But what do they actually mean for development opportunities in our region? And perhaps more interestingly, what might they mean from November 2020 onwards, when the HDT should apply with full impact once the transitional arrangements easing its introduction have fallen away?
What is the Housing Delivery Test?
Firstly, the basics. The HDT has been introduced to encourage planning authorities to enable the delivery of more housing. Authorities have long been incentivised to plan for future housing land supply. There has historically been less incentive to ensure enough houses actually get built, for instance by granting more deliverable planning permissions with fewer conditions and shorter lead-in times.
The HDT engages the presumption in favour of sustainable development where insufficient homes have been built over the previous three year period. It means that the presumption can be triggered even where there is more than a five year housing land supply. The following sanctions currently apply:
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From 2019 onwards, if delivery falls below 45% of the requirement over the previous three years the presumption automatically applies.
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If delivery falls below 85%, the five-year land supply target for each authority automatically has a 20% buffer added in addition to the standard housing requirement. This makes it harder to maintain a five year supply and can trigger the presumption where authorities fall short in this respect.
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If delivery falls below 95%, authorities must publish an action plan to explain how they will increase delivery in future years.
In reality, action plans have little immediate impact and it is the application of the presumption and the 20% buffer that is of most interest for development opportunities.
What do the 2019 HDT results mean?
The 2019 results have triggered the presumption in eight local authority areas across the country, regardless of their five-year land supply position. A further 83 authorities will automatically have a 20% buffer applied to their five-year supply target. These sanctions will apply until the next set of HDT results are published, due in November.
It is no great surprise that in our region the authorities hardest hit are largely covered by Green Belt. The opportunities arising are limited as a consequence, because housing need rarely trumps Green Belt protection in planning terms. In addition, none of the authorities on the London fringe that have fallen below the 45% delivery threshold (Basildon, Havering, North Hertfordshire and Three Rivers) can currently demonstrate a five year land supply, so the presumption in favour of sustainable development should already apply.
Most of the authorities that now have to apply a 20% buffer already did so following the 2018 HDT results. One of the most striking exceptions is Braintree, an authority facing a constant struggle with its five year supply, and where life just became that much harder because it will now need to provide for a 20% buffer, instead of 5%. Oxford, Welwyn Hatfield, King’s Lynn and West Norfolk and Thurrock are similarly affected.
Authorities that previously had to apply a 20% buffer but no longer need to include South Cambridgeshire, Tendring, Mid-Suffolk and various London Boroughs. Maintaining a five-year supply may become easier for these authorities, but it won’t make the difference in all cases.
In South Cambridgeshire, recent appeal decisions have found five-year supply to be borderline but have generally found in the Council’s favour. Their position just became a little more comfortable, but time will tell whether the improved delivery record and five-year supply can be maintained. This is the first time in over a decade that this Council has not had to apply a 20% buffer.
Elsewhere, its largely business as usual, with most authorities either facing no consequence or having to prepare an action plan.
What might the full impact of the Housing Delivery Test be in the 2020 results?
The HDT will have more teeth when the next set of results are published because the presumption will automatically apply when delivery has fallen below 75% of the housing requirement, as opposed to the 45% threshold applicable to the 2019 results. At first glance, the opportunities arising from the HDT would appear likely to become far wider from November 2020 onwards.
It’s not possible to predict with accuracy how the next results will look because the relevant three-year monitoring period will move forward by 12 months and different housing targets and delivery records will apply, but early indications suggest that the impact of the HDT may not be as great as expected.
To provide a guide, we have applied the 75% threshold for engaging the presumption to the 2019 results to see how many additional authorities would get caught if it applied now. The potential results for our region are shown below.
More authorities fall into the red, but they are still mostly in the Green Belt in Hertfordshire, South Essex and outer London. In most cases, there is already a five year supply deficit in these locations and the presumption already applies, but with little impact due to Green Belt protection. Only two authorities that are relatively unconstrained by Green Belt or other factors would have to newly apply the presumption through the HDT using these projections - Braintree and East Cambridgeshire.
Application of the 20% buffer remains unchanged across the board in this projection because the threshold will not change. In reality, there are likely to be some changes in position due to the varying delivery records and housing targets that will apply in the next set of results.
Adoption of emerging Local Plans over the next few months may also have an impact where they were submitted for examination in time to avoid applying Government’s standard housing need methodology. Once adopted, these plans may lower the housing targets that currently apply to the HDT results and improve the position of some authorities. This would be the case for the north Essex authorities, including Braintree.
Conclusion
The Housing Delivery Test results are always anticipated with excitement among planners and developers. They are a welcome addition to the planning framework and can open up (and close) opportunities at the local level, but their impact across our region is limited by Green Belt protection and a close correlation with current patterns of five-year housing land supply. This looks likely to continue even when the transitional arrangements easing the introduction of the HDT fall away.
If Government is serious about improving housing delivery, relaxing Green Belt protection would of course be a more productive policy initiative, particularly if it incentivised Green Belt authorities to review Local Plans and allocate new sites more regularly. Resistance to the release of Green Belt and a lack of up-to-date Local Plans allocating sites for development is the root cause of poor delivery in these areas.
If you would like to discuss the detail of the outcomes of the HDT results in your area, please get in touch.
