The Future of National Housing Targets

Just over 200,000 homes are built in the UK each year – two-thirds of the Government’s target (and manifesto promise).

And as January’s Housing Delivery Test results reveal, 93 of the UK’s 315 local planning authorities (LPAs) have failed to reach the required 95% delivery target over the last three years.

Here Carter Jonas’ planning specialists from across the country address the causes of and potential solutions to this problem; they consider whether the issue lies in our ‘flawed’ plan-led system (as defined by the House of Lords Built Environment Committee’s recently published report Meeting Housing Demand); whether there are additional factors at play, and whether targets are actually the best approach to meeting demand.

Idealistic intentions?

Perhaps the first and most important question is, has the development industry been set a realistic target - or will it consistency fail to meet expectations?

‘Targets are not unrealistic, but they aren’t necessarily sustainable,’ says to Paul Belton regarding the Eastern region. ‘With a number of disused airbases, some of which have access to sustainable modes of transport such as the Cambridgeshire Busway, we do have the capacity to deliver. 

‘But is it safe to assume that historic rates of housing delivery will continue? It would be a brave planner who would simply say “yes”. While there is an emerging trend for Local Plans to favour large new settlements, notable local failures to adopt such strategies highlight the challenges. New settlements can benefit a spreadsheet, but do not always work so well in practice. 

‘If we are to be successful in meeting housing need, we need to build good quality homes where people want to live while addressing the climate emergency. Delivering housing alongside jobs and in well-connected communities that are not reliant on the private car is a significant challenge.’

In the West of England, the sticking point is that out-of-town greenfield development is significantly limited by a lack of sustainable transport options, as Gareth Jackson explains: ‘It is clear that several housing targets will be a challenge to meet. The region is facing an intense period of growth, but growth must be delivered alongside the right infrastructure.’

Kieron Gregson says that in London, whilst some boroughs are overperforming compared to their housing requirements, there remains a shortfall of 30,777 homes against the 2017 standard method and reflecting on these and other issues, believes that ‘The current planning system is not providing the foundation to build the homes required’.

New New Towns?

The UK last exceeded 300,000 homes in 1977, towards the end of the post-WW2 New Towns programme. Neal Allcock sees a role for a modern equivalent – as demonstrated at Worcestershire Parkway, where a 10,000-home community, in addition to having a railway station at its heart, will include employment opportunities. ‘From the late 1980s there has been a noticeable shift away from New Towns, with “urban renaissance” prioritising brownfield development and revitalising previously neglected centres and city fringe areas. So the New Towns of the last 25 years – such as such as Poundbury and Dickens Heath - have been of a smaller scale, locally-led and address local needs rather than wider, more regional needs. They lack an overarching organisation to manage growth and struggle for initial capital to deliver essential infrastructure.

‘As with the original New Towns’ Development Corporations, should the solution be delivered by the public sector, with a body such as Homes England as a pump primer for development? Streamlined access to local growth funding, as purported within the Levelling Up White Paper, may provide authorities with the opportunity to fund infrastructure up-front and be paid for by S106 receipts as development plots come out of the ground.’

Sarah Cox agrees that New Towns could be a large part of the solution: ‘Yes, they would kick-start development, but the problems of finding appropriate sites should not be overlooked. Available brownfield land is hard to come by and where development has taken place on former barracks or quarry sites, for example, it has been slow and piecemeal’. 

This is exemplified in every region. David Churchill comments that in London, ‘Large scale brownfield sites are available, from Wembley to Canning Town, but brownfield sites require a considerable investment in time and resources, as the planning process isn’t a quick one.’

This then poses the question, is the Government’s strong preference for brownfield land (as demonstrated most notably at the recent Conservative Party Conference when Boris Johnson announced that his party would not support greenfield development) a barrier to necessary development?

‘The fact is,’ says David Churchill, ‘That housing targets cannot be met through brownfield alone – it is not a panacea. And furthermore, brownfield sites, because they are typically smaller than greenfield sites, are limited in their ability to provide social infrastructure such as employment, community and healthcare facilities.’

‘If we are to build the homes that we need on brownfield sites, we cannot shy away from difficult decisions such as adding height and density to existing communities, often at considerable cost,’ Kieron Gregson points out. ‘This requires building on the policies within the NPPF in relation to maximising densities around public transport hubs and extending this to building on undeveloped land around train stations as referred to in the Meeting Housing Demand report.’

