Intelligence: 14 September 2017Standardised Methodology for Assessing Housing Need

The Department for Communities and Local Government has published (14 September 2017) its consultation on the new methodology for objectively assessing housing need (OAHN). The consultation runs for 8 weeks, closing on 9 November 2017.

The Government’s intention of the new standardised methodology is to ensure we plan for the right homes in the right places. The Housing White Paper (February 2017) recognised the countries housing market is broken. A shortage of housing is viewed as the cause of rising house prices, meaning owning or renting a home is out of reach for many people.

The National Planning Policy Framework (NPPF) and accompanying Planning Practice Guidance (PPG) require all local authorities to produce a Strategic Housing Market Assessment (SHMA) to assess their full housing needs. However, there is currently no definitive guidance on the way to prepare a SHMA. For this reason, the guidance is open to interpretation and the Housing White Paper states that currently ’some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology for calculating objectively assessed housing need’.

The Government’s consultation proposes a standardised methodology which intends to simplify the OAHN by making the assessment straightforward and transparent. 

 

 

 

Explore the new need vs household projections

There are three steps to the Government’s proposal:

Step 1: Setting the baseline

The demographic baseline should be the annual average household growth over a 10-year period as indicated by the Government’s household projections.

Step 2: An adjustment to take account of market signals

An uplift to the household projection is permitted to address affordability issues. Using the workplace-based median house price to median earnings ratio from the most recent year, for each 1% increase in the ratio above 4.0, the household projection should be increased by 0.25%.

Step 3: Capping the level of any increase

The level of any increase is capped dependent on the status of the local plan in each authority. For those authorities who have adopted a local plan in the last five years, the housing need figure should be capped at 40% above the annual requirement figure currently set out in their local plan. For those authorities with a local plan which was adopted more than five years ago, the housing need figure is capped at 40% above whichever is the higher of the household projection or annual housing requirement in the local plan.    

Under the proposal, 148 local authorities see a fall and 156 local authorities see an increase in housing need from their current assessment. Across the country total housing need would increase to 266,000 homes per annum.

To help you explore the implication of the changes being proposed we have prepared two interactive maps - see below:

Explore the new housing need vs Council’s assessment

 

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OAHN, research, DCLG