Welcome to the fifth edition of ‘The Source’ – prepared by the Strategic Land Team at Gladman with the specific aim of better informing you with regard to current news and views in land & planning.
HOW MANY HOMES ARE REALLY NEEDED?
Over the course of the past 3 years, the Government has taken significant steps to aid the delivery of new homes. The NPPF was intended to both be instrumental in ensuring the number of homes NEEDED was objectively assessed in every local authority (and therefore collectively, England as a whole) and secondly; that local authorities would then be tasked to plan and deliver these homes.
If the Government is to provide the political, financial, and policy framework to enable these homes to be delivered, then everyone involved in the process needs to appreciate the true scale of this problem. Without recognising the true scale of housing need, it is impossible to remedy the acute housing affordability crisis facing this country, and whilst the government is making very positive steps more still needs to be done.
The NPPF correctly identifies the main drivers of housing need that must be added together to create the total number of homes to be delivered:-
- Affordability improvements
Improving Affordability by stopping house price rises and, over time, letting inflation and real earning growth erode the AFFORDABILITY RATIO by perhaps 3% each year, so that over a 25 year plan period it could halve from today’s ratio of 8 to become nearer to the level of 4 (that last existed in the 1970’s).
Houses, like every commodity in any economy, will only fall in price if supply is greater than demand.
The trick is to over-deliver to a level at which house prices stop rising and hence wage inflation makes them more affordable at a rate of about 2.5% to 3% each year. If so many extra were being built that “headline” house prices actually started to fall then there would be micro economic repercussions with house owners losing confidence, feeling “asset poorer” and perhaps spending less, plus issues of negative equity occurring again. The Government will want to manage delivery to ensure that such issues are avoided, but at current housebuilding levels we are a million miles from needing such issues of micro economic management.
Economists, including Dame Kate Barker, have calculated that in order to stop house prices rising we need to build a minimum of 120,000 additional homes per year together with addressing all other components of housing need.
Providing homes for Net Inward Migration which at present is circa 300,000 p.a. This figure doesn’t appear to be falling any time soon, and therefore alone creates a need for over 110,000 homes p.a.
- Backlog or “Hidden Homeless”
Ten years ago, Dame Barker estimated the “Backlog” of new homes at almost one million, a decade later the under delivery has now ballooned to some 1.5 million. This “Backlog” is not an abstract concept, it includes a significant number of “hidden households”. With people mostly in their 20’s and 30’s living with parents or sharing space when they want a home of their own, but cannot afford one whilst there is an Affordability Ratio of 8+, often 10+ in those areas of the country where the greatest number of jobs are being created.
These “hidden households” mostly want to have children, join the property owning society, pay local council rates, stamp duty, and create a home for themselves. What a wasted opportunity and a terrible way to treat millions of talented hard working youngsters in England today.
These 1.5 million “backlog” or “hidden” households will only be able to have a home of their own (owned or rented) when we have managed as a country to deliver far more affordable homes by over-delivering. It must be right to plan for these “hidden households” to have a true home of their own over a maximum 15 year period, i.e. 100,000 extra homes p.a.
- Demographic Drivers of housing need
The way people live, family sizes, and death/birth rates result in changes to how many homes are needed. The divorce rate and increases in life expectancy are creating more single households, as such the average household size is falling, generating a need for more homes. These demographic factors alone create a need for some 120,000 homes p.a.
It is only when policy makers admit to themselves and us, that the true need for homes is actually some 450,000 p.a. in England that we will then grapple with the issues of how, where and who is to deliver them.
It is Gladman’s view that the NPPF will eventually enable the right number of homes to be approved and subsequently delivered. This will involve major contributions from every possible source of land; greenfield on the edge of the most sustainable settlements, small infill sites, urban extensions, ‘Garden Cities’ or new settlements, and every viable Brownfield site that is available. Even, in some locations, this controversially may also require some Green Belt release!
Likewise it must be for the Government to continue to encourage new SME housebuilders and persuade the larger house builders to further ramp up output. It is clear that Housing Associations, Councils, and even Government itself must play an important role in developing and delivering the required homes. In fact pre-Thatcher the public sector built nearly half of the country’s houses.
