FIVE YEAR HOUSING LAND SUPPLY

** This article was published in April 2022 and is now out of date **

Changes to the NPPF in December 2023 and provisions set out in the Levelling Up and Regeneration Act 2023 mean that references in the article below are now out of date. 

The article remains on our site as an archive item only. 

An updated article with new references will be provided as soon as possible.   

WHAT ARE THEY? WHY ARE THEY IMPORTANT IN PLANNING? 

Our FAQ Series answers some of the most commonly searched for queries across TownPlanning.info. 

Today we look at the topic of Five-Year Housing Land Supply (5YHLS), the relationship with development plans, planning applications, the NPPF ‘Presumption in Favour of Sustainable Development’, the Housing Delivery Test (HDT) and why these are all hugely important aspects of the planning system in England. 

Several followers have been in touch to ask for an article on 5-year housing land supply and the HDT – thank you for contacting us with your queries, feedback, and ideas.   If you have any suggestions for future articles, please get in touch.

WHAT IS A ‘FIVE-YEAR HOUSING LAND SUPPLY’?

In England, local planning authorities are required by government (see the NPPF para 74) to identify and update annually a supply of specific ‘deliverable’ sites in their area that will provide a minimum of five years’ worth of housing – when assessed against their ‘housing requirements’ – A ‘5-year housing land supply’ (5YHLS). 

‘Housing requirements’ vary by authority area and are set out in adopted development plans, such as local plans. 

Where plans are over five years old (or are absent), national planning practice guidance (NPPG) dictates that the government’s ‘standard method’ algorithm for assessing local housing need should be used instead of local plan numbers. In exceptional circumstances (e.g. in areas with national parks, local calculations can be put forward).       

The NPPF requires that an additional buffer of 5% be added to supply to ensure choice and competition in the housing market or a 20% buffer where there has been significant under delivery of housing over the previous three years in an area (see the government’s Housing Delivery Test (HDT) below), to improve the prospect of achieving the planned supply. 

WHY IS 5YHLS IMPORTANT IN PLANNING?

Two main reasons: 

1. New development plans will not be found sound unless they provide an adequate supply of housing for the first five years of the plan period following adoption. 
2. For planning applications:  in situations where a local authority cannot demonstrate a five-year housing land supply, there are significant consequences that affect the way that decisions are made.  A ‘tilted balance’ is engaged through the ‘Presumption in Favour of Sustainable Development’ that can lead to ‘planning by appeal’.

THE PLAN-LED PLANNING SYSTEM IN ENGLAND VS ‘PLANNING BY APPEAL’

The town and country planning system in England is ‘plan-led’. Except, it isn’t always in practice …
Local planning authorities are tasked with preparing Development Plans for their area. These set policies on matters that include how much development there should be, where that development should go, how it might be achieved, and the infrastructure needed to support it.
Authorities determine planning applications for development in accordance with the development plan unless material considerations indicate otherwise.

Material considerations include relevant national planning policies and guidance (including the NPPF and NPPG).
Ideally, authorities will have a recently adopted, up-to-date plan in place at all times – i.e. one that has been adopted or reviewed within the past five years and with policies consistent with the NPPF and NPPG.

However, many do not.

Research by the CPRE published in May 2020 (see CPRE.org) found that whilst 91% of authorities in England had adopted plans in place, many were out-of-date. Only 40% of local plans were less than five years old or had been updated or reviewed in the past five years and only 30% could be ‘up-to-date’.

This is important – because if a plan is not up-to-date (or is absent), developers will begin to come forward with schemes that are not in accordance with the development plan. In other words – where material considerations such as national policy in their view should be given greater weight in the ‘planning balance’ than local policy as a result of the ‘Presumption in Favour of Sustainable Development’ (see below).

This is a major problem for local authorities, who risk losing control over development in their area as a result.

Despite knowing better, authorities are often tempted to give undue weight to ‘out-of-date’ development plan policies in their decision making on planning applications they do not want to approve. Unfortunately for them, an applicant has a right of appeal to the Planning Inspectorate and there are many, many examples of local authority decisions being overturned at appeal which reference the Presumption in Favour of Sustainable Development as the main consideration.

