Deliverability of Housing and the Strategic Housing Land Availability Assessment Housing Evidence Base Briefing Note 8:

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1 Deliverability of Housing and the Strategic Housing Land Availability Assessment Housing Evidence Base Briefing Note 8: National Policy Context The NPPF i (paragraph 159) states that local planning authorities should have a clear understanding of housing needs in their area. They should prepare a Strategic Housing Land Availability Assessment to establish realistic assumptions about the availability, suitability and the likely economic viability of land to meet the identified need for housing over the plan period. Draft National Planning Practice Guidance has been made available to guide the Assessment of Land Availability ii and this guidance once formalised will replace the previous 2007 Strategic Housing Land Availability Practice Guidance iii. Definitions Deliverability the NPPF (paragraph 47) states that for a site to be considered deliverable, sites should be available now, offers a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years BN9 and in particular that development of the site is viable. Sites with planning permission should be considered deliverable until permission expires, unless there is clear evidence that schemes will not be implemented within five years, for example they will not be viable, there is no longer a demand for the type of units or sites have long term phasing plans. Developable the NPPF goes on to define that to be considered developable, sites should be in a suitable location for housing development and there should be a reasonable prospect that the site is available and could be viably developed at the point envisaged. The Planning Advisory Service iv considers that the SHLAA is an essential piece of evidence which provides consistent and comparable up to date information on the availability, suitability and deliverability of sites. It allows authorities to understand what sites are theoretically available for allocation, what sites have planning permission and to provide detailed information on past development which can be used to inform windfall calculations. Overview It is difficult to predict how much housing will be delivered in Cornwall during the twenty year plan period as this is outside of the control of planning. What is important is that the Local Plan can be delivered. Past completion rates do give some indication of the likely delivery rates Cornwall can expect to achieve and this suggests that we should be able to deliver between 42,000 and 50,000 new homes based on past long term trends. The development industry does have concerns about deliverability and this is mainly due to the current economic crisis and a lack of both homebuyer and developer finance. In terms of the availability of land to be developed for housing the Strategic Housing Land Availability Assessment (SHLAA) has identified sufficient land to accommodate over 100,000 new dwellings and capacity is therefore not an issue for Cornwall. The latest Housing Trajectory BN9 confirms that Cornwall has at least a 5.6 year supply of Version 1: November

2 land against the higher target of 48,000 (previous consultation) and a 6.7 year supply of land against the current consultation target (42,250). Context Land values are determined by the demand for land for particular uses relative to the supply of land for these uses. Price premiums indicate a shortage of land in a locality for a particular use, i.e. a high price for land generally indicates a shortage of land for that particular use. Housing land in Cornwall v attracts higher values than that for employment purposes and significantly higher values than land in agricultural use. The combination of the restricted ability of purchasers to borrow and buy properties at the moment, combined with the reduced ability of developers to access financing to purchase land has led to a marked decrease in short term demand for housing land and a consequent fall in land values. This is an unprecedented set of economic circumstances prevailing in the current economic climate that do not flow from a reduction in real long term demand vi. Economists and property experts predict that after a period of re-adjustment, underlying demand will return to recent levels, albeit at restructured prices, but no-one is venturing to predict how long recovery will take, although most experts consider that within 4 to 5 years a recovery will be underway. Whilst the short term demand for housing in Cornwall may have fallen as a result of a lack of confidence in the market and financial constraints, medium and long term demand for housing is still considered by the market to be relatively strong. This is underpinned by the well publicised national housing shortage arising from a continuing high level of new household formation combined with record low levels of new house building BN6. Deliverability of sites depends on land owners accepting these new economic circumstances. In some circumstances these land owners could significantly delay development on large urban extensions since many agents fear that some owners have entrenched views of land values, i.e. high expectations. The Local Plan: Strategic Policies Proposed Submission Version vii tries to meet many objectives in terms of the distribution of housing, including the need to redress an imbalance between jobs and homes, the need for regeneration, and the requirement to meet affordable housing needs. However, the distribution of housing growth to meet these objectives and housing need sometimes results in a direction of growth to areas where deliverability prospects are lower than for more attractive areas. Past Experience - Previous Rates of House Building Previous house building rates are not an indication of future house building rates but are useful as an indication (almost a control figure ) of likely future delivery rates. Since 1991 viii, 46,000 houses have been built in Cornwall, giving an annual average of 2,100. Since 2001, 29,740 houses have been built in Cornwall giving an annual average of 2,500. House building rates in Cornwall have experienced both peaks and troughs in delivery since 1976, as shown in the graph below. Version 1: November

