Monthly Archives: August 2018

 

Brokenshire’s Warning to the London Mayor

 

Following the publication of the NPPF on the 24th July 2018, James Brokenshire wrote to the Mayor of London giving him a serious talking to on meeting housing need.

Consultation on the Replacement London Plan was undertaken between December 2017 and March 2018. The Replacement Plan proposed to go further than previous iterations of the London Plan, going beyond strategic policies and proposing an increased housing figure of 65,000 dwellings per annum. The increased numbers were proposed to be met through increased densities and more reliance on Brownfield Sites coming forward.

On the 27th July 2018, James Brokenshire wrote to the Mayor of London, stating that the Mayor is responsible for delivering the strategy to significantly increase housing delivery in London and will be held to account for delivering London’s housing targets, suggesting that the proposed figure of 65,000 is not enough. The Governments standard methodology for OAN results in a capped figure of 72,407dpa and an uncapped figure of 95,267dpa.

The HBF also argued that the figure of 65,000 is not enough taking into consideration the standard methodology as proposed by CLG in 2017. The GLA’s approach to calculating OAN differs from the standard methodology as they created their own demographic and households projections which resulted in figures that were lower than the CLG’s projections. The CLG’s approach would also require more adjustment for affordable housing.

Brokenshire writes:

“London faces the most severe housing pressures in the country with median house prices now over 12 times median earnings – comparing to an England wide ratio of below 8 – and far more than what an individual can typically expect to borrow for a mortgage”.

Nobody is denying that London is unaffordable, however, it is of note that the Conservative housing minister is placing blame on the current Labour Mayor. The issue of housing and affordability and it’s resolution in London needs to go beyond politics.

It may well be that the approach that the GLA have taken is suitable for London, however as the HBF have noted, it has more significant wide reaching implications for surrounding South-East authorities, and so the standard methodology should be adopted by the Mayor.

The New London Plan will continue to Examination which is programmed for later this year. But in accordance with the new NPPF, plans that don’t meet the full housing requirements will be subject to early review. This means that the London Plan will be adopted and then the GLA will need to go back to the drawing board with a new evidence base, an updated SHLAA and new models for capacity created (we can’t mention the Green Belt though!).

A newer London Plan can then be expected….

Start Promoting your Sites Now!

There are also a number of other concerns raised in the letter, including inconsistencies with National policies, the extent of details in policies going beyond the requirements of a Strategic Plan, the Plan does not provide enough information on delivery and collaboration and the Secretary of State requires a consistent approach to setting building standards through the framework of Building Regulations.

Examination in Public

On 13 August 2018 the Mayor published a version of the draft Plan that includes minor suggested changes as the GLA prepare for the Exmination in Public. More details can be found here: https://www.london.gov.uk/what-we-do/planning/london-plan/new-london-plan/examination-public-draft-new-london-plan/eip-library

What we think….

The housing industry will surely welcome Brokenshire’s letter to increase housing supply, whereas residents of a certain generation may not welcome it so much with the standard response likely to be destruction of green fields, increased number of cars and there’s already enough houses being built…

However, if they’ve got a grown-up child living at home trying to save their pennies or know a young professional spending most their wages on renting a room, maybe they’ll start the realise the harsh reality that we do need to provide for and build more homes….

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Here’s what you need to know about viability in the revised NPPG

 

Viability is not dealt within the NPPF, it is dealt with separately in the NPPG.
The draft NPPF stated that “where proposals for development accord with all the relevant policies in an up-to-date development plan, no viability assessment should be required to accompany the application”. The revised 2018 Framework removes this measure and states at paragraph 57: “Where up-to-date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. It is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage”

Viability should be Assessed at Plan Making Stage.
Previously discussions and considerations of viability were undertaken at the decision-making stage which may have led to delays and local authorities not securing the level of affordable housing and infrastructure they required.

The responsibility has now shifted towards local authorities to undertake viability earlier in the process to ensure that they set appropriate levels of infrastructure requirements. This will require greater co-operation between landowners, developers and local authorities to undertake meaningful discussions and agree what is considered viable. At decision making stage, where matters have already been agreed there may be less delays in agreeing matters of viability which wont slow down the determination of applications.

Costs and Requirements for Affordable Housing and Infrastructure Should be Set At A Level That Does Not Require Further Assessment At Decision Making Stage.
There may need to be more negotiation between landowners, developers and local authorities earlier in the plan making process to ensure that requirements for affordable housing and infrastructure are set at a level that does not undermine overall delivery of the site.

The Council may set out within their plans when a viability assessment may be required.
The PPG sets out that viability should be addressed at plan making stage, but states that local authorities can set out when viability assessments may be required to support planning applications.

The Price Paid for Land is not a Justification for Failing to Accord With the Relevant Policies in a Development Plan.
This played out in Parkhurst Road Limited v Secretary of State for Housing Communities and Local Government & London Borough of Islington. Case No: CO/3528/2017. We discuss this below:

Parkhurst Road Limited v Secretary of State for Housing Communities and Local Government & London Borough of Islington
The key consideration within the High Court was the price paid by the developers and the approach taken to assessing viability to justify the minimal amount of affordable housing. The appellants and the Council disagreed on the benchmark land value as the appellants used the purchase price as an acquisition cost leading to profit levels being below normal target values.

