The Housing Delivery Test: what is it, and what does it mean for housing supply?

The government introduced the revised National Planning Policy Framework (NPPF) in the summer of 2018 with the explicit aim of boosting the supply of new homes. One of the new tools to help achieve that objective was the Housing Delivery Test.

How the Housing Delivery Test will work

The Housing Delivery Test is a simple comparison between how many homes should have been built over the last three years in each local authority area, with how many actually were. The results will be published by the government in November every year – although the first results didn’t appear until February 2019 – and will apply for the following 12-month period.

Where more than 95% of the required homes have been built, the test is passed and councils need take no action. If delivery is below that level, councils will be required to investigate the reasons and publish an action plan explaining how they will catch up. This could be something as simple as taking steps to speed up the delivery of a particular site, but could also involve starting an early review of the Local Plan.

Where performance is especially poor – with less than 75% of the target being achieved – some planning policies can effectively be ignored, providing more freedom to developers and land promoters to secure planning permission.

The relationship with five-year housing land supply

The Housing Delivery Test will act as a compliment to the now-familiar concept of the five-year housing land supply. Council’s must be able to demonstrate that they have an adequate supply of housing land to meet their needs for the next five years – if they can’t, the presumption in favour of sustainable development applies, making it easier for planning permission to be secured.

By definition, the assessment of a five-year housing land supply is forward-looking – it is an estimate of the number of homes that might be built. That leaves it open to interpretation. Councils might be overly optimistic in the number of homes they expect to be delivered; developers are likely to take a more pessimistic view.

As a backward-looking measure, the Housing Delivery Test isn’t open to interpretation – the answer is the answer.

The reaction from local authorities

While some councils complain that they can’t actually influence the number of homes built – only the number of planning permissions that are granted – there is a relationship between the two.

There is a wealth of information available to councils to help them make sensible assumptions about how soon sites will start to deliver and how quickly the homes will then be built.

If we’re to come close to building the 300,000 homes a year the government believes we need, local authorities need to take more responsibility for understanding that relationship.

Five independent reviews and an Office of Fair Trading investigation into house building have all concluded that developers build homes on sites with planning permission at a reasonable rate. The government – through the Letwin Review, for example – is even exploring ways to accelerate delivery further.

The plan-led system only works when Local Plans are effective. If the right number of homes aren’t built on a consistent basis, that points to a flaw in the local plan. It seems only reasonable the councils should be required to act to ensure that their Plans are actually delivered.

This will typically mean allowing development to take place across a variety of sites, taking a realistic view about the lead-in times for new development, and ensuring there is sufficient headroom against their target. Together those steps will provide the flexibility to ensure that the right number of homes are built.

The results

The inaugural results suggest that, for England as a whole, we delivered 114 per cent of housing need over the last three years – which would mean that the housing crisis is over. That doesn’t reflect reality.

On closer inspection, the results reveal that 680,000 homes were built over the last three years – an average of around 227,000 per year. That is a long way short of the 300,000 homes per year target the government has set to begin to address the housing crisis.

Shortcomings of the Housing Delivery Test

These first results underline the shortcomings of the Housing Delivery Test  approach – the outcome is only as good as the housing target on which they are based.

Once an adopted housing target is more than five-years old, performance is assessed against a housing target calculated using the Office for National Statistics’ household projections.

Those projections roll forward past trends and so effectively “bake in” the housing crisis. As we continue to under-deliver homes, it is necessary for more people to live in each house – like twenty-somethings still living with their parents. The UK is the only country in the European Union where the average number of occupiers of each home has increased over the last ten years. The projections assume that pattern will continue and forecast that fewer homes will be needed for our growing population in the future as a result. If we use those figures to plan for growth – as the Housing Delivery Test does – we’ll never break the cycle of the housing crisis.

That applies in the majority of cases – a recent report by the National Audit Office points out that only 44% of councils have a local plan that is less than five years old. It is no surprise that so many councils managed to pass this first assessment of the Housing Delivery Test.

Hope for the future

Nevertheless, there remains cause for optimism. Firstly, the Test will become more difficult over time with higher levels of delivery needed to pass. Secondly, for the first time there is a genuine way of holding councils to account to ensure that their plans are delivered. Over time, that should result in more realistic plans – and higher levels of housing delivery.

The Strategic Land Group is a specialist land promotion company that works with land owners to deliver planning consent on their sites at our cost and risk. Our return is a share of the value of the site once it is sold, so if we don’t succeed, it doesn’t cost you a penny. We work on sites of all types – greenfield, brownfield and even Green Belt. If you know of a site that you think might benefit from our approach, get in touch today for a free, no obligation consultation.

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