Only by using every source of land available, and every lever of production being pulled, we will once again return to having a sufficient number of affordable homes in the right places for people to have sustainable lifestyles.
Planning Inspectorate Statistics
The Planning Inspectorate have recently released their yearly statistical report (April 2014 to March 2015) containing a wide range of interesting information for the development industry.
The Source ran an article in Edition 4 – “Is Frontloading the Appeal System Working”, noting the fact that validation of appeals was taking 10-12 weeks and inquiry dates provided 8 months after the validation of an appeal. The PINs report provides further evidence upon the delays in the system, highlighting that on average inquiries in 2014/2015 took 34 weeks for a decision to be issued (compared to 28 weeks in 2013/2014), whilst hearings took on average 21 weeks.
It is also interesting to note the outcome from the different appeal procedures for Major Dwellings (10+ dwellings or site area of more than 0.5ha). The written representation procedure saw only 38% of appeals allowed, with hearings at 48%, whilst inquires at 64% appeared to offer the greatest chance of success for major applications. Of course, this may partly be a reflection on the resources available to those pursuing the inquiry route or simply of the cases presented, but it is a statistic that will be worth monitoring as the number of hearings pursued for residential development is increasing.
Another telling statistic from last year was on decisions made by the Secretary of State on recovered appeals. In 2012/2013, 96% of appeals were decided in accordance with the inspectors recommendation on a total of 53 cases, this is compared to the 66% on a total of 128 cases in 2014/2015. This statistic reinforces the view of many within the development industry; that the pre-election period may have had an influence on decision making.
The report also provides useful information on:
- Total number of dwellings decided at Appeal.
- Percentage of appeals allowed and dismissed by individual inspectors.
- Percentage of appeals allowed and dismissed by Local Authority.
- DPD documents by Local Authority Submitted, Withdrawn and Reports Issued.
Local Plan Examinations
Since the turn of the year some 21 examinations across the Country into Local Plans have begun before the Planning Inspectorate, of those only 1 has so far been adopted (London Legacy Development Corporation). A further 9 are due to begin before the end of the year. The pace at which Local Plans have been progressing has long been a concern for the Government and this week Brandon Lewis announced the formation of an 8 strong panel of experts to examine how the production of plans can be simplified and the amount of time required to produce them reduced. The panel, a mix of public and private sector parties, is due to report its findings in the New Year.
A number of themes have emerged from examinations over the course of the year. Both pre and post-election the overriding theme has been one of inconsistency. The approach of an inspector to examining a plan has varied widely, often representors report a struggle to explain directions taken by inspectors. The difficulty in consistent decision making for inspectors is complicated by changes to the Planning Practice Guidance (PPG) and ad-hoc statements from Ministers, the recent note by Brandon Lewis on Local Plan Review and the push for the adoption of plans using reviews is a pertinent example.
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Call to Cut Local Councils Out of Housing Schemes
The housing shortage has become so severe in the UK that building projects should be considered by central government rather than by local authorities, according to a new report.
Housebuilding should be brought into the nationally significant infrastructure projects (NSIP) regime, a report commissioned by Bond Dickinson, the law firm, and Quod, the planning consultancy, says. This would enable developers to apply directly to the government for planning permission, bypassing local authority planning regulations.
Government Calls for 1 Million Homes by 2020
For the first time the Government has put a figure to the number of new homes it considers need to be built. Brandon Lewis commented to the BBC that achieving 1 million new homes over the next 5 years would be viewed a success. However, will this target of home building meet the real need as it is below even the base level of the latest Household Projections?
Read full article
In some recent appeal decisions, the “harm to social cohesion” has been used as a reason for refusal, particularly in the context of smaller settlements. This can be clearly seen in the decision at Feniton. In this case the Inspector had little more than the local authority arguments to influence the decision, however since then greater research and thought has gone into the counter argument of social cohesion.
