The implications of Covid-19 and lockdown have pre-occupied most of us over the last few months; but whilst developers have been focused on CIL Payments, s.106, supply chains and keeping their consents alive, some local authorities are worrying about the longer term.
Recently a number of Sussex Councils have written to MHCLG raising concerns about the impact that the building slowdown caused by coronavirus will have on their overall housing numbers - and in particular their performance against the housing delivery test and their ability to maintain a five year housing land supply.
These are two of the most significant performance metrics for local councils, in planning terms, and the penalties for failing to meet them can have long reaching consequences. Where a council does not have a five year housing land supply, or is considered to have failed the housing delivery test, then the "tilted balance" set out in paragraph 11(d) of the NPPF can engage. When engaged, this shifts the balance in decision-making towards the grant of planning permission, unless doing so would conflict with specific protective policies in the NPPF, or the adverse impacts of granting the consent would 'significantly and demonstrably' outweigh the benefits'.
The housing delivery test was introduced with a stepped pass rate, which has been gradually increasing over the last few years. From this November, councils will have to able to demonstrate that they have been delivering 75% of their housing need over the last three years in order to pass.
Covid 19 has, in many ways, taken the ability to pass these tests away from councils. The slowdown in construction caused by lockdown, and the need to build out in accordance with social distancing guidelines, means that the rate of completions has slowed significantly over the last few months - and will take a significant period of time to recover. Some of the planning consents that had been included in a council's five year housing land supply calculations are now at risk of expiring and, whilst MHCLG has the issue on their radar, at the moment there is no ability to extend their lifespans. Fewer applications are coming forward at present, whilst developers grapple with the implications of Covid-19 on their own businesses, which means that the 'pipeline' of deliverable sites is starting to diminish.
Against that background, it is not surprising that councils are expressing concern. That said, whilst some of the measures requested by the Councils in the letter, match those being lobbied for by developers (such as the ability to expand the life span of planning permissions) others are perhaps more controversial.
The Councils have called for "a suspension and/or roll forward of five-year land supply arrangements, to acknowledge the lost supply during lockdown and to avoid a surge of speculative applications". As well as "consequent changes to the housing delivery test". I asked Chris Young QC for his views on whether these requests were likely to be taken forward by MHCLG*. Chris's views are that:
"The Government will think long and hard about changing the five year or HDT requirements. To do so risks upsetting the Government's clearest signals about its commitment to housing delivery.
Added to which, there is strong evidence of a very strong immediate bounce back. Showrooms across the country are buzzing. House sales are going through the roof. Prices are remaining surprisingly stable. And major housebuilders like Taylor Wimpey are buying up huge amounts of land. This is all a reflection of a very strong market and a substantial pent up demand. So by the end of the year, and certainly within the 5 year period, there is likely to have been no effect."
He also pointed out "nearly all of" the signatories to the letter "have housing targets which are far below their local need requirements. Letting these particular authorities off the hook would send a very negative message about the Government's commitment to housing delivery"
This view is echoed by Mark Bewsey, a Director of DHA Planning** who states:
"Clearly Covid will affect housing delivery numbers for this year, and so it does not seem unreasonable that local authorities are asking for this year’s figures not to be taken into account when considering the Housing Delivery Test. However, Councils should not reasonably use the current crisis as an excuse for historic past delivery. The Housing Delivery Test results released in February, before the crisis hit, showed that not a single one of the East Sussex councils was delivering the housing numbers required. The planning system needs to work to enable housing to come forward as quickly as housebuilders are able to provide it, taking account of market conditions. This means planning permissions should be automatically extended, without strings attached, to ensure that there are no bureaucratic barriers to allow already permitted development to come forward as soon as possible.”
Not all councils are responding to the current situation by asking for a relaxation in the rules. Others, such as Chichester, are tackling the issue head on. On June 3rd the Council approved an interim policy statement for housing, aiming to boost its housing land supply by encouraging new applications in sustainable locations close to existing settlements.
The impacts of Covid 19 on land supply and housing delivery are likely to be challenging, at least in the short term. That said, whilst we wait for MHCLG to take action on extending the life span of planning permissions, it may be more realistic for local authorities to follow Chichester's example, and plan to address the shortfalls, than to hold out hope that MHCLG will issue them a reprieve...
* He is better connected that I am...
** Mark has recently joined DHA's Crawley Office and I definitely owe him a coffee for this once lockdown is over.
The letter says: "We are concerned about the significant implications of the reduction in housing delivery on the sustainable future of our areas due to the resultant impact on housing delivery test results and the ability to maintain a five year housing land supply. "As you will be aware, the implications of both failing the housing delivery test and not being able to demonstrate a five-year supply of housing land are that the local plan is deemed 'out of date', resulting in the application of a 'tilted balance' towards granting permission, where there are no landscape or ecological designations affected.