see Barwood]
St Modwen the decision Lindblom LJ dismissed the appeal in Oct 2017. Was the writing on the wall? there is no place in challenges to planning decisions for the kind of hypercritical scrutiny that this court has always rejected [para 7] The conclusions in an inspector s report or decision letter, or in an officer s report, should not be laboriously dissected in an effort to find fault [para 8][see also Mansell]. Issue 1 Para 36: The concepts of deliverability and expected rate of delivery are not synonymous or incompatible. Delivery is not the same a deliverability.
St Modwen the decision The fact that a site is capable of being delivered within five years does not mean it necessarily will be. The LPA cannot control the housing market and NPPF Policy recognizes that. The NPPF policies are consistently worded to refer to a supply of housing sites that can be regarded as deliverable, not sites that as regarded as certain to be delivered (para 36). Contrast with NPPF para 47 on housing trajectory expected rate of housing delivery for plan making. If the NPPF required more, it could have said so (para 37). FN11 NPPF and NPPG make clear that permission is not a pre-requisite for a site to be deliverable.
St Modwen the decision Para 39: The production of the "housing trajectory" referred to in the fourth bullet point of paragraph 47 is an exercise required in the course of the preparation of a local plan The policy in paragraph 49 is a development control policy. It guides the decision-maker in the handling of local plan policies when determining an application warning of the potential consequences if relevant policies of the development plan are out-of-date. And it does so against the requirement that the local planning authority must be able to "demonstrate a five-year supply of deliverable housing sites", not against the requirement that the authority must "illustrate the expected rate of housing delivery through a housing trajectory for the plan period". The Inspector had taken on board FN 11 ( realistic prospect ) and that it may well turn out that not all sites would actually come forward.
St Modwen the decision Issue 2: Dismissed for much the same reasons as above, IE that the SoS (and the judge in the first instance) had correctly interpreted/applied the NPPF. Lindblom LJ did not wish to intervene in a matter that had been well aired and understood, on two previous occasions, and which concerned planning judgement. Para 51: It is not open to St Modwen now to go behind the inspector s conclusions on the credibility and reliability of the parties respective cases Such conclusions were well within the province of planning judgement. Reasoning should not be dissected and individual sentences separated from their full context.
St Modwen the decision Issue 3: Challenge based on how the LPA could square its anticipated housing supply with a past record of persistent under-delivery, and failure by the Inspector to grapple with that. As with issue 2, Lindblom LJ was not convinced. Past shortcomings were addressed by the 20% buffer being applied. Para 61: But the question of the deliverability of housing sites, the essential question for the inspector in considering the parties cases on the five-year supply of housing land, required her to exercise her planning judgment. This had now to be done in the light of the emerging local plan, with its new policies for housing development and its new allocations of land for such development. In doing it, the inspector did not ignore the council s housing record. She had regard to it, though correctly not as a principal important controversial issue.
St Modwen final thoughts Allows LPAs greater confidence in defending housing supply position against developers trawling through sites to raise delivery issues. Raises the bar in terms of what developers will need to show to demonstrate lack of realistic prospect. The case involved sites included in an emerging plan. Does not absolve an LPA from defending inclusion of certain sites wholly however. Yet more jurisprudence regarding the Court s unwillingness to intervene in planning judgement; and distaste for overly legalistic attacks on decisions. But is the bar now too high?
St Modwen applied Appeal ref APP/E2001/W/16/3165930: Gladman vs East Riding Yorks. Council. Decision of 2 Nov 17. Main issue: whether the LPA could show a supply of specific sites sufficient to provide 5 years worth of housing land supply. Dispute over the inclusion of allocated sites. Para 31 NPPG says: deliverable sites for housing could include those that are allocated for housing in the development plan unless there is clear evidence that schemes will not be implemented within 5 years. Para 12 applies St Mods: The judgement says, The assessment of housing land supply does not require certainty that the housing sites will actually be developed within that period. The planning process cannot deal in such certainties. I take this to mean that for a site to be deliverable, it should be capable of being delivered not that it will be delivered.
St Modwen applied Para 13: In light of the St Modwens judgement, the trajectory identifies what is likely to happen and the deliverable supply is an expression of what is capable of happening. Trajectory does not go to whether a site is deliverable Rather it is, as the St Modwen Developments judgement identifies, that past shortcomings in the supply of land are to be addressed in the manner required by the Framework i.e. through the application of a 20% buffer. In my view not achieving the trajectory does not go to the determination of whether a site is, in planning policy terms, deliverable.
