With the government trying to solve the issue of how to provide more homes, it needs to ensure councils maintain a supply of sites that can be built on. As for councils themselves, allocating enough housing land means they can be more secure against challenge at appeal if they refuse planning applications in their area.
For more than a decade, councils have been required to show that they have five years' worth of land for housing. But the National Planning Policy Framework (NPPF), published just over a year ago, has toughened up requirements in its ambition to achieve a significant boost to housing, according to experts.
The framework stipulates that, not only should local authorities identify and update annually a supply of sites to provide five years' worth of housing, but those sites must be deliverable and viable. Authorities must also include a five per cent buffer of additional land to ensure choice and competition in the market or 20 per cent if they have "a record of persistent under-delivery of housing".
From appeals data and other research, there are signs that many authorities cannot clearly demonstrate a five year supply of housing land. Although the number of appeals has not wildly increased since the NPPF's publication in March 2012, figures from the Planning Inspectorate (PINS) show that the proportion of major housing appeals relating to schemes of ten homes or more going against councils has risen. The percentage of such schemes allowed following inquiries rose to 72 per cent for October to December last year.
Consultancy Savills has drilled into the issue further by looking at appeals of 50 homes or more that took place in the nine months following the NPPF's publication. It showed that the number of homes in the schemes that were refused permission at appeal in this period was about a quarter of the total number of schemes that went to appeal.
That compared to around half in the nine months before the NPPF came out. Savills says the absence of a five-year land supply is the strongest common feature of appeals that have been allowed. One of the most cited cases is communities secretary Eric Pickles' decision to allow an appeal for 1,000 homes at Bishops Cleeve in Tewkesbury, Gloucestershire (see panel).
It is difficult to get a full national picture of housing land supply, as the government has stopped collating data from councils' annual monitoring reports, following the removal of the requirement in the Localism Act 2011.
But Savills research based on available data from the past two years indicates that the outlook is not all that healthy. According to its report, which focuses on the southern half of England, a third of the 190 authorities studied do not have enough sites to meet the five-year supply. Sixty-two per cent have a marginal supply, with the average position being 5.7 years.
Poor past delivery rates means that 34 per cent of authorities need to apply the 20 per cent buffer in their calculations, the research suggests.
But assessment of land supply and monitoring is far from an exact science. Councils' monitoring reports, published each December, relate to the position at the preceding April, so they are already eight months old.
Matthew Spry, director at Nathaniel Lichfield and Partners, says planning departments have to rely on their local knowledge and any recent planning decisions to clarify the position.
Assessments have also become more challenging because of regional strategies being revoked, creating more debate over housing needs, he adds.
Even councils with recently adopted plans are at risk of having decisions overturned at appeal if they cannot demonstrate a five-year land supply, as the NPPF says policies will be considered out of date without this.
Another factor that makes it hard to determine the extent of housing land supply is disagreement between councils and developers on which methodology to use.
The Sedgefield method of calculating land supply involves adding any shortfall of housing from previous years within the first five years of a local plan, whereas the Liverpool method spreads the shortfall over the whole plan period.
Experts says there has been a shift towards the Sedgefield method, shown in appeal decisions, since the NPPF. Savills director Chris Rees says: "This ensures the current housing shortfall is made up quickly, and not simply averaged out over a much longer time frame."
Barton Willmore senior partner Ian Tant says: "A lot of councils recognise that housing need cannot wait until 2026."
But the Sedgefield method is not always upheld, as an appeal decision in January on a 91-home scheme in Groby, Leicestershire, shows (see panel).
There are also disputes over whether councils have shown persistent under-delivery of housing in the first place.
Cotswold District Council, which is taking Pickles to court over two recent housing approvals, claims that PINS judgment of it as a persistent under-deliverer of housing is "completely at odds with the evidence".
Stephen Hollowood, senior director at GVA, believes a lot of councils are in denial about their ability to deliver and whether the five or 20 per cent buffer applies.
The government has so far been reluctant to define persistent under-delivery and it has been down to inspectors to interpret the rules. Experts say delivery should be gauged by measuring annual housing completions against housing targets for that year.