3 4000 Housing Completions in Cornwall since 1976 with Long Term Average This allows us to calculate a long term average (2,265 per year since 1976), which is as realistic an indication of a house building delivery rate as is possible as it incorporates both upturns and downturns in the market. If house building were to continue as it has over the past twenty years, then we could reasonably expect to deliver 42,000 homes (2,100 per annum) for the period If house building delivery were to continue as it has over the past ten years, then we could reasonably expect to deliver some 50,000 homes (2,500 per annum) for the period Despite concerns over the decline in the housing market nationally and locally, housing delivery in Cornwall has remained fairly buoyant since Housing Delivery has averaged almost 2,500 per year for the last six years ( ) and has averaged 2,200 completions per year over the last three years ( ). Future Capacity - the Strategic Housing Land Availability Assessment (SHLAA) A SHLAA was undertaken in 2010 ix to assess the capacity of sites around the main towns in Cornwall, and this resulted in a potential capacity of some 92,000 dwellings. This work has been further refined through the preparation of town frameworks x and sites have been proposed that can more than meet the growth figures proposed for the main towns. A further call for sites was carried out in 2012 and the SHLAA has now been updated and extended to include sites in the towns and other settlements across Cornwall. Early indications are that there is capacity to accommodate about 116,000 xi new dwellings in Cornwall and this does indicate that there is more than enough capacity to accommodate any of the levels of growth proposed. Note of Caution 1: A site s inclusion in a SHLAA does not imply that it will be made available for housing. The SHLAA is a technical study and not a policy document. It identifies possible housing sites and assesses overall housing potential but ultimately decisions on which sites should be brought forward Version 1: November

4 for development will be determined through either the Cornwall Local Plan process or through planning applications. A key part of the SHLAA and plan making is to understand how a local authority s supply will be delivered over time and to develop a trajectory to ensure that a deliverable supply meets the objectively assessed requirement BN1 which in terms will be used to inform the five year land supply BN9 calculations. Development Industry Perspective An essential part of the process of a robust SHLAA is the involvement of developers in the process. This ensures developers are the key source of information to help with assessing supply and the trajectory. Registered providers can also provide useful information in relation to the delivery of affordable housing. The Cornwall SHLAA was prepared with significant input from the partners who make up the SHLAA Panel, and in line with current government guidance this includes house builders, social landlords, property agents, and others such as the Environment Agency and Highways Agency. This ensures that all relevant data are brought together and that partners are engaged at the earliest stages in the plan making process. The SHMNA xii also included some discussion with developers and a number of conclusions were made about the housing market in Cornwall: Agents were keen to emphasise that the housing market varies greatly across Cornwall, and generally house prices and rents have been over recent years, and continue to be, fairly static. There were exceptions at a local level which have seen higher signs of market volatility. Rents in general are perceived as not significantly changing for the last 1 to 2 years. A large number of developers are active in Cornwall either building properties or looking for potential new development sites. Developers considered that there is a perceived polarised market in Cornwall, with affluent and desirable development areas including Truro, Penryn, Fowey, Mevagissy, St Agnes and areas along the coast. By contrast there was a perception that less desirable areas include inland locations, such as Bugle, St Stephen, Nanpean, Camborne and parts of Redruth. Developers stated that build out rates vary greatly dependent on the size of the developer and the location of sites. Some developers anticipate an dwellings per annum build out rate; whereas others predict up to 120 dwellings per annum could be constructed on the right site in a strong market location given the scale of demand. Whilst the messages around the strength of the market were consistent, developers did note that there were a number of obstacles impacting on the delivery of new housing. This included high land prices, low household incomes in some areas, high construction costs and a low rate of sales in weaker market areas. Problems for small scale developers include a lack of finance. Developers had mixed views about the future housing market in Cornwall. The majority agreed that the market will not improve until mortgage availability increases. At present, many people in Cornwall are struggling to save for a deposit and acquire a mortgage. Developers reported that they are increasingly looking to incentivising schemes, such as First Buy and Home Buy, and one developer stated that house sales are often dependent on the ability to offer the benefits of these government funded schemes. Peter Brett Associates xiii were also commissioned to undertake a delivery based approach looking at the capacity of the area to provide housing from a housing Version 1: November

