Communities secretary Sajid Javid has launched a consultation on the government’s proposals for calculating local housing need as the government looks to deliver measures set out earlier this year in the housing white paper.
Speaking in the House of Commons, Javid said that if lasting change is to be made, a proper understanding of how many homes are needed, and where, is required, and the existing system “is not good enough”. He said a “consistent approach” is a necessity.
The government’s proposed approach is split into three stages, notes the consultation.
For stage one, the baseline, the government proposes that “projections of household growth should be the demographic baseline for every local authority area”, using the most recent figures. Household growth would be calculated for the period over which the plan is being made. The demographic baseline would be the annual average household growth over a 10-year period. Household projections should be “regarded as the minimum local housing need figure”.
Stage two would see plan-makers using the workplace-based median house price-to-median earnings ratio from the most recent data available. A variety of industry professionals have estimated how many homes are required each year, ranging from 225,000 to 275,000 a year.
The consultation document states that to get a total housing need close to this range, “our modelling proposes that each 1 per cent increase in the ratio of house prices to earnings above four results in a quarter of a per cent increase in need above projected household growth. This achieves the overall level of delivery that most external commentators believe we need, while ensuring that it is delivered in the places where affordability is worst”.
Applying this would see a significant increase in the potential housing need in some parts of England, said the government. So stage three caps the level of any increase according to the current status of the local plans:
For authorities with a local plan adopted in the last five years, a cap of 40 per cent above the annual requirement set in the local plan is proposed.
For authorities that don’t have an up-to-date local plan, the cap is 40 per cent above whichever is higher of the projected household growth for their area over the plan period or the annual housing requirement in their local plan.
Javid said the proposals should not be “mistaken for a hard and fast target”.
“This new approach will cut the unnecessarily complex and lengthy debates that can delay housebuilding. It will make sure we have a clear and realistic assessment of how many new homes are needed, and ensure local communities have a voice in deciding where they go.”