The number of homes planned by Local Authorities in southern England will leave a shortfall of 160,000 homes over the next five years.
28 March 2014, Words by Savills Research
Local Planning Authorities across our study area are not planning to deliver enough new homes, according to Savills analysis based on predicted need.
We expect to see a shortfall of at least 160,000 homes across London, East of England, South East and South West over the next five years. Our calculations compare the latest locally planned targets with the needs predictions from the Town and Country Planning Association (TCPA) - 240,000 new homes a year across the whole of England, of which 152,900 are needed within our study area.
The locally planned targets will leave the study area 21% short of its housing requirements before we even start taking into account the backlog of need resulting from years of undersupply, or the numbers that might be required to slow house price inflation.
Government projections based on the 2011 Census indicate the annual formation of an additional 221,000 households across the whole of England.
Recent analysis from the University of Cambridge (Neil McDonald and Peter Williams for the RTPI and Alan Holmans for the TCPA) identify increased international migration and the constraints on household formation between 2001 and 2011 as key reasons for the 2011 figures being underestimates of actual housing need.
Holmans’ work concludes that we need 240,000 new homes a year in England over the 20 years to 2031, which is the equivalent of a 1.04% per annum increase in housing stock. In the South East, particularly within London’s commuter zone, housing requirements are likely to be even higher.
The London problem
London faces the greatest deficiency: the latest proposed alterations to the London Plan set a minimum target of 42,000 homes a year for the 10 years from 2015. Although this is an increase from the previous target of 32,000 a year, it represents a shortage of 7,000 homes a year against the finding of the strategic housing market assessment (SHMA) carried out by the Greater London Authority (GLA), which was that a minimum 49,000 homes are needed.
Savills analysis using TCPA predictions identifies an even greater shortfall – of 14,400 homes a year – resulting in a shortfall of 72,000 over the next five years. Furthermore, delivery of new homes in London has not in recent years got anywhere near even the 32,000 a year target, so there is the prospect of the actual shortfall over the next few years being even greater than indicated above.
The locally planned levels of housing set by LPAs across the South East, South West and East of England will leave these regions short of 91,323 homes relative to their indigenous needs over the next five years. They take no account of the additional demand likely to spill out from London.
Analysis of land supply shows that of the 147 LPAs (or combined LPA partnerships in some cases) across the three regions in our study, 102 (69%) claim that they have more than five years’ supply and 61% say they have more than 5.25 years’ (the equivalent of five years plus a 5% buffer, as required by the NPPF).
Recent appeals, however, have exposed the fact that the claimed supply figures are often less than robust when scrutinised in detail.
Of the 103 most significant planning appeal decisions issued since the NPPF came into effect, 69 were allowed. In 63 of these cases, a deficit in five year supply was a material factor in the decision. 20 of these 63 are located in the three regions of our study area and of those 20, half the relevant LPAs had reported in their latest published land supply analysis that they had a land supply of five years or more.
The greatest disparity between the LPA assessment and the land supply determined through the appeal process was in Sevenoaks, where the LPA reported a 9.7 year land supply, but it was found that the supply was actually less than five years because housing needs had been significantly underestimated.
Savills has analysed emerging plans published post- NPPF to ascertain patterns in emerging levels of planned housing. This has identified some ‘leaders’ – LPAs who have used their new powers to increase planned housing levels - and some ‘laggards’ – those who have either reduced their targets or planned well below their needs.
■ Only Mendip (at examination) and Cherwell (advanced draft) have plans at an advanced stage seeking planned levels of housing above the previous regional spatial strategy (RSS) and deliver a percentage of stock above Holmans average need projections. However, neither location would be described as a ‘growth’ area, Cherwell for example has lost a number of land supply appeals.
■ Winchester, South Glos and Milton Keynes have all adopted plans post NPPF, which although they plan for reduced levels of housing compared to the RSS, include provision above the Holmans average.
■ A number of Local Authorities (12) are planning below their previous RSS target and below the need projections. In two cases these low targets have been enshrined in adopted plans: Wealden, where the target has fallen by 18% and will only deliver an 0.7% increase of stock; and South Oxfordshire, where the target has fallen by 15% and only delivers a growth rate of 1.0% of stock.
Evidence-based housing needs should inform the local plan
Regional Spatial Strategies outside London were all finally revoked in 2013. Initially, the Planning Inspectorate (PINS) allowed some flexibility in the application of the NPPF. More recently PINS has taken a more robust stance, and emphasised that evidence-based housing needs should inform the Local Plan. There has been a flurry of appeals since the NPPF, with a better success rate than before. The scale of appeal schemes has reduced markedly, to below 500 homes – a result of housebuilders finding medium-sized schemes more cost-effective, and less likely to run into prematurity objections at appeal, and of the demise of some large land allocations that were previously being promoted under the RSSs.
Planning: Countdown to the election