Sometimes councils will argue that under-delivery is not down to planning issues, but other obstacles such as a lack of funding. But Spry argues that, even where non-planning issues are proving a difficulty, councils should consider whether planning changes could circumvent them.
He says: "If a local authority is relying on a large site that depends on funding of infrastructure, I would argue that it has the choice to bring forward smaller, more deliverable sites."
The NPPF says that, to be deliverable, sites should be "available now, offer a suitable location for development now" and have "a realistic prospect that housing will be delivered on the site within five years and that development of the site is viable".
Tant says this means sites need planning permission, or at least a resolution to approve, to be counted as part of the five-year supply.
But the requirement to assess whether sites are viable, which has become much more rigorous since the economic downturn, is making it harder for councils to work out what is deliverable, according to Richard Blyth, head of policy at the Royal Town Planning Institute. Assessing viability requires councils to consider a new factor - the competitive return to the landowner - along with costs of requirements such as affordable housing and infrastructure contributions.
Blyth is concerned that landowners expect returns to be as they were pre-downturn when prices were rising. "There could be a risk of a hardening of the arteries when landowners sit on sites hoping the price will go up," he warns.
To ensure land supply assessments are robust, consultants advise councils to work out the housing requirement based on up-to-date evidence, be realistic on what sites will come forward and deal with any under delivery.
The Planning Advisory Service advises authorities to be prepared to be tested by peers in other councils. But Blyth says the government needs to update guidance on how councils prepare their housing requirement and land availability assessments - two key recommendations from Lord Taylor's review of planning guidance.
He says some authorities are afraid to allocate sites because they fear the old methodology means they will be open to challenge. Updated guidance should give a steer on whether to use the Liverpool or Sedgefield method and what is meant by a competitive return to the landowner, he argues.
"It is imperative that ministers say what is meant by this, as it is a political statement," he adds.
Key recent decisions
Appeals won on lack of housing supply:
July 2012: Bishops Cleeve, Tewkesbury, Gloucestershire
Two appeals backed by communities secretary Eric Pickles for schemes totalling 1,000 homes. His decision letter said that the most significant material consideration was the requirement for a five-year housing land supply, which he said could not be demonstrated against the development plan.
GVA's Stephen Hollowood says the case shows that, where a local authority has not met national requirements, the secretary of state has every right to intervene. "The shift to localism is still there, but when it comes to compliance with objectively assessed housing needs, that wins out," he says.
DCS Number 100-078-098
July 2012: Burgess Farm, Salford
Peel Investments' appeal for 350 homes on a greenfield site was allowed by the secretary of state against the inspector's advice.
Despite the permanent loss of an area of open countryside and the fact that the development would seriously degrade the character and appearance of the area, Eric Pickles considered that this was outweighed by the scheme's contribution to reducing the significant shortfall of some 4,000 homes (2.5 years supply) against the five year housing land requirement.
Nathaniel Lichfield and Partners' Matthew Spry says the decision shows a rigorous application of the supply argument and was a powerful indication from Pickles of the government's stance.
DCS Number 100-078-099
August 2012: Honeybourne, Worcestershire
Appeal by Lioncourt Homes for up to 70 homes granted by an inspector, who concluded that Wychavon District Council was unable to demonstrate a five-year housing land supply and its record on housing delivery was very poor.
He dismissed the council's argument to use the Liverpool method of calculating land supply (see main article), saying it would inconsistent with the NPPF to meet any shortfall by spreading additional provision over the whole plan period. Barton Willmore's Ian Tant says the case is a "microcosm of the gritty issues around land supply".
DCS Number 100-079-014
Appeals Dismissed despite marginal supply:
January 2013: Groby, Leicestershire
Bloor Homes' proposal for 91 homes was judged premature by an inspector because Hinckley and Bosworth council's emerging policy on site allocation and its green wedge review were still in draft.
He backed the council despite only showing a marginal five-year housing supply using the Liverpool method, saying that progress on sustainable urban extensions was being made, which will make up the shortfall and has an up-to-date core strategy.
DCS Number 100-080-753.
Housing land supply and significant appeals in the South East
The map on this page was originally presented with an incorrect key, due to an error in Planning's presentation of the Savills data, which was amended on 10 June 2013.