R. (on the application of Wet Finishing Works Ltd) v Taunton Deane BC [2017] EWHC 1837 (Admin) A judicial review against the grant of a s73 Consent which proceeded on two grounds: o Procedural unfairness in s106 arrangements. o Grant was ultra vires of s73. Regarding the second, Singh J addressed whether increasing the number of consented units from 84 to 90 was within s73. Citing Arrowcroft (Coventry City Council ex p. Arrowcroft Group plc [2001] PLCR para 33: is able to impose different conditions but only if they are conditions which the Council could lawfully have imposed on the original permission in the sense that they do not amount to a fundamental alteration of the proposal Singh J rejected the second ground
Richborough Estates-v-SoS CLG [2018] EWHC 33 Challenge against Gavin Barwell s WMS issued on 12 December 2016:..This means that relevant policies for the supply of housing in a neighbourhood plan, that is part of the development plan, should not be deemed to be 'out-of-date' under paragraph 49 of the National Planning Policy Framework where all of the following circumstances arise at the time the decision is made: This written ministerial statement is less than 2 years old, or the neighbourhood plan has been part of the development plan for 2 years or less;
Richborough Estates The neighbourhood plan allocates sites for housing; and The local planning authority can demonstrate a three-year supply of deliverable housing sites.
Richborough Estates Five grounds of challenge 1. The WMS was inconsistent with paragraphs 14 and 49 of the NPPF and in having the effect of amending paragraph 49 without explicitly doing so represented an approach which was irrational and unlawful; 2. The Government had made errors of fact in the research that was relied upon in formulating the policy; 3. The WMS was invalid for uncertainty and confused given a lack of clarity as to how the three-years supply was to be calculated; 4. Irrationality in the face of the stated intention of the NPPF to boost significantly the supply of housing ; 5. Breach of legitimate expectation that there would be public consultation before planning policy for housing was changed by the WMS.
Richborough Estates Brief chronology: 12 December 2016 - WMS issued 30 December 2016 - Pre-action protocol letter 20 January 2017 - Govt Legal Department response dismissed all five grounds 25 January 2017 - Proceedings issued 7 March 2017 - Proceedings adjourned pending the decision in Suffolk Coastal DC-v-Hopkins Homes 10 May 2017 SC judgment in Suffolk Coastal
Richborough Estates Brief chronology (continued): 10 August 2017 - NPPG relating to WMS guidance amended following the Suffolk Coastal decision 7 and 8 November 2017 - Richborough Estates heard by Dove J 12 January 2018 judgment handed down
Richborough Estates Decision Dove J Ground 1 following West Berks case, provided that the policy does not frustrate the operation of planning legislation or introduce matters which are not properly planning considerations at all and is not irrational, the matters which the SoS regards as material or immaterial to the determination of the policy being issued is a matter entirely for the Secretary of State Ground 2 the evidence was considered as being adequate with the shortcomings acknowledged by the SoS use of the term recent analysis suggests indicates that the SoS was not asserting that this was a hard and fast concluded view
Richborough Estates Ground 3 the judge had no difficulty concluding that a three-year supply of housing in the WMS means a three-year supply in terms of the exercise for assessing a five-year supply required by paras 47-49 of the NPPF. Ground 4 the judge held that the SoS had not acted irrationally in issuing the WMS, which it was argued would frustrate the aim to boost significantly the supply of housing. The NPPF clearly promotes this as a key priority but it is not an objective that exists on its own isolated from other interests addressed by the NPPF. It isn t to be pursued at all costs and not above all other objectives of the NPPF. Neighbourhood planning being one such other objective.
Richborough Estates Ground 5 no statutory requirement for public consultation for planning policy Narrow way that the ground was pleaded legitimate expectation that the housebuilders would be consulted based on past practice didn t mention others with an interest such as LPAs, community groups or the public Ground not made on the facts there are two previous WMSs relating to housing which were not consulted upon the first was removing gardens from the definition of previously developed land in 2010 and the second was Planning for Growth in March 2011
Richborough Estates So what is the application of the WMS following Richborough and Suffolk Coastal?: Where: The WMS is less than two years old or the NP has been part of the Development Plan for two years or less; and The NP allocates sites for housing; and The LPA s can demonstrate a housing land supply calculation of a more than three but less than five-year supply then para 49 requires the planning balance to be struck using the tilted balance in para 14 and significant weight is to be given to the NP.
Latest CIL Amendments Criteria for Regulation 128A: o On day pp A is granted no charging schedule o o New pp B is granted in relation to development under S73 On day pp B granted charging schedule is in place chargeable amount shall be: X Y Where X = chargeable amount for B calculated in accordance with Regulation 40 Y = amount that would have been the chargeable amount for A, if A first permitted development on the same day as B But how do you index the notional pp A CIL?
Latest CIL Amendments The Community Infrastructure Levy (Amendment) Regulations 2018 [SI2018/172]. In force on 9 February 2018. Apply to any liability notice (or revised notice) issued by a collecting authority on or after date of coming into force. Address how to deal with indexation, on which the Regs were previously silent. Amended Reg 128A includes an assumption that the notional CIL for the first permission has the index figure for the year in which the amendment permission is granted. To do otherwise depresses the pp A figure, leaving a liability under Reg 128A even if floorspace is no different, and floorspace previously outside of CIL was charged CIL indexation