The Department for Communities and Local Government ('DCLG') has followed up on the White Paper 'Fixing our broken housing market' of February 2017 ('the White Paper') by issuing a consultation paper entitled 'Planning for the right homes in the right places'.

The paper, which can be read here, was published on 14 September 2017. In particular to the extent that it deals with calculating local housing need, it was much anticipated and advance warning was given of its arrival in the White Paper itself. This explained that: "…at the moment some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology for calculating 'objectively assessed need'. So, we are going to consult on a new standard methodology for calculation 'objectively assessed need', and encourage councils to plan on this basis".

The consultation paper does not just address calculating objectively assessed need ('OAN'), though that is the most headline grabbing part of it. The other matters covered include statements of common ground; more policy changes surrounding neighbourhood plans; approaches to viability assessments; planning fees; and prematurity. These are summarised below. But first to the standard method of calculating OAN.

The founding principles for the proposal in the consultation are that the method should be simple, based on publicly available information and realistic. Allied to that is the need to ensure the approach allows an understanding of the minimum number of homes needed across England as a whole, while also reflecting the Government's industrial strategy. With that in mind, the proposed approach is:

  • A baseline is set using the demographic baseline for each local authority area, taking the annual average household growth over a ten year period.
  • To temper the issues with using just household growth, an adjustment is made to take account of market signals. This is to be done by using the workplace-based median house price to median earnings ratio - essentially a comparison between house prices and earnings used to measure affordability.
  • The adjustment is then as follows: "each 1% increase in the ratio of house prices to earnings above four results in a quarter of a per cent increase in need above projected household growth". That, the paper states, should achieve the delivery needed. Mercifully a worked example is included in the paper.
  • A cap on the level of increase is then applied, so that in areas where a large need arises from the above calculation, deliverability (and realism) is taken into account. The cap is proposed at either: 40% above the figure in a current local plan where adopted in the last five years; or 40% above the higher of projected household growth over the plan period using ONS projections or annual housing requirement figure in the local plan - where the local plan was adopted more than five years ago.

Other matters of detail regarding the calculation are set out in the paper, including for how long the assessment can be relied upon (two years); what happens if the method is not used; and the transitional arrangements for introducing the method.

Statements of Common Ground

DCLG aspire to more effective co-operation between authorities in plan making, as failing the duty to co-operate is a common reason why plans are not found sound. Therefore, the consultation paper proposes amending the NPPF to make clear that all authorities should prepare a statement of common ground, setting out how they will work together to meet housing requirements (and of course deal with other cross boundary issues - infrastructure being one obvious example). The paper perhaps disingenuously states that this should not be an 'additional burden on local planning authorities'.

It is proposed that agreed housing market areas should be the basis for developing these statements, unless an alternative method can be identified (and justified). Each authority involved will then sign up to the relevant parts of the statement, i.e. the parts that address strategic issues affecting that particular authority. As for when, the paper suggests a deadline of 12 months from when the NPPF is amended, with an outline statement in place within 6 months. Helpfully, guidance is given in the paper as to the content of a statement of common ground in the form of a template.

Neighbourhood Plans

This part of the consultation paper addresses the perceived problems faced by neighbourhood groups in determining housing need for their neighbourhood area. To address this, the consultation proposes that guidance is amended to allow authorities to make a judgement of what the housing need figure should be for a particular neighbourhood area "based on the settlement strategy and housing allocations in their plan".

Critically, it goes on to say that where this is the case "we would not expect the resulting housing figure to have to be tested during the neighbourhood plan's production". Views are then sought as to whether national policy should in fact expect authorities to set out a particular figure for neighbourhood areas (and parish areas).

What if the local plan is out of date? In those circumstances a formula based approach is put forward, which will apportion the housing need figure based on calculations worked out using the new standard approach.

Viability Assessments

The White Paper also considered section 106 obligations and set out an intent to consult on standardised open book section 106 agreements, as perhaps a short term fix until such time as the Government decides on what it is going to do with the community infrastructure levy ('CIL'). Some will find this welcome, having experience of the dreaded viability discussions and the inevitable disagreements over costs.

The consultation paper proposes a two pronged approach via policy changes. For plan making, it states that authorities should set out detail of the affordable housing contributions they will require, what infrastructure is needed, and how it might be delivered at that stage. For decision taking, the NPPF will be amended, it is suggested, to make clear that where the policy requirement is viability tested, that issue should not be tested again during determination of applications. Put another way, applications in accordance with the plan should be assumed to be viable.

In some cases viability assessments will still be needed. The consultation paper is less forthright on that issue, asking for views on updating guidance to make that process quicker, simpler and more transparent.

Planning fees

Also trailed in the White Paper, the consultation paper recalls DCLG's intention to raise planning fees by 20% for those authorities that commit to invest the additional income in improving the productivity of their planning departments. Regulations are to be introduced "at the earliest opportunity" to now enable this. However, the consultation paper seeks views on what criteria should be imposed to allow the increase to apply. The current proposal is that it is available to those authorities "who are delivering the homes their communities need". Much will turn on the meaning of 'delivering'.

Prematurity

Last but not least, and unceremoniously included under the heading 'Other issues', comes prematurity - which has proved a tricky principle to apply in past cases but seems to have been largely ironed out by the current guidance. The intent as expressed in the consultation paper is to set out when a planning application may be refused due to prematurity in the NPPF, upgrading the current view on prematurity from where it currently sits in guidance.

The deadline for consultation responses is 9 November 2017, and it is unlikely DCLG will be short of comments.