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The Insider's Guide to the Housing Delivery Test

What impact will the Housing Delivery Test (HDT) have on your planning application or appeal?  How is it calculated, how can it help your planning application or planning appeal, and where can the underlying data be found?  All is revealed below.

It's worth noting the revised National Planning Policy Framework published in December 2023 retains the HDT and arguably strengthens the weight given to housing delivery by adding the word "sufficient" in front of housing in paragraph 1. Housing delivery remains very important and Michael Gove's Written Ministerial Statement confirms the national target of 300,000 new homes per annum, which can only be met if every local planning authority delivers its share.

Impact of the Housing Delivery Test on planning decisions

The ultimate consequence of failing the Housing Delivery Test (HDT) is to render relevant policies “out-of-date” as per paragraph 11d) of the National Planning Policy Framework.  In turn this triggers the “tilted balance” or “presumption in favour of sustainable development” set out in NPPF 11d) which requires, “granting permission unless...any adverse impacts of doing so would significantly and demonstrably outweigh the benefits….”.

There are some important caveats which make the presumption less clear-cut than you might hope, explored in my blog in March 2023 on whether it makes any difference to your planning appeal’s chances of success.  Another key concern is the relative importance planning inspectors give beautiful design verses housing delivery, as explored here.

Despite the caveats, any local planning authority which over the past three years has delivered less than 75% of its housing requirement is undoubtedly on the back foot. They may be more likely to welcome housing developments, avoiding an appeal in the first place.

See our housing delivery test results table for the past three years’ results for every local planning authority.  If you want to estimate the 2023 Housing Delivery Test results, later on this page we'll show how you to do this.

Summary Table 1 below shows a significant and growing number of local planning authorities (LPAs) are affected by the housing delivery test penalty of a 'presumption in favour'.

Table 1: Number of LPAs failing the Housing Delivery Test over time
HDT result Consequences    2019    2020    2021    2022
   <75%
 PRESUMPTION in favour of sustainable development
       8       55       51  61
  75-85%  BUFFER
 20% more land required for 5 yr land supply
      73       19       19 19
   <95%  ACTION PLAN
 To increase supply
      26       33       23 21 

Understanding the Housing Delivery Test and using it to support your planning case

Numbers matter because they tell a story.

There’s a saying, “Optimism is evidence based”.  Clear, objective facts used well in your planning statement or appeal statement of case can tell a persuasive story which can make all the difference to obtaining planning consent.

If you know where to look, various DLUHC official statistics provide valuable evidence you can use to support your planning case in a manner which will help a planning officer or planning inspector reach a positive decision. This is why understanding the housing delivery test and how you can use it to support a planning proposal can be so useful.

The housing delivery test is a simple calculation as follows:

P28_HDT_equation.png

We'll look in detail at the 'net homes delivered' numerator before moving on to the 'number of homes required' denominator, showing how each can be useful to your planning case.

Using 'Net Homes Delivered' to support your planning application or appeal

It's quite straightforward to obtain the 'net homes delivered' figure. Simply download these 2 tables from the DLUHC website here and add the totals for your local planning authority together:

You now have at your fingertips key evidence to show whether your local planning authority needs housing, or to refute any case from objectors that new housing development is “not needed”.

Using 'number of homes required' to support your planning application or appeal

Housing requirements are much more complex than housing delivery, partly because they relate to the future and involve demographic assumptions and partly because they are a political football. In summary:

Housing requirements are the LOWER of:
    • the adopted Local Plan housing requirement, providing this is less than 5 years old or does not need updating; OR
    • the minimum annual local housing need figure, calculated using the “standard method”.

Areas covered by joint local plans, spatial development strategies or development corporations should check the HDT measurement rule book for full details.

The standard method is set out in detail in the National Planning Practice Guidance on “housing and economic needs assessment”.  It is more than possible that the Government might alter how local housing need is calculated in the near future, but for now the calculation using the “standard method” is:
         - annual average household growth over a ten year period; 
         - adjusted by the affordability ratio.

We'll look at these two inputs in turn.

Housing needs based on the 10-year growth in households

Sensibly enough, the starting point is the projected growth in the number of households over the next 10 consecutive years, with the current year being used as the starting point from which to calculate growth over that period.

