New Standard Methodology Consultation launched 

29 October 2018

Government has published its latest consultation on changes to the standard methodology for calculating housing need (26 October). Bidwells Associate Mark Harris explains how Government plans to abandon the latest ONS housing projections published earlier this year and “rightly commit” to a change in the standard methodology which will support an increase in house-building nationally. 

The proposed changes respond to the impact of the latest household projections on the overall need generated by the current standard method, setting out how the Government propose to update planning practice guidance to be consistent with their commitment to increasing the supply of housing nationally.

In the 2017 budget, the Government committed to building 300,000 per year by the mid-2020’s and, during 2018, introduced a revised National Planning Policy Framework (NPPF), which included the requirement for strategic policies in Local Plans to be informed by an assessment of housing need using the standard method. This standard method, set out in planning practice guidance, required the use of the latest household projections as part of the calculation of housing need. Using 2016 data (2014 based) available at the time the original standard method was published, gave an aggregate annual housing need across England of 266,000 homes, a step towards the Government’s target.

The latest household projections (2016 based) published by the Office for National Statistics in September 2018 indicated a lower household formation rate compared to previous projections. The impact of this is that the housing need calculated by the current standard method dropped to 213,000 – a figure below the number of homes built nationally in 2017/18, and well below the level the Government has committed to building by the mid-2020’s. In the meantime, with slight amendments to the standard method and the publication of latest affordability ratios, the housing need using the 2014-base has increased to 273,000 dwellings.

The publication of the new household projections has caused some uncertainty for the plan making process, particularly for those plans at examination, such as North Hertfordshire, where Inspectors have been keen to investigate the implications of the perceived fall in household formation rates despite the revised NPPF making clear that they should not do so. Elsewhere, other local authorities such as Bassetlaw have been keen to capitalise on the reduction in housing need in order to demonstrate a 5-year housing land supply.

The Government have therefore considered whether the revised household projections mean that they should re-assess their house-building aspirations. After analysing the reasons underlying the fall in household formation rates, they have rightly committed to revise the standard method and continue with the intent of increasing rates of house-building nationally, rather than to effectively lock local authorities into a methodology which projects forward a trend of suppressed household formation over the period between 2001 and 2011.

As part of the consultation, the Government are proposing to alter the standard method to require the use of the 2014 based household projections, abandoning the latest projections published earlier this year, which are out-of-sync with the realities of housing need. They are also committed to reviewing the standard method by the time the household projections are next published in 2020 to ensure it is consistent with the commitment to delivering a minimum of 300,000 new homes per year. They are therefore proposing a short-term fix, ahead of a full review of the methodology over the next couple of years. Whilst an interim solution, this change should at least provide certainty for those plans currently making their way through the plan making process.

The Government estimate using the 2014-based population projections, alongside current affordability estimates and current plan status, would deliver a minimum of 269,000 homes annually– within 3,000 of the estimates produced by the previous formula.  The proposed change is, therefore, a positive step in supporting the market is delivering sufficient housing to meet ongoing need.

Whilst the Government recognise that 269,000 homes is below the 300,000 home aspiration, they see housing growth deals driving delivery up and specifically reference the Oxford to Cambridge (CaMkOx) corridor, where they will focus significant infrastructure investment, as an area of potential additional growth for 1.2m homes by 2050.

Alongside the changes to the standard method, the consultation also seeks to clarify existing policy on housing land supply, the definition of deliverable sites and appropriate assessment for habitats sites.

It also proposes to amend the NPPF with:

  • A new footnote 37, which clarifies that a Local Needs Assessment used for calculating five-year land supply must be based on the use of the standard method;
  • An alteration to the definition of ‘deliverable’ to make it clear that minor development, with outline consent should be considered deliverable unless there is clear evidence to the contrary; and
  • An amendment to paragraph 177 to clarify in relation to sites subject to a Habitat Regulations Assessments, that the presumption in favour of sustainable development is only disapplied where an appropriate assessment has concluded that there is no suitable mitigation strategy in place.

In relation to the definition of deliverable, the Government are also proposing to prepare additional planning practice guidance to set how they considered sites with different degrees of ‘planning certainty’ may be counted when calculating housing land availability. This guidance will follow on from the current consultation.

The consultation on these proposed changes runs until 7th December 2018.

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