NPPF and HOUSING WHITE PAPER
The Government issued a revised National Planning Policy Framework (NPPF) in July 2018 (see here). This had been preceded by consultations on a Housing White Paper (see below) and its follow-up consultation document (Planning for the right homes in the right places, September 2017). This includes a new two-step “objective” method for calculating housing need (and "need" can be a misconstrued term: CPRE National Office's paper, Needless Demand (see here - 6MB file), argues for a clearer distinction between what is genuine need, and what is aspirational demand) .
Anyway, Step 1 makes all Local Authorities start from the Government’s demographically-based estimates of need, which we approve of (it’s what we’ve been arguing for for years). But Step 2 controversially proposes an adjustment based on the local ratio of house prices to earnings (the “affordability ratio”) that will cause more houses to be built in the priciest areas. For Shropshire, Step 1 gives a figure of 20,700 new homes over the 20-year plan period to 2036. Step 2 increases this by 4,700 (in Shropshire house prices are nearly 8 times earnings). The Step 2 adjustment is fairly blatantly devised (by the maths of its formula) to help achieve the overall Government target of something like 266,000 new homes a year in England. Shropshire Council thinks the new method vindicates its existing 25,000 “objective” need figure, yet it still now proposes a much higher target figure than that.
The contrived nature of this formula has now come back to bite the Government. New 2016-based housing projections were published in September 2018. They were well down on the 2014-based projections on which the formula was based. Instead of revising their figures down, the Government is proposing to stick with the 2014-based projections. They are hell-bent on getting 300,000 houses a year built. What a farce!
The original Housing White Paper itself (in February 2017) is entitled “Fixing our broken housing market” which tells you its thrust. The Government thinks that building more houses will help to make them cost less. That is because between 1997 and 2010 the ratio of average house price to average income more than doubled, from 3.5 to 7. To meet demand, they think that nationally they must deliver between 225,000 and 275,000 homes every year. The threat is bad enough in Shropshire but think of the pressure round London and other big city areas.
There is no silver bullet to “fix” the so-called housing crisis so the Government has incorporated a range of measures in the new NPPF, including the new controversial Objective Assessments of Housing Need, and reforming the housing delivery test that so bugs Local Authorities (including Shropshire Council). There is also the ongoing Letwin Review into the problem of land-banking, which slows delivery of houses. Its interim report identified “absorption rates” as part of the issue – this is the rate at which developers dribble out houses to the market to stop a slump in prices.
But some people think the housing market is not broken in the way the Government claims. The graph below (showing housing completions since World War II) shows that much of the blame is because of the lack of council housing. The Government recognises this to some extent and have announced around £2 billion for Councils to build affordable houses. But even that amount will produce only 25,000 new houses. And the rules may prevent Shropshire Council from tapping into this money, although they are seeking ways to get more social housing built.
Updated 10th July 2018
The graph is derived from DCLG Live Table 241: Permanent dwellings completed, by tenure, UK historical calendar year series