A ‘standardised methodology’ might sound mind-numbing, but this proposal for the way councils should assess local housing need rather typifies the housing white paper’s approach.
The idea is that it will avoid every council doing its own thing when assessing how many homes – of all tenures – are needed. They can set their own total, but will be told how.
This ethos runs through Fixing Our Broken Housing Market – the very name of which shows the government’s thinks housing has become a political problem and it must be seen to ‘do something’.
There are proposals councils will like, and several stings in the tail. LGC has spoken to industry experts to analyse the key points of the government’s housing white paper.
Buying power: compulsory purchase
The white paper provides councils with the power to require developers to begin construction within two years of gaining planning permission, rather than three, and to use compulsory purchase to start ‘stalled sites’. Richard Blyth, policy director of the Royal Town Planning Institute, said: “The process seems to be that councils would use compulsory purchase then sell the site to another developer and any resulting profit would go to the original purchaser.”
He questioned whether councils would be able to ensure another developer started building immediately. Mr Blyth said: “It looks like frying pan to fire; why not allow the local authority to commission a builder to do the work?”
Getting the builders in: backing councils to build
After some years in which councils took tentative steps to resume the housebuilding role they lost in 1989, the white paper gives explicit support to this.
A section headed ‘Backing local authorities to build’ could hardly be clearer. It says councils have “an important role in delivering homes themselves”, praises local housing companies for building homes for sale or private rent, “as well as affordable housing” and even offers to remove impediments to this.
But then comes a desire to see “tenants that local authorities place in new affordable properties offered equivalent terms to those in council housing, including a right-to-buy their home”.
Councils with local housing companies warn this could capsize their business plans.
Barking & Dagenham LBC’s company Reside builds homes to rent for people on lower incomes who are unlikely to qualify for council housing. The borough makes £800,000 profit a year from Reside’s 800 homes, which it reinvests. The company aims to build up to 4,000 homes over the next three years. But John East, director for growth and homes at Barking & Dagenham, warned “if right-to-buy is applied it would eat into that [profit] very quickly [and] it would be a disincentive to build”.
John Bibby, chief executive of the Association of Retained Council Housing, said the white paper marked the first time since the housing revenue account settlement of 2012 that the government specifically said there was a role for local authorities in building homes even if “it may not be a big role”. He said: “Overall this will not deliver a step change in supply but it’s a move in the right direction. If you look at when there has been a radical change in the supply of homes it has only happened when the public sector was fully engaged, and that is 40 years ago now.”
Long-desired freedoms and flexibilities – such as increased borrowing against the housing revenue account, for example – are absent from the white paper but hinted at as potentially forming part of ‘bespoke’ deals between government and councils with ambitious building plans.
Melanie Rees, head of policy at the Chartered Institute of Housing, said other recent policy changes were also undermining councils’ ability to build, such as the 1% annual social housing rent reduction and the plan to force councils to sell their high value housing to fund the extension of the right-to-buy to housing association tenants.
“There are councils ready to build and we have said to the government we need some flexibility in these cases, perhaps over the 1% reduction, or using right-to-buy receipts over a longer period than the three years allowed, or easing the HRA borrowing cap. If things like that could be tweaked it would help and it may be that bespoke deals would do that but we need more detail,” she said.
Method actors: assessing housing need
Ministers are to consult on options for a standardised approach to assessing housing requirements, as the white paper said “some local authorities can duck potentially difficult decisions” by producing their own methodology for calculating ‘objectively assessed need’.
Anna Rose, president of the Planning Officers Society and director of growth, environment and culture at Milton Keynes Council, said the methodology was likely to be that proposed in the Local Plans Expert Group report published last March.
This included plans for using data from over the course of 10 years to determine whether local planning authorities had under-delivered the number of homes they said they would. In addition any shortfall since the last local plan was agreed, up to a maximum of 10 years, should be included in the revised calculations, the report said.
Ms Rose said the panel’s proposals would result in a 25% to 30% increase in the number of homes some areas would need to deliver. She said it was “better to have one way that is clearly understood than everyone using different methods.”
Councils will have to plan to deliver their required homes and be held to a ‘housing delivery test’.
From November, councils will have to publish a remedial action plan if delivery falls below 95% of their annual housing requirement.
Also from November, if delivery falls below 85% of requirements, a council would have to plan for an additional 20% ‘buffer’ on its five-year land supply.
From November 2018, if delivery of housing falls below 25% of the housing requirement, the presumption in favour of sustainable development in the National Planning Policy Framework would apply automatically – in effect allowing developers to build almost anywhere they pleased. This threshold would rise in subsequent years.
Mr Blyth said: “This looks a little incongruous in that it effectively says that if builders do not build, the local authority has to do something about that, but it has limited powers to do so.”
Fales start: starter homes
The white paper tones down the government’s enthusiasm for starter homes. Councils will have to plan for all tenures – including private rent – but previous proposals for 20% starter homes on all but the smallest developments have been reduced. Housing sites will have instead to deliver a minimum of 10% affordable homes for ownership, which could include shared ownership homes, with councils left to decide the appropriate proportion of starter homes.
Finding common ground
The duty to co-operate – under which neighbouring councils in theory collaborated to meet housing demand – will be replaced with a ‘statement of common ground’ setting out how councils will work together to satisfy housing markets that cross boundaries.
Detail is lacking on these statements but those with long memories may be reminded of structure plans, which before 2004 saw councils agree regional housing totals and their distribution.
Ms Rose says: “The duty to co-operate has just been a duty to have a conversation and then probably disagree. This will mean a joint plan rather like a structure plan, by housing market area, or a combined authority, or local enterprise partnership, or along a growth corridor but ultimately someone would have to decide who is in which grouping.”
Show us the money: planning fees
The white paper offers a 20% increase in nationally set planning fees for councils to invest in planning departments, with a further 20% for those meeting housing delivery plans.
Councils wanted powers to set fees locally, but this goes some way to meeting the criticism that development is delayed because under-staffed planning teams cannot cope.
Ms Rose said: “The increased fees is very good news. We would have liked local flexibility, but this will allow councils to recruit specialists where there have been shortages such as in master-planning and in urban design.”
Some think the recession deterred entrants to the profession, leading to a skills shortage, but Mr Blyth said: “Many young planners have been going into the private sector rather than local authorities. A 20% fees increase goes some of the way to filling the 30% fall in staffing we have identified since 2013.”