5 market delivery perspective. Discussions took place with many national and local developers, agents operating in the housing market in Cornwall, as well as with Council Officers responsible for the development of the Town Frameworks. These discussions reached consensus conclusions about the capacity of the housing market areas to deliver growth as proposed at that time in the Core Strategy Preferred Approach xiv : The capacity of the housing market now and in the foreseeable future was considered to be limited. The Peter Brett Associates xv assessment of market capacity demonstrated that there was a gap between what was currently proposed in terms of housing requirements (48,850) and what appeared to be deliverable. This gap was considered to be in the region of 2,500 fewer dwellings in the main settlements which would reduce the housing requirement to about 46,300. In considering the issue of a potential under delivery, there was a need to acknowledge and accept that there were/are some artificial factors in play at this point in time. There is very clearly a demonstrable housing requirement, there are development sites able to address that need, but the delivery of housing was and is stalled by the inability of developers and potential buyers to borrow money in normal ways. If this credit shortage were eased, the industry could set about meeting what will by then be a pent up requirement very effectively. The Council might therefore consider that the gap between the requirement and delivery, might be presented as a timing issue rather than requiring a fundamental change. Risk Assessment Caution needs to be used in identifying sites for development through a SHLAA as a common misunderstanding is that all of the se sites could come forward for development. As indicated in Note of Caution 1 above - the SHLAA is a technical study in that it identifies possible housing sites and assesses overall housing potential but the final decision on which sites should be brought forward for development will be determined through either the Cornwall Local Plan process in terms of site allocations or through planning applications. Examination Findings The proposed housing supply for an area is not the same as the objectively assessed need for the area, but it is an important element of the evidence base to demonstrate that there is sufficient land available to meet the housing target and to comply with the five year land supply assessment. Inspectors have made this clear in advice on core strategies, particularly in relation to: Ryedale the SHLAA gives insufficient guidance about the release, delivery and scale of proposed housing development Bath & North East Somerset - in that the wide range of material of potential relevance has made it impossible for me to be clear as to the assumptions which the Council has made about these sites and the consistency of its approach. Does the capacity of sites in the SHLAA reflect a preliminary application of the PPS25 sequential test where the site occupies land in more than one flood zone? I also want to be clear as to the latest position regarding the deliverability of these sites and have set out specific questions. Use in Cornwall Local Plan An analysis of housing deliverability has been used throughout the development of the Cornwall Local Plan (previously known as the Core Strategy) and the following papers accompanied or were available at the time of each consultation: Version 1: November

6 Strategic Housing Land Availability Assessment 1 (November 2010) accompanied the Core Strategy Options Report and Our Preferred Approach for a Core Strategy - Housing Land Availability Assessments and Trajectories were available for the Core Strategy Options Report, Our Preferred Approach for a Core Strategy and Cornwall Local Plan: Strategic Policies Pre-Submission Version - Strategic Housing Land Availability Assessment 2 (preliminary results - early 2013) were available to inform the Cornwall Local Plan: Strategic Policies Pre-Submission Version - Accompanying Briefing Notes: BN1 Objectively Assessed Need BN6 Why do we need to build more houses and what are the consequences of building too few or too many homes? BN9 Five Year land Supply & Flexibility Allowance Further Information: 1. A Strategic Housing Land Availability Assessment (SHLAA) will establish realistic assumptions about the availability, suitability and the likely economic viability of land to meet the identified need for housing over the plan period 2. A Housing Land Availability (HLA) report monitors delivery against a Local plan housing target on an annual basis, and usually forms part of a local authority s Monitoring report. i DCLG (2012) National Planning Policy Framework - ii DCLG (2013) Assessment of Land Availability - iii DCLG (2007) Strategic Housing Land Availability Practice Guidance - iv Planning Advisory Service (2013) Ten Key Principles for Owning your Housing Number Finding your Objectively Assessed Needs - v ORS/Three Dragons (2012) Housing Strategic Viability Assessment - vi The National Housing & Planning Advisory Unit makes it very clear that the current recession will have little impact on the number of homes required over the next twenty years. Recessions do not have a big impact on household growth but they do cause a dip in house building. Homes lost in that dip will need to be made good later in the period. In Cornwall Council (2011) Housing Growth Targets - vii Cornwall Council (2013) Local Plan: Strategic Policies Proposed Submission Version viii Cornwall Council (various) Annual Monitoring Reports Version 1: November

7 ix Cornwall Council/Entec (2011) Cornwall Strategic Housing Land Availability Assessment - x Cornwall Council (2010) Place Based Plans - xi This figure includes un-assessed SHLAA 2012 Call for Sites submissions only. A density multiplier of 40 dwellings per hectare and net developable areas has been broadly applied. The net developable areas applied are as follows: a) Below 25 units: 100% of site area (net); b) units: 85% of site area (net); c) Over 50 units: 70% of site area (net). It is important to note that these are crude initial calculations which do not take factors into account such as site overlap or that some sites are likely to be removed from the process. This includes where there is a reliance on a small number of large sites. There is overlap with SHLAA1 sites. The combined SHLAA will also incorporate potential housing capacity from other sources. xii GVA/Edge Analytics (2013) Strategic Housing Market Needs Assessment Main Report: Plymouth City Council, South Hams District Council, West Devon Borough Council, Cornwall Council and Dartmoor National Park xiii Peter Brett Associates (2010) Housing Requirement for Cornwall - xiv Cornwall Council (2012) Our Preferred Approach for a Core Strategy xv Peter Brett Associates (2012) Housing Requirement for Cornwall - Version 1: November