The tricky bit for the Office of National Statistics (ONS) involves the assumptions underlying the “projected” trend. The ONS does its best, but it doesn’t have a crystal ball and it’s impossible to know precisely how many people will die in future years, how many will divorce to create separate households, how many will merge households, etc. They therefore project past trends forward into the future. However you wouldn’t want to plan your nation’s housing based on unusual trends, for example a recession, a pandemic, a wedding bonanza or whatever, so the year choosen for the projected trend is very important.

Official housing needs are based on table 406 of the 2014-based household projections.  At nearly a decade old, the projections are ripe for change. When change comes, possibly linked to the 2021 census results, the figures could change very dramatically.

A political decision was made in December 2020 to modify the “standard method” and apply a 35% uplift to the largest 20 cities and towns in the country. However this will only be applied for Housing Delivery Test purposes from 2023 (ie. the HDT to be published in early 2024), as set out in paragraph 038 Reference ID: 2a-038-20201216 of the National Planning Practice Guidance.

Housing needs adjusted by the local affordability ratio

The second part of the calculation of housing needs is an adjustment to reflect market demand. It is reasonably assumed that higher house prices indicate a desire by households to live in particular areas.

Some areas have higher prices because of higher salaries, so to create a level playing field, house prices are divided by local wages to produce a ‘local affordability ratio’. This is the median house price for the local authority area divided by the median earnings. For example, if median house prices were £300,000 and median earnings were £30,000p.a, then average house prices are 10 times average local incomes and the affordability ratio would be 10.  The figures are published every March in Table 5c of the downloadable xlsx spreadsheet found on the Office of National Statistics page 'House price to workplace-based earnings ratio'.

The higher the affordability ratio, the greater the upward adjustment to housing needs.  For example, if average house prices are 8 times average salaries, housing requirements are increased by 25%. If average house prices are 12 times average salaries, the increase in housing requirements is 50%.  The formula used for this sliding scale of adjustment is:
P28_HDT_housing_needs_adjustment_factor_v2.png

Don't let the formula put you off - it is easier to use than it looks. Some useful examples of the calculation are found in the National Planning Practice Guidance here.

Using housing needs to support your planning case

It’s easy to lose a planning officer or planning inspector with too much detailed argument. Not all are capable of being excited by statistics. You see their eyes glaze over and realise your argument has just gone way over their head.  There is a simple answer.  Go visual.

Use graphs, use infographics, use headline figures, use simple tables. Use maps. Use comparisons. Tell the story. Use all your skills to convert dry housing needs figures into digestible chunks.

Often it is the direction of travel and a comparison with neighbouring areas that communicates most effectively to a decision maker.  If the situation on the ground has moved on since the Local Plan was adopted, provide the pictures or graphs that illustrate it.

To help you present the evidence in a manner that is more likely to persuade a planning officer or planning inspector, see our toolbox of ideas for making the case for housing development in planning applications and appeals.

In summary, our 3 key tips for using housing delivery to support your planning application or planning appeal are:

Tip 1. Tell the housing delivery story in your planning or appeal statement

A picture speaks a thousand words” is undoubtedly true when trying to convey housing delivery statistics to planning officers, members on planning committees and Planning Inspectors. Fortunately DLUHC have developed a handy interactive dashboard which provides nice graphs and maps ideal for copying and pasting into planning statements and appeal statements. It’s a brilliant tool to create a visual housing delivery message.

Tip 2. Use housing delivery figures to estimate the HDT results

On-the-ball professionals use the net homes delivered figures, which are published in November several months before the HDT results, to estimate the LPA’s risk of failing the housing delivery test. Download the figures for every LPA in table 122 on the DLUHC website here.

Tip 3. Use wider housing evidence to support your planning applications and appeals

'Net homes delivered' obscures the reality that the planning system does not treat all housing equally. Affordable housing is often given special weight in the planning balance, partly because there is such an acute shortage of it, and partly because it helps social and economic sustainability to an even greater degree than market housing. DLUHC have other tables providing detail on affordable housing delivery which can also be very helpful in making a planning case. The weblinks are available in our blog ‘Winning appeals with good evidence on affordable housing’.

 

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