National planning policy requires local authorities to maintain a supply of deliverable housing land big enough to meet their housing needs for the next five-years. If the housing supply falls below that level, the so-called “tilted balance” comes into effect. This means that some local planning policies which might otherwise prevent development - like a location outside the existing boundary of a town or village, unless it is in the green belt - become less important when deciding whether an application should be approved.
Whether or not a five-year supply exists can therefore be very important to the prospects of a planning application succeeding.
Measuring that supply needs a clear understanding of the level of housing need. Housing targets are based on the government’s “standard method,” a formula first introduced in 2018 which takes into account projections of household growth and the existing affordability of new homes. However, the figures produced by this calculation - known as “local housing need” - can be very different to those in Local Plans which were adopted before (or even very shortly after) the standard method was introduced. In those circumstances, which housing target should be used for assessing housing land supply?
Here’s what the National Planning Policy Framework tells us (at paragraph 74):
Local planning authorities should identify and update annually a supply of specific deliverable sites sufficient to provide a minimum of five years’ worth of housing against their housing requirement set out in adopted strategic policies, or against their local housing need where the strategic policies are more than five years old.
A footnote provides some further clarification: where the adopted housing target is more than five years old, it can still be used for the basis of calculating housing land supply if “strategic policies have been reviewed and found not to require updating.”
That is very clear. If the housing target was adopted or reviewed in the last five years, it should be used for calculating housing land supply; where it is older, the standard method should be used.
Although that appears to be a hard and fast rule, there are some exceptions to it (planning is planning, after all).
The first exception is that the housing land supply should be measured against the target in an emerging Local Plan if it is very close to adoption. This precedent was established in June 2020 in a Secretary of State (SoS) appeal decision relating to a site in London, known as the VIP Trading Estate.
Based on the adopted housing target at the time of the appeal, the inspector considered that the Royal Borough of Greenwich had a housing supply of between 4.49 and 4.99 years. That would result in the tilted balance being engaged.
However, the SoS reached a different conclusion. In his Decision Letter, he noted that the London Plan - which would set a new, reduced, housing target for Greenwich - was very close to adoption. The inspector had proposed changes to allow the London Plan to be found sound (allowing it to come into force), but none of them related to the new housing target for Greenwich.
As a result, the SoS concluded that the emerging housing target should be used for the purpose of calculating the housing land supply. The result was that Greenwich was comfortably able to demonstrate a five-year supply and so the tilted-balance was not engaged.
The second exception is where there are clear errors with the target produced by the standard method. This point was considered in an appeal decision relating to a site in Clacton-on-Sea, in Tendring, in January 2021.
Using the standard method target of 865 new homes per year, Tendring was not able to demonstrate a five-year housing land supply. However, their new Local Plan was at an advanced stage, and the examining inspector had concluded that a housing target of just 550 homes per year was justified. That was because the household projections - a key input into the standard method - appeared to include an error that resulted in the standard method target being vastly inflated.
After reflecting on the point, the inspector considering the Clacton-on-Sea appeal concluded that the standard method target was “so erroneous” it couldn’t possibly be used as the basis for calculating housing land supply. Instead, the emerging Local Plan target of 550 homes a year should be used. Despite the possibility the new Plan may, ultimately, not be adopted, the Inspector felt this represented the most realistic target based on the available evidence. As a result, he found that the council could demonstrate a five-year housing land supply.
East Riding had sought to defend a planning appeal on the basis of a hybrid approach to calculating their housing land supply. In establishing the housing target against which their five-year supply should be measured, they sought to use their adopted housing target (of 1,400 homes per year) for the first year and the standard method target (of 909 home per year) for the remaining four years of the five year period. This was justified on the basis that, in 12 months time, their adopted housing target would be more than five years old and therefore the standard method would become the appropriate benchmark.
The planning inspector considering the appeal rejected this approach, and Mr Justice Dove concluded he was correct to do so. In his judgement, he noted that national policy provides “a binary choice” - five-year housing supply is to be assessed against either the adopted housing target or the standard method figure.
As a consequence, East Riding’s housing supply was correctly measured against just their adopted target resulting in a housing land supply that fell below five-years.
These examples show the importance of five-year housing land supply, but also the complexity of determining what the supply actually is. They deal with just once facet of the calculation; others - such as how to account for past under-delivery and what sites can legitimately be include in the supply - can be just as complex. Get the calculation right, and it could result in planning permission being granted for housing development on a piece of land where it might not otherwise be allowed.
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If you own - or know of - a site that might have development potential and are interested in hearing more about our approach, get in touch today for a free, confidential and no obligation consultation.
