Welcome to the first in a series of posts about Planning and the challenges of Planning.

It began as an exercise to educate myself about the Planning system and all it’s quirks, but I soon realised that residents might appreciate my sharing the insights I had gathered.

I hope it will enable residents to have a better understanding of Planning, allow them to engage constructively with the Planning process, and enable them to understand the challenges the system presents and the case for Planning system reform.

Like many others, I am concerned about overdevelopment in our area. I worry that if uncontrolled development continues, the South East will end up like Los Angeles, with 20 million people and grid lock every day.

We need first to understand the facts, who controls what, and what needs to change if we are to avoid this.

If you want to drill into the details, I’ve included references at the bottom.

The first challenge of Planning is the fundamental assumption that we need more and more houses.

Household Projection Figures

The Government publishes Office of National Statistics Household Projection Figures, which are based on a formula that extrapolates the census figures.

The maths are complicated. The formula used is either1:

Δln(Xt/(1−Xt)) = β0 + β1/(1 + exp(-1.β2(t – β3)) + et

or

Δln(Xt/(1−Xt)) = 0.42(ln(X2001/(1−X2001))−ln(X1991/(1−X1991))) + 0.33(ln(X1991/(1−X1991)) − ln(X1981/(1−X1981)))+ 0.25(ln(X1981/(1− X1981))−ln(X1971/(1− X1971)))

To illustrate this, I’m going to use the same data sources that the Surrey Heath Borough Council May 2020 Local Housing Needs Assessment 2.

This is the Ministry of Housing, Communities & Local Government projection of household growth in Surrey Heath 3 …

If it looks they’ve used a straight line for Surrey Heath, I think you are almost right. If you look at the data very closely there is a slight curve towards levelling-off; it’s what’s called a “logistics curve”.

But what is the rationale for this growth? It based on the historical growth rate, and that because the number of houses in Surrey Heath have grown in the past, they will continue to grow.

If we look at the 10 year period from 2019 to 2029, the projections are:

38,125 households in 2029

35,753 households in 2019

Difference = 2,372 new houses over 10 years, or 237 every year.

But it doesn’t stop there. The growth figures are then adjusted depending on how affordable property is the area. We all know property in Surrey Heath is expensive, but how affordable is it?

Affordability Adjustment Factor

Affordability is calculated as average house price/average earnings.

The graphs below show how house prices have risen and how earnings have changed4:

 

Affordability has dramatically fallen, from a price:earnings ratio of 4.6 in 1997 to over 13 in 2018:

The numbers of houses assumed to be needed is then adjusted to reflect affordability. Unfortunately for those of us concerned about over development, the more unaffordable housing is, the more are are added. The rationale is presumably that more supply=>lower prices.

The Adjustment Formula = (Local Affordability Ratio - 4)/16.

So in Surrey Heath, with a 2018 Affordability Ration of 13, the Adjustment is (13-4)/16 = 0.56, or 56%.

This means that 56% should be added to the previous figure of 237 new houses per year.

Thankfully there is a maximum cap of 40%, so the final figure is 237 + 40% = 332 per year.

This is known as the Annualised Housing Requirement:

5 Year Housing Land Supply

The National Policy Planning Framework5 requires each Council to produce a 5 Year Housing Land Supply (5YHLS).  This is based on the Annualised Housing Requirement (332 for Surrey Heath) plus a "buffer" of at least 5%. (332 + 5% = 349).

So for Surrey Heath the expectation is land supply for 349 x 5 = 1,743 new homes to be built over the next 5 years. The Surrey Heath 5YLS6 identfies land for 1,692 homes, 4.8 years worth. Surrey Heath cannot currently demonstrate a five year housing land supply.

The 'Tilted Balance'

The harder a Planning Authority finds it to build the expected number of houses, the harder it is for that Planning Authority  to say "no" to new developments.

The National Planning Policy Framework (NPPF) is designed to promote what is known as "sustainable development". It has mechanisms built-in so that Local Planning Authorities cannot unreasonably hold up housing developments.

One mechanism is known as the 'Tilted Balance'.

The word's 'tilted balance' don't appear anywhere within the NPPF, but it is paragraph 117 that describes how the balance tilts towards approval of development if, for example, a local authority cannot demonstrate a five year supply of deliverable housing sites.

Because Surrey Heath cannot demonstrate a 5 year housing land supply, the balance is tilted and it becomes harder for the Council to say 'no' to developments.

Conclusions

The legislative presumption of so-called sustainable development is the driver of continued housing development in the area. It is hard to see how development can be controlled unless this presumption is changed.

In further posts I will explore the challenges of the availability of land in Surrey Heath, the planning decision-making process and affordable housing.

Stuart Black, January 2022

 

Update December 2022

Very pleased to see that Surrey Heath MP Michael Gove, in his capacity of Secretary of State for Levelling Up, Housing and Communities has announced changes to a number of the issues highlighted in the blog above.

The changes announced include:

  • The assumption of continuous growth will be an advisory starting point, not mandatory. Local authorities will determine how many homes they need.
  • Local planning authorities will be able to plan for fewer homes if building is constrained by factors such as those highlighted in my blog on where to build.
  • Consultation on additional measures to tackle the problem of housing developers 'sitting' on planning permissions and not building needed homes, for example allowing local planning authorities to refuse planning applications from developers who have built slowly in the past, and making sure that local authorities who permission land are not punished under the housing delivery test when it is developers who are not building, and fines for those not building quickly enough.
  • Ending the need for local authorities to maintain a rolling five-year supply of land for housing where their plans are up-to-date.

I believe these announcements are an important step in allowing local areas to control developments in ways that have not been possible in the past.

Stuart Black, 8 December 2022

References:

1. Testing methodological changes to the household projections model: research report, Department for Communities and Local Government, 2010, P44

2. Local Housing Needs Assessment, Surrey Heath Borough Council, May 2020

3. Household projections for England and local authority districts, 2014-based, Table 406

4. Ratio of house price to workplace-based earnings (lower quartile and median), 1997 to 2020, Office of National Statistics

5. National Planning Policy Framework July 2021, p.20, para 74

6. Draft Five Year Housing Land Supply 2020-2025 (August 2020), Surrey Heath Borough Council

7. National Planning Policy Framework July 2021, p.6, para 11