Islington disagreed with this using the same methodology excluding the site acquisition cost. The Council carried out a series of residual valuations inputting alternative affordable housing proportions of 50%, 40% and 32% which produced residual land valuations for the site of £4.98m, £7.32m and £9.35m respectively. They contended that the price which Parkhurst Road Ltd had paid for the site was excessive since it did not properly reflect the policy requirement to maximise the affordable housing component.

The viability assessment of the site has never been made public, but it is of direct relevance as its part of the weight applied to the development proposals.

When reading Justice Holgate’s decision, there are criticisms of the wider approach taken to viability:
“where an applicant seeking planning permission for residential development in Islington proposes that the “maximum reasonable amount of affordable housing” is lower than the borough-wide 50% target on viability grounds, it is his responsibility to demonstrate that that is so

Justice Holgate also recognised the inherent tension between decision makers and developers stating that:
“According to the basic principles set out in the NPPF and the NPPG, it is understandable why a decision-maker may, as a matter of judgment, attach little or no weight to a developer’s analysis which claims to show a “market norm” for BLV by doing little more than averaging land values obtained from a large number of transactions within a district…

…On the other hand, it is understandable why developers and landowners may argue against local policy statements that BLV should simply conform to an “EUV plus a percentage” basis of valuation, especially where the document has not been subjected to independent statutory examination prior to adoption. Some adherents appear to be promoting a formulaic application of “EUV plus.”

Justice Holgate suggests that RICS could consider revisiting the 2012 Guidance Note, perhaps in conjunction with MHCLG and the RTPI, to address any misunderstandings about market valuation concepts and techniques to address the “circularity” issue and any other problems encountered in practice over the last 6 years, to help avoid protracted disputes.

The Guidance Removes Flexibility in Considering Policy Requirements
The previous Guidance stated that ‘where the viability of a development is in question, local planning authorities should look to be flexible in applying policy requirements wherever possible.

This hard-line approach allows decision makers to decide an application on whether it achieves the full policy requirements or not.

A Standard Approach to Viability where Previously it was Accepted there was no Standard Answer to Viability
Again the flexible approach to viability has been removed in favour of a standard approach to be taken across all sites. The intention is probably to speed up delivery as all matters will be assessed, although the same approach cannot be used for different site characteristics such as brownfield and greenfield sites. If the standardised approach doesn’t work for a site, the Council may have to look at alternatives until one fits the approach.

Land Value Calculated on Existing Use Value plus a Premium
The Guidance sets out the approach to be taken to Benchmark Land Value, again to give decision makers more support in assessing development viability.

Premium is described in broad terms as the minimum price a rational landowner would be willing to sell their land, although there is likely to be further debate over what a premium should be and this debate is likely to delay the overall Local Plan process. .

A Return of 15-20% of Gross Development Value
The Draft PPG referred to 20 per cent return which has been the accepted level of return.

The PPG states that a lower figure:
may be more appropriate in consideration of delivery of affordable housing in circumstances where this guarantees an end sale at a known value and reduces the risk

Viability Assessments to be Publicly Available.
A Viability Assessment will only be kept confidential in exceptional circumstances, and it will be down to the applicant to justify the case for confidentiality. Within the Parkhurst case, the decision refers to the Viability Assessment never being provided.

Conclusions
The revised approach to viability whilst potentially aiming to speed up the decision making process, may have the unintended consequences of delaying the plan making process as Local Authorities, developers and landowners grapple with the revised approach to infrastructure costs and negotiate the best scenarios for all parties.

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12 things you need to know about the Revised NPPF

 

As you may be aware, the government published the revised National Planning Policy Framework on 24th July 2018. This means that the NPPF 2018 is a material consideration in determining planning applications. If you have not had a chance to read the document, you can download the NPPF 2018 here. We have analysed the changes made since the draft was consulted upon in Spring and here are 12 things you need to know:

  • Implementation
  • Viability
  • Design standards
  • Green Belt
  • Housing delivery test
  • Standardised method of calculating housing need
  • Inclusion of social rent in definition of affordable housing
  • Small sites
  • Neighbourhood development plans
  • Voluntary PPAs
  • Storage and distribution operations
  • Ancient Woodland and veteran trees

Implementation
NPPF 2018 is now a material consideration which means that the policies come into effect straight away. However, the NPPF 2018 states that, Local Plans submitted before 24 January 2018 will be Examined against the 2012 NPPF. Any Plans submitted after this date will be examined under the new 2018 policies. This could mean that part of a Council’s newly prepared Plan could be immediately out of date which may contribute to penalties/interventions.

Viability
There is a significant shift in the role of viability assessments. The 2018 Framework now requires viability to be dealt with at the plan making stage, thus shifting responsibility on LPAs as opposed to developers. Essentially, LPAs will now be required to set strategic site allocations, infrastructure requirements and a minimum level of affordable housing which they consider viable. The draft NPPF stated  that “where proposals for development accord with all the relevant policies in an up-to-date development plan, no viability assessment should be required to accompany the application”. The revised 2018 Framework removes this measure and states at paragraph 57: “Where up-to-date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. It is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage”. This provides decision makers more power in deciding whether a viability assessment is required.

