The Housing White Paper – Calculating Housing Need

16th February 2017
By Helen Reid

The Housing White Paper finally provided a much awaited Government response to the recommendations put forward last year by the Local Plans Expert Group (LPEG) on standardising the methodology for calculating housing need.  Although we must wait a little longer to find out exactly what the standard methodology might actually be. 

Despite not going as far as agreeing with LPEG’s proposed methodology or setting out an alternative, it did agree that a standardised approach was necessary and that the current approach is particularly complex and lacks transparency.   The intention advised in the HWP is to consult on options for this new methodology "at the earliest opportunity this year". 

As most non-demographers who have attempted to delve into any of the SHMAs produced in recent years will attest, it can be a confusing foray into a new world of migration rates, headship rates, fertility rates, unattributable population change, workforce growth rates, migration flows and affordability ratios to name but a few.   Trying to understand exactly how the final OAN figure has been arrived at can be extremely difficult particularly where there is no consistency of approach and as the White Paper points out “some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology”.

Most of the responses to the LPEG recommendations had some level of agreement that a standardised methodology would be helpful however some criticised the simplicity of the proposed method.  This leads to the big questions, what should the methodology be? How can it be robust and fair but also simple enough that it is easily calculated and transparent?  There is likely to be much discussion and debate over this in the coming months but it should be recognised that this potential pain now will save time and money arguing methodological points each time a local plan is examined.

According to the White Paper we need 225,000 to 275,000 or more homes per year in England to keep up with population growth; however the latest CLG household projections (which are a generally accepted starting point) show growth of around 202,000 households per year.  Therefore it is clear that there is going to have to be significant uplift (even once households are converted to dwellings) to reach the 225,000 to 275,000 homes needed.  What the Government and Planners now need to grapple with is how should this uplift be calculated and how should it be spread across local authorities. 

The impact that any new methodology has on actual homes being built will all depend on how this OAN figure is then used to determine housing targets and how any shortfall is addressed with neighbouring authorities.  However, it is also proposed in the White Paper that from April 2018 this new method for calculating OAN would apply as the baseline for assessing five year housing land supply and housing delivery for those local authorities without an up-to-date-plan in place. Therefore, this could provide a much needed incentive for some authorities to speed up their plan making process.


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