Achieving affordability

At the root of the housing crisis is a lack of affordability: a house price to earnings ratio which exceeds 1:19 in many areas. 

As Paul Belton says, ‘While the statistics show that thousands of new homes are built each year, the number of the most vulnerable in urgent need of a home has remained frighteningly high. The ability to deliver affordable housing should be the top priority in assessing future strategies for growth.’

The national annual target of 300,000 homes will not necessarily impact on affordability, according to Peter Canavan. ‘Investment in built development is at the cornerstone of our economy. We are conditioned to expect the ‘value’ of our homes to increase, and no-one would sanction a return to negative equity, as a drop in house prices would have a catastrophic impact on the economy.’

Do interventions benefit affordability? Not necessarily, says Peter: ‘Help to Buy loans and Stamp Duty holidays appear to drive up the cost of new homes. Products such as self-build and modular build may have a role to play, but mortgages have been hard to come by for some of these products. Furthermore, their resale has yet to be fully tested. We could experience a ‘modular build bubble’ in which values fail to increase in line with those of traditionally built homes.’

Sarah Cox feels that a different kind of intervention is necessary to increase the supply of affordable housing: ‘The Government must intervene more to enable affordable housing, allowing families move up the housing ladder while remaining in their neighbourhood. Perhaps the housing target should relate the delivery of affordable housing, making this the priority for Government and local authorities?’

Return to regional?

Gareth Jackson highlights an issue common across the country whereby, on a regional level, targets are achievable but while some LPAs struggle with too few sites, others exceed allocations. 

This situation is best illustrated in Monmouth where the local authority’s proposed number of homes exceeds the Welsh Government’s maximum level and, it is feared, will result in displacement of housing, jobs and population from elsewhere.

Peter Canavan reflects on a similar situation in Oxfordshire: ‘The Oxford City Deal and subsequent Housing and Growth Deal set a target of 100,000 new homes by 2031. These first emerged through a market assessment in 2013/14, and have eventually been adopted in Local Plans, the last of which was accepted – under some duress – at the end of 2020. 100,000 homes a year was higher than a baseline “demographic” need for new homes. It included “uplifts” to create a target aimed at supporting economic growth and addressing affordability. So the standard methodology undershot the adopted housing targets. This is highlighted by the recent decision at the Vale of White Horse, where for apparent housing land supply reasons, the standard methodology target has been identified as “more up to date” than that of the adopted Local Plan. This could be seen as a clever tactic by the Council - by reducing the five-year housing requirement but at the same time retaining the land supply from a plan with a higher target, it can prevent applications from speculative developers, also allowing time to deliver ambitious developments such as extensions to Didcot, Abingdon and Wantage & Grove. More cynically though, my fear is that it is the first step towards drawing in housing targets to a baseline that forgets attempts to support economic growth, forgets ways to secure much needed infrastructure and forgets engaging with an affordability crisis and delivering homes for people who will never be able to enter the housing market.’

Sarah Cox agrees that a regional target would ease pressure on local authorities while also helping to de-politicise development. ‘Turkeys don’t vote for Christmas – councillors don’t want to go door-knocking, knowing that their housing plans are unpopular. But if targets are set at a regional level, councillors are not personally blamed; also housing targets can be more appropriately divided between local authorities.’ 

However, Peter Canavan warns that the Duty to Cooperate (a means by which local authorities are required to work together), has not succeeded in resolving tensions between neighbouring authorities, nor produced a clear approach to meeting needs across wider areas. ‘A return to regional targets must transparently identify all the elements and enable space for debate on each. The absence of these factors led to suggestions of “dictatorship” in the previous Regional Spatial Strategies.’

David Churchill proposes, ‘Plan-making that includes a process to “set” housing needs, at a regional level, which is then followed by a suite of local and neighbourhood plans identifying sites and addressing the specifics of delivery. Resources must be invested in partnership working and ensuring the appropriate facilities and services. This needs to be articulated and agreed – by all parties including service providers – through the Local Plan process. This requires skilled workforces with the capability to engage with targets, and to predict and provide – not simply to react when applications materialise. It also requires a shakeup of funding models for utility companies and statutory consultees and must be considered in any review of planning obligations.’

Policy Paralysis

A major hurdle, it was widely agreed, is a lack of consistency in planning policy. Specifically, with the ‘pioneering’ White Paper now over 18 months old with little policy having followed it, planners and housebuilders operate within a climate of considerable uncertainty. 

