18 February 2020

Is the Housing Delivery Test worth the paper it's written on? by Lucy Morris, Planner

On the same day it was announced that we would have our tenth housing minister in as many years, the Ministry of Housing, Communities & Local Government (MHCLG) released the results from the 2019 Housing Delivery Test (HDT). 

 

Overall, the results indicate a positive story with delivery up by over 8% from the previous three-year reporting years.  However, it is not all good news, with the results showing that eight LPAs delivered less than 45% of their housing requirement and will now face the toughest sanction of the HDT, the presumption in favour of sustainable development.  There was also an increase in the number of LPAs which will be required to prepare Action Plans (26, up from 21 the previous year).  There was a decrease in the number of LPAs which will be required to apply the 20% buffer to their housing land supply calculations (74, down from 86).

Whilst there has been barely any change in the total number of LPAs which are delivering below 95% of their housing targets, some 136 LPAs have seen reductions in their housing delivery since the previous results, the most dramatic being Cambridge, which has seen a 108% reduction in delivery.  A total of 175 LPAs have seen increases in their housing delivery.

The London picture

In London, just over half of the boroughs (including the City of London) have seen a reduction in their housing delivery rates from the year before.  Unsurprisingly, given market conditions, the majority of the boroughs seeing a reduction in delivery are within inner London (nine out of the 12 boroughs).  Whilst there has been a small increase in the overall delivery of housing over the monitoring period, there has been a reduction in delivery compared to the capital’s requirement indicating that London is failing to keep up with the housing targets updated in the 2016 FALP review.  This is ominous given the modified draft London Plan proposes to increase the Capital’s housing target by a further 23%.   

Notably, there are significant discrepancies between boroughs, with some performing very poorly, whilst others such as Hillingdon and Hammersmith and Fulham are delivering at well above their targets.

Two authorities (Havering and the City of London), face the presumption in favour of sustainable development having delivered just 32% and 33% of their housing delivery targets, respectively.  Nine boroughs are required to apply the 20% buffer (up from eight last year).  Kensington and Chelsea has seen its delivery rates drop from 137% to just 57%.

London Mayor, Sadiq Khan is seeking re-election this May, and after previously being elected on a promise to tackle London’s housing crisis, the question as to whether he has done enough to address this key issue, is something which will be hotly debated in the coming months.  This is given further pertinence given the status of his draft London Plan which is currently with the Secretary of State, Robert Jenrick after the Panel of Inspectors recommended a significant reduction in the overall housing targets, primarily due to concerns over their deliverability.

 

Is the HDT effective?

At this stage, it is too early to tell whether the HDT will directly help the Government meet its target of delivering 300,000 homes a year by the mid-2020s. 

This year's results are unlikely to indicate a long-term trend of effectiveness of the HDT given the lag from start to completion of housebuilding.  It would be unsurprising if the effects of Brexit uncertainty and the corresponding slowdown of the economy on housing delivery, negatively influence next year’s results.

At present, it is certainly too early to tell if the production of Action Plans will help increase housing delivery.

One of the key implications of the HDT is the effect of the application of the 20% buffer.  The application of a 20% buffer to housing requirements for LPAs which deliver less than 80% of their target, which could then bring a LPA’s housing land supply below five years is, arguably, the most effective tool of the Test.  LPAs which cannot demonstrate a five year housing land supply are subject to the tilted-balance, which applies a greater weight to the supply of housing when considering planning applications. 

 

Conversely, the most severe sanction of the HDT, the implication of the presumption in favour of sustainable development may not be so effective.   Of the eight LPAs which are now subject to the presumption in favour of sustainable development, seven already cannot demonstrate a five year housing land supply and, therefore, are already subject to the tilted-balance.  It will be interesting to see whether this has more of an impact in next year’s figures when the threshold increases to 75% and more LPAs are likely to face this sanction.

Overall, however, the picture presented by the HDT is reasonably positive.  There was an increase in the delivery of 52,669 homes over the monitoring period from the last HDT and a 9% increase in the average delivery from 214,674 to 232,230 homes per year.  If this trajectory can be maintained, the goal of delivering 300,000 homes could be met by as early as 2022. 

Of course, correlation is not causation and the HDT is probably not responsible for the increase in housing delivery.   Firstly, it is unlikely that this trajectory will be maintained as the Government’s standard method for calculating housing requirements remains well short of the 300,000 target.  Reaching this goal would rely on the majority of LPAs delivering well above their targets. 

Secondly, politics is heavily entwined within the planning system and the issue of housing is never very far away from local political conversations.  In a post-Localism Act era, communities remain at the heart of planning decisions and the scale of planned housing delivery is often driven by the political party in charge of the local council at the local plan stage.

The recent spate of local plans which have been found unsound, many in relation to the lack of compliance with the Duty to Cooperate (such as Wealden and Sevenoaks), point to the lack of cross-boundary collaboration to tackle issues such as local and regional housing shortages.  It remains to be seen how the HDT sanctions can overcome these issues.

Moving forward, even if the HDT makes only a limited contribution to the Government meeting its housing target within the current parliamentary term, it will be no doubt be seen as part of a success story.