Planners should ignore latest household projections when using standard method, MHCLG proposes

Planners should ignore the latest household growth projections when assessing their housing need and instead use the figures published two years ago, the government has announced in its much-anticipated proposed changes to its new standard method.

New consultation launched: MHCLG headquarters in Marsham Street, London. Pic: Steve Cadman, Flickr
New consultation launched: MHCLG headquarters in Marsham Street, London. Pic: Steve Cadman, Flickr

In a consultation published this afternoon, the Ministry of Housing, Communities and Local Government (MHCLG) also announced that it intends to publish a new version of the National Planning Policy Framework (NPPF) to accommodate the proposed changes.

The consultation also proposes revisions to the new NPPF's definition of deliverability and a response to a landmark European Court of Justice ruling on habitats earlier this year.

The proposed changes to the standard method, which would see planners use the 2014-based household projections rather than last month's 2016-based figures, would be short term only, the MHCLG said. It indicated that it would review the formula more comprehensively in the long term.

The standard method, introduced in the revised NPPF published in July, uses the projections as a starting point for calculating each council’s objectively assessed need. It then applies an "affordability adjustment" in high demand areas and a "cap" to limit the scale of any increase in housing reequirmeents.

When the NPPF was published, the MHCLG said it would revise the standard method in the light of expected Office for National Statistics (ONS) household projections that were anticipated to show a substantial drop in growth rates.

The ONS' latest 2016-based household projections reduced the projected rate of household formation compared to the previous projections by 53,000 a year between 2018 and 2028.

According to the MHCLG, this resulted in the national annual housing need calculated using the standard method "falling significantly", from about 269,000 homes using the 2014-based figures to about 213,000 - below the 217,350 homes delivered last year. 

The 2016-based household projections have led some areas to "reconsider the number of homes they were planning for", the consultation document states. But it says the government is still committed to its target of delivering 300,000 homes a year by the miid 2020s. 

The government’s proposed approach, it says, is to make three changes: 

  • In the short term, to "specify that the 2014-based data will provide the demographic baseline for assessment of local housing need". 
  • To "make clear in national planning practice guidance that lower numbers through the 2016-based projections do not qualify as an exceptional circumstance that justifies a departure from the standard methodology". 
  • In the longer term, to "review the formula with a view to establishing a new method that meets the principles in paragraph 18 above by the time the next projections are issued". 

It adds: "All other elements of the standard method of assessing housing need would, for now, remain unchanged."

Using the 2014-based population projections, current affordability estimates and current plan status, the government "estimates that it would deliver 269,000 homes". 

The document adds: "Subject to the outcome of this consultation, the government intends to publish updated planning guidance on housing need assessment, and a new version of the NPPF incorporating the policy clarifications that are proposed."

While the standard method came into force for decision-making and appeals as soon as the NPPF was published in July, it only applies to plan-making for plans submitted on or after the 24 January 2019. 

A number of councils and combined authorities have said they would delay their plan-making timetable or start again, in light of the new household projections and the awaited changes to the standard method.

Housing minister Kit Malthouse said: "We must tackle the historic shortage of new homes and restore the dream of ownership for the next generation.

"To do this we must build more and better homes, faster and are committed to delivering 300,000 homes a year by the mid-2020s.

"These proposals maintain this commitment and crucially give stability and certainty for local authorities, so they can get on with the job of building the homes their communities need."

The consultation closes on Friday 7 December 2018. The Technical consultation on updates to national planning policy and guidance can be found here.

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