In the West Country, says Gareth Jackson, uncertainty at a regional level is delaying planning decisions: ‘Bristol and its surrounding authorities have seen considerable uncertainty in the planning system while the West of England Combined Authority (WECA) prepares its Spatial Development Strategy. Moving forward, it is critical that the WECA, and North Somerset, look to cooperate fully in order that targets across the region can be met and that as far as possible, uncertainty and other factors such as environmental matters don’t bring housing delivery grinding to a halt.’

And uncertainty also exists on a local level where the plan-led system is in disarray. This is particularly prevalent in Yorkshire where several LPAs lack an approved Local Plan. ‘The system doesn’t need to be changed,’ says Emma Winter, ‘Just better resourced. Most problems are because planners are so stretched and as the demands on the planning system are continually expanding – such as the requirement for Design Codes.’   

Are numbers necessary?

Finally we addressed the question of whether housing targets should remain in their current form.

‘We need something,’ was a common response - without targets, growth can become side-tracked and lethargy can set in.

Sarah Cox believes that the answer does not lie in the numbers alone: ‘It’s too simplistic, too much of a blunt tool. A number doesn’t result in appropriate housing being delivered and progress is best achieved through “carrot” as well as “stick.”’

‘Regular monitoring is an important part of the process, which should also include market analysis,’ says Peter Canavan. ‘Local authorities should not be penalised for market failure, only for slow or inappropriate decision-making that disrupts housing provision. There is some precedence for this in the latest HDT figures where a discount was made for the impact of COVID. The number of consents issued should be a clearer part of longer-term monitoring, not just the number of finished houses. Housing targets need to remain part of plan-making, both as an aspirational target – supported by infrastructure and services – and also a minimum requirement that if missed, results in sanctions.’

But sanctions, where they do exist, are not always appropriate, says David Churchill. ‘I’m hopeful that First Homes will help alleviate the affordability crisis, but I’m not convinced that First Homes Exemption Sites are the best tool, as they won’t necessarily result in homes being located in accessible and sustainable locations.’ 

Further Factors

Planning is about the future. And yet the main mechanism for tracking delivery – the Housing Delivery Test – is a retrospective tool which can override the principles of a plan-led system. There was a general consensus that plan-making should, ideally, take into account a wider range of factors – population and demographic changes, but also changing household formations and nuanced shifts in preferences, such as the recent rise in counter-urbanisation. Projections should take into account wages, rent costs, the ability to save for a deposit and the availability of mortgages to first time buyers: ‘Whilst the standard methodology includes affordability calculations, it fails to understand and respond to economic trends,’ says Peter Canavan. 

‘Increased information would extend to an understanding of infrastructure’s potential and its limitations. The delivery of homes is invariably held up by infrastructure capacity – and yet the real value of the plan-making process is that it can identify these issues at the outset and bring together the people who can solve them. Rather than concluding through the plan-making process that the answers will fall into place through applications, more ought to be done to “front load” deliverability, and test the assumptions made. While this might not help the time it takes a Plan to be produced, if more time was invested in a draft Plan, more engagement would be secured from service providers and a more deliverable outcome achieved. An efficient Plan is one that delivers tangible outcomes, not one with a list of potential development sites that gathers dust on a council bookshelf.’

According to Sarah Cox, a greater level of demographic understanding to inform Local Plan-making can be achieved through two-way dialogue: ‘We need to have a more mature discussion about location and the role that it can play. Creating high quality housing in unpopular areas responds to the targets but does little to provide what people actually want.’ Sarah also sees an opportunity for, ‘Greater thought and creativity specific to the region – for example, enabling communities to continue to thrive and grow while providing the ability for the older generation to downsize within their community’.

According to Gareth Jackson, a ‘one size fits all’ approach to calculating housing targets also takes no account of unexpected factors impacting delivery which in turn puts more pressure on ‘failing’ authorities. ‘An unexpected factor in the South West for example is the high level of phosphates in the Somerset levels which is currently holding up approximately 11,000 new homes in the planning system. If other environmental issues arise, the delivery of many more homes could be delayed, putting further pressure on local authorities where the lack of resources is already significantly constraining progress.’

The verdict

Carter Jonas’ consensus is that, while the factors impacting on housing delivery are changing, changing policy is not necessarily the answer.  Rather than the seismic overhaul of planning policy as proposed in the Planning White Paper, the existing system, updated to reflect today’s challenges, has the potential to deliver. We look forward to the eventual publication of a draft Planning Bill and the opportunity to help shape future policy.