Consultation into method for calculating housing need closes

The consultation into the Government’s proposed standardised method for calculating housing need closes this afternoon, and planners, advisors and housebuilders continue to warn that the method could impact growth in the North West.

Communities Secretary Sajid Javid launched the public consultation in September, calling the current process, which changes for each local authority, “an opaque mish-mash”. Instead, he put forward plans for a standardised method based around Office for National Statistics projections.

Lobbying organisations such as Housing the Powerhouse were quick to criticise the plan for being too South-centric, as it seeks to increase housebuilding in less affordable areas, while potentially reducing housing targets in the North.

Analysis by Barton Willmore suggested that Manchester’s estimated housing need and corresponding housing targets would be reduced by 15% a year, equivalent to around 460 fewer homes per year.

Barton Willmore has created two interactive maps that explore the implications of the changes being proposed. Explore these maps here

Cumbria and Lancashire will be particularly impacted by methodology changes. Across the whole of the North West, the estimated annual housing need would be reduced by a quarter, although for the country as a whole, total housing need would increase to 266,000 each year.

Land promotion company the Strategic Land Group, also a member of Housing the Powerhouse, has warned that the new methodology “could be set up to fail” because it misses the impact of two crucial influences on the housing market; affordable housing need and economic growth.

The Government’s assumption is the maximum level of mortgage finance typically available to home buyers is four-times their salary. Where average house prices are more than four-times average incomes, houses are deemed unaffordable – too few homes are available, and the housing target is increased as a result. The more unaffordable homes become, the greater the increase to the housing target required.

Paul Smith, managing director of the Strategic Land Group said: “Affordability might be central to the Standard Method, but that is different to the need for affordable housing meaning homes for those who cannot access market housing.

“In some areas, delivering the maximum viable amount of affordable housing from market housing schemes leaves a shortfall against the need for affordable homes. In those circumstances, current planning guidance suggests increasing the housing target to enable the need for affordable housing to be met.

“As it stands, though, the Standard Method does not take into account the need for affordable homes at all. It therefore risks failing to meet affordable housing need.

“Many councils set out plans to deliver better economic growth. They work tirelessly on marketing their town, city, region and its assets to major employers and investors. Success brings jobs, those jobs need people to fill them, and those people will need new homes. Apart from paying a little lip-service, saying councils ‘may’ plan for more homes the Standard Method does not take economic growth aspirations into account.”

Dan Mitchell, partner at Barton Willmore, said: “On the face of it, the Government’s standard methodology in calculating housing needs suggests lower levels of housing growth in the North West of about 24% across all districts. This is not surprising given the standard approach and we are concerned that this could adversely impact the Northern Powerhouse agenda. However, it is also clear that councils will need to use the new approach as a baseline. Clearly areas where employment, investment and growth is envisaged, housing requirements will need to be adjusted upwards to meet economic growth projections. We are therefore seeing a mixed reaction from councils on the ground. Whilst housing is often controversial, especially where Green Belt is concerned, most North West councils also recognise the need to grow their economic base.”

• Respond to the Government consultation here