The headache for local authorities in this position is that ‘planning-by-appeal’ becomes the norm until an up-to-date development plan can be put in place.

WHAT IS THE PRESUMPTION IN FAVOUR OF SUSTAINABLE DEVELOPMENT?

At the heart of the National Planning Policy Framework is a presumption in favour of sustainable development (Paragraph 10). 

Paragraph 11 of the NPPF outlines that,

‘11.  Plans and decisions should apply a presumption in favour of sustainable development.

For plan-making this means that:

a) plans should positively seek opportunities to meet the development needs of their area, and be sufficiently flexible to adapt to rapid change;

b) 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:

i.  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

ii. 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.

For decision-taking this means:

c) approving development proposals that accord with an up-to-date development plan without delay; or

d) where there are no relevant development plan policies, or the policies which are most important for determining the application are out-of-date, granting permission unless:

i. the application of policies in this Framework that protect areas or assets of particular importance provides a clear reason for refusing the development proposed; or

ii. 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.’

So, from the extract above we can see the importance that the government places on decisions being made in accordance with an up-to-date development plan. 

“How does 5-year housing land supply fit into all this?” 

Well, if an authority cannot demonstrate a 5YHLS, under para 11 d, their policies are considered ‘out of date’ (see footnote 8 of the NPPF), and a ‘tilted balance’ applies where planning permission should be granted unless for the reasons set out in d) i) or ii) above.

WHAT IS THE ‘STANDARD METHOD’ IN HOUSING AND PLANNING?

The standard method is a formula set by government to identify the minimum number of homes expected to be planned for in an area.  It is rather convoluted, but in summary utilises projected household growth, any historic under-supply of housing and affordability in an area to arrive at a number to be used by authorities as part of the process of planning their housing need going forward. 

National Planning Practice Guidance (NPPG) provides a rule book on how to undertake an assessment of housing need using the standard methodology. 

WHAT IS THE HOUSING DELIVERY TEST?

The Housing Delivery Test (HDT) refers to a monitoring calculation that compares the number of homes being delivered in an authority area with the number they are meant to be providing over a three-year period.  i.e.

Housing Delivery Test (%) =

Total net homes delivered over 3-year period  / Total number of homes required over 3-year period

HDT does not apply to National Park Authorities, the Broads or to development corporations.

The results have the following implications for local authorities:

• If housing delivery was less than 95% of the requirement, an action plan will need to be prepared to assess the cause of under-delivery and identify actions to increase delivery in future years.
• If delivery was less than 85% of the requirement, in addition to preparing an action plan, a 20% buffer is added to the calculation of the Authority’s five-year housing land supply.
• If housing delivery was less than 75% of the housing requirement, then the presumption applies, in addition to preparing an action plan and applying a 20% to the five-year housing land supply. I.e. big trouble! 

These sanctions apply until the release of the next HDT results the following year.

In 2021, 51 local planning authorities in England failed to deliver 75 per cent of their three-year housing target and consequently are now subject to ‘the presumption in favour of sustainable development’. 

19 authorities delivered less than 85 per cent of their housing requirement and are therefore subject to a 20 per cent buffer added to their 5YHLS target compared to the standard NPPF five per cent.  In some cases, this has resulted in authorities no longer being able to demonstrate a 5YHLS, and therefore the presumption in favour of sustainable development is engaged.  A further 23 authorities failed the test, recording between 85 and 95 per cent and have had to publish a housing delivery Action Plan setting out a strategy for increasing their provision in the coming years. 

CONCLUSION – HOUSING SUPPLY AND DELIVERY ARE SUPER IMPORTANT!

With the HDT being a rolling annual test of performance, local authorities must ensure consistent delivery of homes in their areas or face consequences.  They must also ensure a constant supply is in their planned pipeline due to the NPPF requirement for a 5YHLS. 

Failing either of these tests risks authorities losing control of where houses are built in their areas due to the imposition of ‘planning by appeal’ that inevitably comes with the ‘presumption in favour of sustainable development’ being triggered.