To date, social cohesion has been used as a reason for refusal for schemes in villages where there are relatively high house prices and an average age, significantly above the national profile. The positive counter argument is that by providing new homes, house price rises will be kept in check which will encourage new families to move in to the area, thus reducing the age profile of the village to better match the national average. It can also be argued that the “social capital” of a community, with its clubs, societies and sports teams, all need younger people to organise them, lead them and keep them viable. The alternative of no development would drive up house prices due to the shortage of supply, and without the impetus from new families, lead to a decline in the use of local clubs, societies and sports teams. As such a settlement would resemble a retirement community rather than a thriving community of all ages.
For more detailed thoughts on this subject, including recent differing appeal decisions together with expert opinion from Rural Solutions, who specialise in advising and guiding rural communities to help them thrive, adapt and prosper, please click here.
Be careful what you wish for …!
North Somerset Council wrote to the Secretary of State (SoS) in March 2015 requesting his intervention in the examination of North Somerset Core Strategy Policy CS13 to consider the Inspector’s reasoning and conclusions as set out in his report. The Inspector concluded that the Council’s housing requirement should increase from 14,000 to 20,985 dwellings over that Plan period and that the backlog should be addressed by the use of the Sedgefield method. The Council claimed that this increased figure would be “challenging to deliver” and that the use of the Sedgefield method would “give a green light to green field expansion proposals”.
The SoS agreed to the Council’s request and called in the Policy for his approval. In a letter received by the Council on 18th September 2015, the SoS states that following a thorough review, he is satisfied that the Inspector’s recommendations apply and correctly reflect national policy. In addition, the SoS agrees with the Inspector’s recommendations, chiefly that the housing target of 20,985 is appropriate. He therefore approves Policy CS13 and its supporting text and it immediately becomes part of the adopted Development Plan.
In his letter, the SoS unequivocally states that “the Government now expects North Somerset Council to move forward with the other elements of its Local Plan and to deliver the homes its communities need”.
In the six months since the Council’s request, it has put a hold on the determination of most major planning application for residential development. This delay in determining applications for proposals that would deliver sustainable housing developments in the short term, further compounds the Council’s existing backlog in housing delivery. In the 18 months that have passed since the original examination, the evidence base that informs the calculation of objectively assessed housing needs has moved on and indicates that the need for additional housing could be much higher.
It will be interesting to see when the dust settles, whether the Council heeds the SoS’s clear expectations and starts to recommend positively and approve applications for sustainable residential development. Time will tell.
House Builder News
Positive results from Miller and Kier
Both Miller and Kier have reported positive recent results in a continuation of the trend shown by many of their fellow housebuilders.
Miller Homes, the housebuilding arm of the Miller Group announced an 80% increase in their pre-tax profit in the 6 months to the end of June 2015 when compared with the same period last year with an increase from 761 private completions to 854 also being achieved. These improvements represent both better overall market conditions and an 11% increase in Miller’s average selling price to £218,800. These improved conditions have led to 10 new sites being launched in the first six months of the year with a further 12 sites projected to launch before the end of the year. Chris Endsor, the firm’s ceo, said: “I am delighted by the progress we made during the first half of 2015. Miller Homes’ results demonstrate the successful execution of our strategic plan based on a considered approach to increasing volumes in good quality locations concentrating on family housing.”
Kier Living , the residential arm of the Kier Group (who incidentally acquired the Miller Homes Southern Division in the mid-1990s) has reported a record number of completions for the 12 month period up to June 30th with a total of 2,130, up 35% on 2014. Operating profit over the same period is also up 45% to £11.2 million. The firm has expanded into the north through assimilation of some elements of the former Yorkshire based housebuilder Southdale which went into administration earlier in the year. John Anderson, Kier Living executive director, said: “This has been an outstanding year for Kier Living which has included significant organic growth combined with the successful integration of parts of Southdale. We are making very good progress towards our Vision 2020 target of 4,000 completions a year.”
New Product Launch for Balfour Beatty
Balfour Beatty Investments are imminently due to launch a new House Building company, which will replace Mansell Homes. A whole new product range is currently being developed, which will set their quality design led houses apart. BBI have significant funds in place to acquire new development land across the UK, with the aim to deliver over 1500 completions per annum by 2020.
