Draft National Planning Policy Framework – government housing policy shifts from supply to delivery

The Government has published its long awaited draft revisions to the National Planning Policy Framework (NPPF) for consultation, one year on from the publication of the Housing White Paper (HWP). Heralded as a “new planning rule book” to deliver a “fairer planning system”, the Prime Minister’s much anticipated speech was preceded by press releases pointing the finger for the housing crisis at both ‘nimby councils’ and ‘unscrupulous developers’. So what will change and will the revised NPPF deliver on the HWP promise to ‘fix our broken housing market’?

The draft NPPF, in conjunction with a suite of associated documents, seeks to address head-on the two pillars of the housing crisis – housing delivery and viability.  The key new component in the Government’s new housing policy is the Housing Delivery Test (HDT).

The ‘golden thread’ now running through the revised NPPF is ‘strategic’ policy – local plans must make explicit which policies are strategic and strategic policies must be updated least every five years but sooner if local housing need is likely to increase in the near future.

The draft Planning Policy Guidance (PPG) includes the proposed standardised approach to assessing housing requirements first published in the HWP and local authorities will need ‘compelling circumstances’ for departing from the standard approach, justified through examination.  The PPG proposes a ‘simple’ standard approach to assessing local housing need figure (LHNF) based on three components – (1) a demographic base line using most recent national household projections for the local authority area, (2) an affordability adjustment ratio to take account of market signals (local house prices) using medium affordability ratios published by the Office for National Statistics and (3) a 40% cap on any increase.

The affordability adjustment ratio compares the median house prices with the median workplace earnings at local authority level and published by the government each November. Clearly, some local authorities, particularly in high value areas, are likely to fair better than others from a 40% cap depending upon the position of their existing housing need figure and how recently it has been examined.  In London, many boroughs may find the maximum cap falls substantially below the New London Plan housing targets proposed by the Mayor.

More significantly, local authorities will no longer be able to apply a ‘constrained’ housing need figure on the basis of Green Belt, flood risk or other environmental constraints within their area.

The Draft Measurement Rule Book published with the draft NPPF defines the HDT as a percentage measurement of the number of net homes delivered (including student and communal accommodation) divided by the number of homes required over a rolling three-year period (from November 2018).

The presumption in favour of sustainable development will apply if a local authority cannot demonstrate a five-year supply of deliverable sites (plus buffer) or where the HDT falls below 75% of the housing requirement over the previous three years.  Where delivery falls below 95% of the housing requirement, an authority will be required to prepare an action plan to identify the causes of under-delivery and the proposed remedy.

To speed up delivery further, authorities are encouraged to reduce the implementation time period for housing development by imposing planning conditions requiring commencement within two years permission being granted. The PPG also confirms that the local housing need figure established through the standard method can only be relied on for a period of two years from the date of submission for examination.

Other changes to NPPF signal more subtle strengthening of central government support for other sectors of the housing market including purpose-built student accommodation, self-build and small housing site development.

Decision-makers must give ‘great weight’ to the benefits of using suitable small sites in determining planning applications and at least 20% of the sites identified for housing in local plans should be small sites (0.5 ha or less).  Local authorities are encouraged to use area-wide design assessments to identify appropriate small sites and work with developers to sub-divide larger sites to speed up housing delivery.

The draft NPPF seeks to tackle some of the fundamental flaws with existing national housing policy, not least the many creative ways local authorities approach the current requirement to establish the ‘full objectively-assessed housing need’ and seek to offset housing delivery.  Will the Liverpool v Sedgefield methodology debate be consigned to history by the HDT or does the draft NPPF include sufficient flexibility for local authorities to put forward ‘compelling circumstances to introduce bespoke methodologies to off-set housing delivery as set by the HDT?

The government has confirmed that the current NPPF will apply for any plans submitted for examination up to six months after final publication of the final version of the new NPPF and that the HDT threshold for under delivery will rise over three years from 25% in November 2018, to 45% by November 2019 and to 75% by November 2020.

The revised national housing policy will not reverse the acute housing shortage in the short term and any punitive elements of the draft NPPF are unlikely to impact on ‘nimby councils’ until well after the next general election.

Crucially, however, the NPPF remains national policy not legislation and as ‘other material consideration’ the weight to be accorded to the proposed changes will lie with the decision-makers.  The effectiveness of the proposed changes in addressing the housing crisis will depend largely on whether the new national policy approach is endorsed in future examination reports and appeal decisions.