Is Government about to ditch mandatory housing targets when London needs more homes than ever?

There has been a sustained period of residential planning activity since we emerged from the 2008 recession, but more recently there have been macro and micro forces that are starting to cause a significant trend of London Boroughs dipping below having a five-year housing land supply (5YHLS).

The trend is evident even in East London, where large areas of brownfield land have historically been fertile ground for large-scale residential developments.

Our experience includes a Hackney case study. We gave evidence resulting in the appeal decision which confirms Hackney’s current 5YHLS figure – 3.89 years – as of September 2023. https://acp.planninginspectorate.gov.uk/ViewCase.aspx?caseid=3292646

Here are the three things to look at closely when assessing an LPA’s housing land supply:

1. Small sites vs minor sites

London Plan Policy H2 lets LPAs assume that the housing delivery on small sites (<0.25 ha) will be at least as much as the policy’s minimum target for delivery on small sites. However, this policy also assumes that LPAs will change their delivery rates to meet this minimum. This policy has always been a bit of a ‘fudge’ in the London Plan to get land supply and minimum requirements to match without releasing green belt land or MOL. We’re now 2.5 years on since the adoption of the London Plan, and LPAs might have struggled to increase the number of homes approved on small sites to meet this ambition.

Also, bear in mind that housing delivery is usually reported by LPAs in ‘major development’ and ‘minor development’ groups. These categories generally sort developments by the number of homes delivered (≥10 for major development, <10 for minor development), but, of course, small sites can often accommodate major development, especially in urban areas. Make sure you’re comparing like for like.

2. Allocated sites

An LPA may rely on all allocated sites being deliverable in the next five years. A local plan will demonstrate a 5YHLS on this basis. Again though, the soundness of this assumption needs to be tested for each site when assessing housing land supply in the plan period. In our experience, the likelihood that each allocated site is deliverable in the next five years should be tested no matter how recently the local plan has been adopted. The older the plan, the more important this exercise becomes.

Remember the test for deliverability in the NPPF. Allocated sites without full planning permission should only be counted as deliverable if there is “clear evidence” of deliverability in the plan period.? In our experience, once you begin looking at these sites in detail, a much clearer and sometimes much less optimistic view of deliverability emerges.

3. Development corporations

The London Legacy Development Corporation (LLDC) is due to be dissolved at the end of November 2024. This specific case is most relevant to Hackney, Newham and Tower Hamlets, but it raises in-principle questions for cases where a development corporation may be dissolved in the plan period.

Watch out for one-sided counting of land supply. If the sites in the development corporation area to be counted as deliverable for the borough, a proportion of the corporation’s minimum requirement must be included in the calculation along with any deliverable homes. If this is not done, then a one-sided adjustment is made which will unbalance the 5YHLS equation.

Minimum housing targets are usually set through the plan making process, but the planning functions of the LLDC are to be dissolved using a statutory instrument. We’ll be watching for the publication of this statutory instrument, which we would expect to provide for the reapportionment of LLDC’s minimum requirement.?

It takes a good amount of forensic work to test an LPA’s housing land supply, but it can be decisive for getting planning permission where the tilted balance may apply. If you have a project where housing land supply could prove decisive, please get in touch.

Make sure you are also up to date on proposed changes to national policy and recent legislation (i.e., LURA). And whether the tilted balance applies or not, keep sight of the big picture. The development ecosystem is not delivering the number of homes we desperately need. Good development teams and good LPAs will be united on changing this.