Interesting Appeal Decisions
At Gladman, we monitor all residential appeal decisions issued by the Planning Inspectorate, to better understand current interpretations of government planning policy.
Greenfield would not preclude brownfield development, even where 5 year supply exists
An appeal for 300 dwellings has been approved in Spennymoor, Durham. Inspector Malcolm Rivett identified the main issues with the scheme to focus on the council’s 5 year housing land supply position, and also the potential implications the scheme could cause to prospective brownfield sites coming forward in the area.
Mr Rivett concluded that the Council could demonstrate a housing supply of around 5 years but explained this was not reason enough to refuse the scheme and that housing applications would need to continue to come forward in order to maintain that supply. The inspector also disregarded the Council’s argument that if more houses were required there are a number of brownfield sites that could come forward in Spennymoor, as there is no proof to show they will come forward for planning permission in the near future. Mr Rivett also used past examples to show that greenfield and brownfield sites were able to come forward in harmony in the settlement.
Two sustainable sites in Cheshire West allowed despite presence of 5 year supply
Despite two Inspectors independently reaching the conclusion that Cheshire West and Chester can demonstrate a 5 year supply of housing land, two appeals were allowed on the basis that they satisfied all 3 pillars of sustainability, sufficient to tip the planning balance in their favour.
The first appeal in Northwich, for 113 dwellings was on a visually self-contained site and comprised enhancement of the highway network and improvements to pedestrian safety which when combined with its inherent sustainability, outweighed any development plan conflict.
The other appeal in Davenham, for 70 dwellings would enhance the relationship between the built up area and rural surroundings subject to careful design and layout. The creation of an enhanced settlement edge was sufficient to contribute to the social, economic and environmental benefits arising from the development.
Stroud site dismissed adjacent to AONB
An appeal against refusal of 100 dwellings in Dursley in Stroud District was dismissed after the inspector considered the main issue to be impact on character and appearance of the immediately adjacent Cotswold AONB. The site has strong boundaries and is located in a well-defined valley and whilst the masterplan suggested that 46 per cent of the site could be retained as open space with buildings following the subtle changes in site contours, views of the AONB would be obstructed from a public right of way and would reduce the site’s contribution to the setting of the high quality landscape. In the inspector’s view no compelling case was made on the grounds of housing need, however, the question remains as to how the larger settlements in Stroud District will meet their innate housing need, rather than Gloucester’s.
Central Bedfordshire appeal inspector is pragmatic about need for housing
An appeal for 140 dwellings in Shefford, Central Bedfordshire was allowed after the inspector considered the scheme would increase supply of market and affordable housing where a five year supply was lacking. There was little doubt that third party objectors were correct that the site’s green and open character would be significantly altered, but the inspector felt that this was likely in any event, given the previously undeveloped nature of the land. Equally, the loss of grade 3a agricultural land was almost inevitable since the majority of land surrounding the town fell into this category.
The inspector considered that new residents would increase the vitality of the town through new energy and enthusiasm and the proposed games area would benefit local children. Overall the benefits significantly outweighed the harm she had identified and the appeal was allowed.
Inspector for Suffolk appeal takes logical approach to decision making
An appeal for 180 dwellings in Melton, in Suffolk Coastal, was allowed after the inspector considered the main issues to be five year supply and whether the benefits outweighed the harm. The Inspector cited the judgment in Ivan Crane v Secretary of State for CLG and Harborough District Council , where the weight given to relevant policies for the supply of housing land is addressed. The inspector commented that weight was not dictated by government policy or high court judgments, but varies according to the circumstances including the degree to which the supply fell below five years. Since the council, at best, could demonstrate 4.3 years as opposed to the 3.2 years suggested by the appellant, the inspector decided that it was not relevant what buffer was used or when any shortfall should be made up; it was only relevant that policies relating to restricting development in the countryside were now out of date. The settlement is a sustainable location and the impact on the countryside was not so great as to justify refusing permission. Nor had any better sites been identified to meet the need for more housing, both market and affordable.
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