14 August 2018
Some may be aware of an article in Planning Resource (8 August 2018) where a Ministry of Housing, Communities & Local Government (MHCLG) spokesman was quoted as stating that the standard method should be used now in the determination of applications.
In essence, it is correct that Local Housing Need (LHN) is now in force in terms of determining applications, as the only transitional arrangements in the revised NPPF relate to plans that are submitted to examination before 24 January 2019.
We do however need to look at the sequence of events to determine how practical this is:
1. Paragraph 60 says we should be using a local housing needs assessment to determine the minimum number of homes required. It goes on to state that this LHNA should be conducted using the standard method, unless exceptional circumstances justify an alternative approach. That alternative approach, to identify the minimum number of dwellings needed, should reflect demographic trends and market signals.
2. We know from the MHCLG response to consultation on the draft revised NPPF that the standard method will need to be consistent with delivering 300,000dpa by the mid-2020s; the indicative LHNA figures from September 2017 added to 266,000dpa. Given the recognition that we are not going to start building 300,000 dwellings overnight, it is likely that MHCLG will want the standard method to add to around 275,000dpa.
3. We also know that the latest national population projections suggest 1.5m less people over the next 25 years compared to the previous projections, and that the revised household projection method will result in less household formation than the previous method. Consequently, the household projections, which will be published on 20 September, and underpin the standard method, will highly likely suggest far lower household growth compared to those projections on which the indicative LHNA figures were based.
4. MHCLG have confirmed that if the standard method currently published (which is slightly different from that used for the indicative LHNA figures) does not achieve the required national objective (i.e. somewhere near 300,000dpa), they will change the method to ensure that it does.
5. Consequently, we do not have the data on which to calculate the LHNA using the standard method, and in fact do not know what the standard method will be even once that data is published on 20 September.
6. Consequently, we can safely say that the exceptional circumstances exist to justify an alternative approach. The question is, what is an alternative clear and justified method (using the parlance in footnote 19)?
7. The only clear and justified method with any status is the one recently deleted from the PPG. While this does factor in economic trends, this is consistent with paragraph 81c of the revised NPPF, which states that policies should seek to address potential barriers to investment, such as inadequate housing.
8. Therefore, we have come full circle and can continue to use the current Strategic Housing Market Assessments (SHMA) for the time being.
This will change when the LHN standard method is ironed out, which is probably what the ‘MHCLG Spokesman’ was getting at. I expect this to be sorted just before the November Budget. From that point, because there are no transitional arrangements in the revised NPPF relating to planning applications, the LHN will be a material consideration in the context of paragraph 213. Therefore, the greater the difference between the LHN and the adopted housing requirement, the more likely that an inspector will consider that LP to be out of date and apply the LHN.
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