Housing Delivery Test update

By Michael Hardware, Director of Planning and Property

In our last newsletter we talked about the Housing Delivery Test and the 100 or so local authorities which failed it. The test looked at housing need and housing delivery over the last three years and represented it as a percentage. Those with 95% or more obviously have nothing to worry about but those councils between 85% and 95% have now to produce an action plan to detail how they are going toe increase delivery. Those with less than 85% have also to add 20% to their housing supply and produce an action plan. Those below 25% would revert from the local plan to the NPPF and a presumption in favour of sustainable development – no councils failed this threshold.

The pressure is increased this November when the next set of figures are published when the bottom threshold is increased from 25% to 45%. This will capture a handful of councils – Savills estimates that around 16 LPAs would have failed last year’s Test had the threshold been at 45%. The real crunch will come next November when the bottom threshold is raised to 75%, which will capture a significant number of councils.

But councils have criticised this ramping-up of the bottom threshold as they have little or no control of the delivery of new homes, it is up to the developers to bring forward sites for development. This then takes us into the realms of why developers delay so long in bringing sites forward and the issue of land banking that Sir Oliver Letwin looked at last year.

He found no evidence that developers land banked, which is what the industry has always said: it is not in their interests to hold onto land once planning has been consented as most borrow to buy the land and are paying interest on that capital. Only by developing out the land the selling the homes can they release that capital to pay off the debt. The delays are mainly around reserved matters and then mobilising the project, which can both take a year or even two to conclude.

It is true that developers do control production to a degree – there is no point in flooding the market with new homes as that will just result in prices falling for everyone, which certainly would not be popular. The usual output is around 50 units per site so a typical 250-home site would built-out in five years.

Part of Sir Oliver’s recommendations to increase output was to provide multiple offerings addressing different segments of the market at the same time. These could include various affordable tenures, PRS, starter homes, open market and older peoples housing all at once. This certainly has some merit and the industry has been looking closely at this.

The Government is serious about achieving its 300,000 new homes per year and is ramping up the pressure on councils to get up-to-date local plans and to work with developers to deliver homes to meet their housing needs. It is ironic that the Government is pushing housing which impacts more in the Tory heartlands – politically, this may not go down very well at the next General Election assuming, of course, people’s minds are not still on Brexit.