Design Standards
The 2018 Framework places emphasis on the importance of design standards and contains requirements that planning policies set out clear design and vision expectations in SPDs and design codes. It states that “being clear about design expectations, and how these will be tested, is essential for achieving this. So too is effective engagement between applicants, communities, local planning authorities and other interests throughout the process…” Councils should try to “ensure that the quality of approved development is not materially diminished between permission and completion, as a result of changes being made to the permitted scheme”. The policies should however be flexible and allow variety, however, as with design there may be an element of subjectivity.

Green Belt
The draft Framework published in March 2018 stated that “once established, green belt boundaries should only be altered in exceptional circumstances, through the preparation or updating of plans.” The 2018 Framework however requires greenbelt reviews to be ‘fully evidenced and justified’. Paragraph 136 of the 2018 Framework states that “Once established, green belt boundaries should only be altered where exceptional circumstances are fully evidenced and justified, through the preparation or updating of plans“. LPA are required to fully examine all reasonable options to meet its identified need for development. However, this amendment appears to tighten the already restrictive Green Belt release policy.

Housing Delivery Test
No significant amendments have been made to the government’s new Housing Delivery Test. Where delivery is below 75% of the housing requirement from 2020, the Government intends to apply the presumption in favour of sustainable development

Standardised Method of Calculating Housing Need
The 2018 Framework implements a standard methodology for assessing housing need. This method is intended to simplify Objectively Assessed Need (OAN) calculations to provide a centrally-based figure. This is done by taking the Government’s household growth projections and applying an affordability ratio, and comparing local house prices with workplace earnings to identify a need figure. The 2018 Framework states that “strategic policies should, as a minimum, provide for objectively assessed needs for housing and other uses, as well as any needs that cannot be met within neighbouring areas , unless the application of policies in this Framework that protect areas or assets of particular importance provides a strong reason for restricting the overall scale, type or distribution of development in the plan area… ; or  any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole”. This strengthens the requirement for LPAs to cooperate with each other in meeting unmet housing requirements.

Social Rent in Definition of Affordable Housing
The term which had been omitted from March’s draft version prompting concerns from some sector bodies has now been reinstated.

Small Sites
The policy encouraging the use of small sites has now been altered to include sites of up to 1ha and medium sized sites. Development plans are now required to identify land to accommodate at least 10% of housing requirement on small sites.

Neighbourhood Development Plans
Paragraph 14 of the 2018 Framework states that presumption in favour of sustainable would apply in the absence of an up to date plan – however by allowing housing schemes that conflict with NDP it is likely to “significantly and demonstrably outweigh the benefits“. It is suggested that where a plan has been adopted two years or less before the decision, it contains policies and allocations to meet its identified housing requirement. As such, the LPA would have at least a three-year supply of deliverable housing sites against its five-year requirement.

Voluntary PPAs
Paragraph 46 of the 2018 Framework states that Planning Performance Agreements (PPAs) are likely to be needed for applications which are large or complex to determine. The suggestion of potential of voluntary PPAs were excluded from the March draft NPPF.

Storage and distribution operations
Paragraph 82 of the 2018 Framework refers to the provision for storage and distribution operations “at a variety of scales and in suitably accessible locations“. This provision requires the specific locational requirements of storage operations to be recognised in planning policies and decisions.  This was omitted from the March 2018 draft.

Ancient Woodland and veteran trees
Paragraph 175(c) offers protection to woodland and ancient veteran trees. It states that development which result in the loss or deterioration of irreplaceable habitats such as ancient woodland and veteran trees should be refused unless there are exceptional reasons and mitigation in place. Veteran trees in the ancient woodland were excluded from the definition of ‘irreplaceable habitat’ in the draft Framework published in March 2018.

What do we think about the NPPF?
As highlighted in James Brockenshire’s Written Ministerial Statement, 85 of the proposals set out in the housing white paper and the Budget, are implemented in the new National Planning Policy Framework. The new rules require greater responsibility, transparency and accountability from both LPAs and developers. The amendments to Viability Assessments are ambitious and only time will how successful this approach will be. We are also disappointed to see the amendment to the already restrictive Green Belt Release Policy appears being tightened. The Housing Crisis is multifaceted in nature, exacerbated by other factors such as the shortage of construction workers, reduced LPA powers, a lack of transparency, increased demand brought on by decades of deregulation, and lax policies – the revisions to the NPPF alone cannot solve the Housing Crisis and therefore, other central government reforms will be necessary.

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Local Plan Updates and Progression August 2018

 

Local Plan Updates – Tracking and Progression

We have been tracking and following the progress of Local Plans in the different regions of England.

A Local Plan sets out planning policies and identifies how land is used – determining what will be built where. We’ve developed this Local Plan Schedule which we hope will keep you up to date on what Local Authorities are doing on their Plans and if you have any questions contact us today.

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