Last month, the Ministry of Housing, Communities and Local Government (MHCLG) published its net additional dwellings figures for 2018/19. The statistics showed that a record 240,000 new homes were created in England, the highest figure in almost 30 years. The figures are also notable because they form a key part of the MHCLG's dataset for its housing delivery test.
Please click here to view our table predicting which authorities will face which sanctions.
The test aims to measure how effectively each local authority is delivering housing, as well as planning for it. It works by comparing each councils' level of housing delivery - using the the net additional dwelling figures - over a three-year period to the total number of homes required. The first test results for the 2015-18 period were published in February - three months late - and the second, covering 2016-19, were due last month. However, they have been postponed, the housing ministry told Planning last month, until after the general election.
For the 2019 test, authorities delivering under 45 per cent of their requirement will be subject to the National Planning Policy Framework's (NPPF’s) presumption in favour of sustainable development, which would mean their local planning policies on housing are rendered out of date. Authorities who deliver less than 95 per cent of their requirement must devise an action plan to address the problem. Those who deliver less than 85 per cent must also identify a "buffer" of 20 per cent more housing sites to add to their land supply position. The penalties take effect from the moment the results are published, according to the 2018 NPPF.
Ahead of the government's release of the official 2019 test figures, Planning carried out its own research to estimate what the results might be. We used the MHCLG's February figures for the housing requirement and delivery figures for 2016/17 and 2017/18. To calculate the data for 2018/19 in line with the MHCLG's methodology, we used the latest 2018/19 net additional dwelling figures to produce a delivery figure. For the 2018/19 requirement, we used the lower of either a council's up-to-date local plan annual housing target or its local housing need figure. If a local plan became out of date during the financial year, we used a combination of the plan target and the standard method, in line with the MHCLG criteria.
This year's test is notable because 2018/19 is the first year in which the MHCLG's standard method of assessing housing need is being used to calculate the local housing need figure for councils without an adopted plan that is less than five years old. Compared to the Office for National Statistics' household projections figures, which has been used to calculate housing need for the 2016/17 and 2017/18 years, the standard method, which takes into account local affordability, in many cases produces higher housing need figures, especially in areas of high demand. Planning used standard method figures for 2018/19 produced by consultancy Turley.
In its calculations for homes delivery, the MHCLG takes account of a local authority's level of student or communal housing delivery. And, if the local plan target is not being used, the housing requirement figure is adjusted to take account of unmet need from neighbouring areas. Our calculations did not take account of either of these factors, so the MHCLG final delivery test figures are likely to be different in some cases. In addition, for the 2018 test results, the MHCLG spent months checking its figures with individual authorities, which led to further adjustments and is a process likely to be repeated for the 2019 test.
Nonetheless, our study found that this year, 112 authorities - or 34 per cent - scored under 95 per cent and seem set to face a penalty under the test, which means they will have to produce an action plan showing how they will improve their performance over the next year. Of these, eight authorities fall under the 45 per cent threshold and we predict will face the presumption (although most of them already face the presumption for other reasons). Meanwhile, we predict that 83 - a quarter - will have to find an additional 20 per cent buffer for their housing land supply. Some 66 per cent escape a penalty.
Despite the introduction of the standard method, our findings on how many councils are placed in each of the performance bands are remarkably similar to the official 2018 results. The latter put nine councils under 45 per cent, 27 per cent of councils under 85 per cent and therefore required to provide a 20 per cent buffer, 33 per cent under 95 per cent and 67 per cent facing no penalty on the grounds of having delivered more than 95 per cent of the requirement.
Our figures are also very similar to research by consultancy Savills, which found that nine authorities would face the presumption under the 2019 test, 85 a 20 per cent buffer and 115 the action plan requirement.
Jonathan Dixon, a planning director at Savills, said he isn’t surprised by the year-on-year continuity. "The higher number of dwellings delivered is balanced by an overall increase in the delivery test requirement," he said. Richard Crawley, programme manager at the Local Government Association's Planning Advisory Service, believes that as the standard methodology replaces household projections over the next two years, more authorities may find themselves penalised. "This transition is one of the reasons that many councils go into the ‘red’ as you project into the future," he said.
The eight councils our figures show to be placed under 45 per cent are all in the Greater South East, while seven of them - the City of London is the exception - lack up-to-date local plans. Talking about the geographical pattern, Dixon said: "This is almost certainly a product of higher household projections, plus high affordability ratios, greater constraints on supply, such as green belt and limited brownfield sites, and out-of-date local plans."
At the bottom of our delivery rate table is the City of London, which delivered just 32 per cent of the housing required. Of the eight, three - Thanet, Three Rivers and New Forest - also scored under 45 per cent last year.
Planning presented our figures to the eight councils and asked if they disputed our figures. None challenged our findings, and Three Rivers and Basildon said our calculations tallied with their expectations. Three Rivers and North Hertfordshire said they are already subject to the presumption penalty due to their lack of a sufficient land supply. According to Savills, the five other councils lacking a local plan also have a housing land supply deficit and so are subject to the presumption.
We also asked the authorities if they could explain their performance. Several pointed to the fact they have out-of-date local plans and were in the process of producing new strategies that would introduce more achievable housing targets and allow them to allocate fresh sites for development. Some also highlighted that they have been subject to sharp increases in housing need in 2018/19 created by the standard method. Eastbourne and Basildon councils said they were already addressing the causes of under-delivery in their action plans, required because of penalties under the 2018 test.
A City of London spokeswoman simply said the corporation is on course to "deliver housing targets in the city in accordance with our local plan aims for the period to 2026". But she added that it is also consulting on a new draft City Plan "which sets out how we will meet higher targets up to 2036".
A spokesman for Eastbourne Council, which scored 39 per cent, making it the fourth worst performer in our table, highlighted the fact that the council’s out-of-date plan included an annual target of 240 homes a year. However, the local housing need figure using the standard method produced a requirement figure of 668 homes for 2018/19, something the spokesman described as "totally unrealistic". Likewise, a New Forest Council spokeswoman said the requirements produced using household projections and the standard methodology resulted in a 500 per cent increase on the "very low" annual targets in its out-of-date core strategy.
Similarly, a spokesman for Three Rivers Council said its requirements of 316 homes for 2016/17 and 437 for 2017/18 were produced using the ONS household projections figures. But under the standard method, the figure for 2018/19 leapt to 620. The spokesman said Three Rivers Council is working on producing a new local plan, a point echoed by Eastbourne, New Forest, North Hertfordshire and Basildon councils.
Ian Fullstone, regulatory director at North Hertfordshire Council, said the authority's main towns are all surrounded by "tightly drawn green belt boundaries" while the authority has been operating under the NPPF's presumption "for a number of years" because it lacks a five year housing land supply. Therefore, the test results anticipated by Planning would "not make a significant difference to our decision-making procedures", he added.
In Basildon, which we found to have a test result of 44 per cent, council leader Gavin Callaghan said the council is "stepping up action" to boost housing delivery, including the creation of a council-owned housebuilding company. Similarly, Eastbourne said it is anticipating the direct provision of new homes through council-owned vehicles.