Banner triangles

Changes to the Standard Method for assessing housing need

On 12 January 2021, David Mathias, Tim Willis, Sam Grange and Matthew Stimson from our Planning & Environmental team hosted a webinar to discuss the main changes introduced to the existing ‘Standard Method’ used for assessing housing need in England and Wales.

Background to the Standard Method

  • The Standard Method was first introduced as part of an update to the NPPF in July 2018, using a formula to identify a minimum number of new homes that are expected to be planned for by an LPA in a way that addresses projected household growth and historic undersupply. The formula looks at projected household growth based on data from 2014, applies an affordability adjustment, before capping that increase, depending on the strategic housing policies adopted by an LPA in its Local Plan.
  • The Standard Method has resulted in a significant uplift in the number of houses in London and the South East but has constrained delivery of additional housing in the North.
  • In August of last year the government published a consultation proposing revisions to the Standard Method. The changes would have:
    • amended the baseline so that instead of current household projections the higher of the latest figures or a 0.5% increase of the housing stock is used;
    • updated the affordability adjustment to take account of the ratio of the previous 10 years in addition to current adjustment; and
    • removed the cap regardless of an LPA’s policies.
  • Aim that the changes would result in an additional 37,000 more homes a year on top of the previous target of 300,000.
  • Once the numbers were crunched it was clear the revised formula would not address the imbalance between the regions in terms of housing numbers. Alternatives were suggested in response to the consultation however in the week before Christmas 2020 the government announced it was dropping the revisions in favour of a 35% uplift in the numbers in the largest 20 urban areas in the country.

Impact of Government U-turn across the country

  • North – There is a general feeling of dissatisfaction for the Standard Method, both from its original iteration in 2018 and the most recent amendments. In order to keep pace with the economic growth which fuels the Northern Powerhouse agenda, ambitious housing plans are needed. The Standard Method in its current form will not achieve this and deliver on the governments levelling up agenda. When the cities and urban centres in the north taking the uplift are removed from the picture, there will be an overall reduction in the housing need figures in the north as a region of around 20% less than the revised Method proposed in August would have delivered. Further issues arise from the fact that many local authorities had out of date local plans and the cities and urban areas taking the uplift will have to get up to speed very quickly and identify their brownfield land sites.
  • Midlands –Birmingham, Coventry and Wolverhampton are subject to the city uplift the government has made it clear that its aim are to be achieved by redeveloping brownfield land, which is difficult in the region. Whilst some authorities may feel a little complacent at being able to proceed with housing figures they had planned for before the reforms, a number continue to engage with the government further. The added issue with allocating 35% in city centres is that this is not generally where affordable housing can be found, especially in Birmingham.
  • London & South East – The original Standard Method, due to the cost of housing in London, resulted in a significant uplift in housing numbers unlike other areas. Whilst the numbers for the Standard Method remain the same in many areas following the government’s changes, there may be a subplot at play whereby central government are attempting to force the Mayor of London to deliver more housing. The Secretary of State for Housing, Communities and Local Government has often criticised the target of delivering only 52,000 new homes per annum in the London Plan (which is obviously at an advanced stage). The version of the Standard Method now in play increases London’s housing need from 70,000 to 93,000, a significant proportion of the government’s national target figure. Delivering these numbers can only be achieved by building upwards or outwards, which would result in a housing density increase and taller buildings. In addition, London is surrounded by a large area of metropolitan Green Belt, which would need to be released in order to allow development.

Question: Is a 35% increase in housing numbers in urban areas genuinely going to satisfy the levelling up agenda? And what are the consequences for Green Belt release?

  • The Standard Method now in force supposedly reflects the government’s efforts towards meeting the levelling up agenda, which it is suggested will be achieved by hitting this reduced number of homes. In reality this is flawed as even if those targets are reached, levelling up will not be achieved.
  • Whilst there is a consistent message in the north that ambitious housing numbers are needed, the government has prioritised stability, taking account that local planning authorities’ existing policies such as these are based on the existing Method.
  • With the emphasis on the 35% uplift in urban areas it is not expected that there will be significant Green Belt release in the north. In order to deliver the numbers housing in the city centre will need to be delivered via the Use Classes Order and Permitted Development Rights. This in turn raises the question of the quality of housing and the mix.
  • There is also the question of desirability of living in the centres, where the uplift has an impact. There is a tension between delivery and desirability.

Question: The Planning White Paper proposes the abolition of the duty to cooperate. Can local authorities in the top 20 urban areas meet their uplifted targets in a world where they are not obliged to work together with other local authorities?

  • Government has specified that the emphasis should be on the development of brownfield land in each local planning authority’s area, therefore neighbouring authorities should only be approached if existing policies within their local plan mean this cannot happen.
  • As yet, there is no replacement table for the Duty to Cooperate which it is proposed will be abolished. As such there is limited incentive for adjoining authorities to work together.
  • However, the consultation on the Planning White Paper covered dealing with cross boundary issues on strategic sites. It is yet to be seen how this will be resolved by the government, although potential solutions include more authorities becoming unitary or via the imposition of a top down figure set by government confirming how many houses the neighbouring authorities would have to collaborate on and planning powers for the Metropolitan Mayors in Manchester and Birmingham as is already seen in London.

Question: The Standard Method changes were not only intended to deal with open market housing but also address persistent under-delivery of affordable dwellings. What does this now mean for affordable housing?

  • The Standard Method doesn’t go far enough in providing a solution to the need for affordable housing. There are hopes that this will more effectively be achieved through the ‘Affordable Homes’ programme introduced by the government for the period between 2021-2026, which is designed to create 180,000 homes. In addition, ‘First Homes’ policy which was announced by the government last year offers a 30% discount from market value for first time buyers.

Question: How will the Government deal with those areas which have Growth Deals (i.e. Oxfordshire) where the Deal seeks housing in excess of the Standard Method?

  • The Oxfordshire Growth Deal was introduced to acknowledge the Oxford Cambridge Arc, where there is significant economic growth potential in high-tech and knowledge-based industries. This is hindered by the lack of affordable housing in these areas, which are themselves heavily constrained by the Green Belt and heritage sites. The situation to date has been to build outside of the centres in new settlements, which are connected to the Arc by better infrastructure and rail connections.
  • The National Infrastructure Commission set out the need for additional homes in the Arc in “Partnering for Prosperity” published in 2017 and following its endorsement by the government in 2017 and 2019, it is now a material consideration in the making of plans. After applying the baseline determined by the Standard Method, the endorsed recommendation will need to be taken into account alongside other policy recommendations.
  • This acts as a precedent for other areas with growth ambitions and shows there is no reason why it cannot act as a material consideration in those areas, although this must be done in a clear and co-ordinated way.

Question: COVID angle – given what has become the new normal, is there really a sustained appetite to keep living in urban areas with no need to commute when many of us have been working remotely for so long and making that work?

  • The Standard Method exists to help recover from economic impacts of COVID-19, yet it raises the question of whether this is needed in city centres?
  • It is highly likely that in the aftermath of the COVID-19 pandemic, there will be a permanent change in mindset about how people choose to live their lives. People are generally looking to move out of the city centres, rather than in, as they seek more open spaces.
  • The effects of Brexit and the international climate change agenda must also be considered alongside this, as further reasons why the desire to live in city centres and avoid a daily commute may fall.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

Listen to the webinar

View all webinars

Insights

Read the latest articles and commentary from Shoosmiths or you can explore our full insights library.