Draft NPPF Consultation & What it Means for Housing
March 2018 marked the Government’s launch of the revised National Planning Policy Framework (NPPF) and the Draft Planning Practice Guidance (PPG) consultation. This follows on from the Housing White Paper and Planning for The Right Homes in the Right Place Consultation; both of which provided initial proposals to amend the existing policy following a consecutive 6 years of no changes in the NPFF.
The documents were published alongside statements by Theresa May and Sajid Javed focussing on the need for housing delivery. With housing firmly at the forefront of the government’s agenda, we explore the key policy changes that will affect residential development. Points we consider are of high significance have been underlined for emphasis.
The Presumption in Favour of Sustainable Development
While the presumption in favour of sustainable development remains at the heart of the NPPF, it is no longer the ‘golden thread running through both plan-making and decision-taking’, with the draft document simply stating ‘Plans and decisions should apply a presumption in favour of sustainable development’. A small change, but one which we feel serves to reduce ambiguity; a common theme throughout the draft policy documents.
Applying the Tilted Balance
The draft NPPF also provides a subtle change in wording with regard to the tilted balance. The document states ‘where there are no relevant development plan policies, or the policies which are most important for determining the application are out-of-date, permission should be granted unless;
the application of policies in this Framework that protect areas or assets of particular importance provides a clear reason for refusing the development proposed7; or
any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole.’
The replacement of ‘relevant policies’ with ‘policies which are most important for determining the application’ is an interesting change, although the meaning of the ‘most important’ will raise many questions and no doubt require clarification through future litigation.
The above still applies where a ‘local planning authority cannot demonstrate a five-year supply of deliverable housing sites (with the appropriate buffer)’. However, a new layer has been introduced, with the same tilted balance also kicking in ‘where the Housing Delivery Test indicates that delivery of housing has been substantially below the housing requirement over the previous three years’. The definition of ‘substantially below’ is provided, with delivery targets increasing each year until 2020. This means from November 2020 (and subsequent years) if delivery is below 75% of the housing required, the tilted balance can be applied.
While judging Local Authorities against housing land supply and delivery alike is entirely logical, we do have some concerns over the Housing Delivery Test.
The Government are also consulting on a Housing Delivery Test Measurement Rule Book (HDTMRB), which identifies the methodology for calculating housing delivery. The HDTMRB states that Local Authorities should use the following calculation to annually measure performance:
The HDTMRB explains that the figure for the number of homes required, in the above calculation, is the lower of ‘the latest adopted housing requirement figure’ or ‘the local housing need figure (projected household growth for financial years 2014-15 to 2017-2018 and unmet neighbours’ need figure’. How exactly the ‘unmet neighbours’ need figure’ is calculated has not been clarified.
Allowing Councils to select the lower of their adopted plan figure or the government figures (as set out in the projected household growth) for calculating housing land supply is somewhat problematic. The government figure, if the lower of the two, may not be an actual reflection of the housing requirement within an area and could serve to exacerbate any shortfall.
Local Planning Authorities have also been given an option to fix their 5-year housing supply position for a year through an ‘annual position statement’; this will show that a 5-year supply can be demonstrated which then cannot be challenged for a year. How this will work in practice is still unknown, as we are not sure how an ‘annual position statement’ is actually prepared and what it entails. This is a clear attempt from government to block speculative developers from undermining Councils’ housing figures immediately after the adoption of a plan.
Other changes in relation to housing delivery include the power for Local Authorities to speed up development delivery via planning conditions; foregoing the default time limit applied to planning permissions.
The draft NPPF indicates that Local Authorities are expected to follow ‘the standard approach’ for assessing local housing need. Clarification is provided within the Draft PPG which sets out a 3-step process; firstly, a baseline is set using national household projections. Then, an adjustment is made to take account of market signals and specifically the affordability of homes within the area. The final step requires appropriately capping the level of any increase from the adjustment factor in step 2.
Having a standardised approach is a welcome addition, something which will be key to the government reaching its housing target. This standard approach methodology however does not take into account other factors, most notably economic growth which could have a significant impact on housing needs; how this is addressed and whether this standard approach will allow or require flexibility for such variables is something to consider.
Affordable housing delivery is still a priority under the revised NPPF policies, but ‘should not be sought for developments that are not major, other than in designated rural areas’.
As for major developments, the draft NPPF states that there is an expectation of ‘at least 10%’ of homes to be affordable. There are some exceptions to this, for example; when the 10% figure exceeds the level of affordable housing required in the area or if it significantly prejudices the ability to meet the identified affordable housing need of specific groups. Exemptions also apply when the proposal provides solely for Build to Rent Homes, provides specialist accommodation for a group of people with specific needs (elderly or students) or is being progressed by those who wish to build their own homes.
The draft NPPF also positively promotes housing for first time buyers and renters, through support of entry level exception sites on unallocated sites outside settlement boundaries.
The widening of the ‘affordable housing’ definition is welcomed, with Starter Homes now being included. This could boost delivery and see marginal sites becoming viable for developers.
The viability shake-up will not be welcome news to land promoters, with the reference to ‘competitive returns to a willing landowner and willing developer’ having been removed. Further changes include the requirements to make viability assessments publicly available if required at the planning application stage. Developers take heed!
What Happens Next?
The above are just some of the key emerging policy changes provided in the revised NPPF that we think will have the biggest implications for developers.
What is clear is that the government are attempting to promote housing delivery, while also appeasing Councils and placing greater hurdles on land promoters. This has led to some odd policies which will hopefully be clarified within the final document.
The consultation period for the Draft NPPF will run until 10th May, with adoption expected in the summer.
If you want to know how your land or development may be affected, get in touch.