Housing land audits: research project

2 Policy and Research Review

Introduction

2.1 This section reviews policy, guidance and research for Housing Land Audits (HLAs). It considers the Scottish Planning Policy (SPP) requirement to provide an effective supply of housing land. This requirement is monitored by HLAs. The review provides a context for the analysis of HLAs in Section 3 and for the survey and consultation work in Section 4. It also provides a baseline against which to assess the implications of any potential changes to the production of HLAs.

Policy and Guidance

2.2 SPP states that housing land requirements should be met by an effective, rolling five-year land supply. It states (paragraph 110) that the planning system should:

“identify a generous supply of land for each housing market area within the plan area to support the achievement of the housing land requirement across all tenures, maintaining at least a 5-year supply of effective housing land at all times;”

2.3 SPP notes (paragraph 111) that ‘functional’ housing market areas should be identified. It further notes that they may significantly overlap and will rarely coincide with local authority boundaries.

2.4 Paragraph 113 of SPP requires that development plans should be informed by the preparation of a Housing Needs and Demand Assessment (HNDA) in line with Scottish Government HNDA Guidance. Housing needs and demand figures should be generated for both functional housing market and local authority areas, and cover all tenures.

2.5 The Housing (Scotland) Act 2001 places a responsibility on local authorities to prepare a Local Housing Strategy (LHS), supported by the HNDA. The Town and Country Planning (Scotland) Act 1997 (as amended) requires local and strategic planning authorities to plan for land use in their areas, including the allocation of land for housing. The HNDA informs this process by identifying the number of housing units required^[2].

2.6 Building upon those HNDAs, paragraph 115 of SPP sets out that development plans should use evidence from them to establish a Housing Supply Target (HST). The HST is the total number of homes that the authority has agreed to be delivered and is prepared jointly and agreed by relevant strategic and local authority interest. This then informs the Housing Land Requirement (HLR), which should be the planning authority’s policy view of the number of homes to be delivered, taking into account a wide range of factors and adding a generosity allowance of 10-20%. The HLR can be met from established land supply as sites are or become effective, from new allocations and from potential windfall sites. Appendix 1 reproduces Diagram 1 from SPP, which sets out how the HST flows into the development planning system, leading to the Housing Land Requirements (HLRs) within plans. Thus, the development plan identifies the amount of housing land required to build housing units initially identified in the HNDA.

2.7 In addition to identifying market and affordable housing, SPP introduces (at paragraphs 132-134) the requirement for HNDAs to consider specialist/ specific housing needs, such as accessible and adapted housing, wheelchair housing and supported accommodation. SPP also further advises that HNDAs should evidence need for Gypsy/Travellers and Travelling Showpeople.

2.8 SPP advises (at paragraphs 123–125) that planning authorities should actively manage their housing land supply and work with housing and infrastructure providers to maintain a 5-year effective land supply.

2.9 Effective housing land supply is defined in Affordable Housing & Housing Land Audits Planning Advice Note 2/2010 (PAN 2/2010) as being free from the undernoted constraints to the completion and occupation of residential units:

• Ownership: the site is available for development.
• Physical nature: the site is free from constraints, or where there are constraints those can be overcome and any remedial works funded.
• Contamination: free from, or has commitments to remediate to a standard for marketable housing.
• Deficit funding: has been committed if required.
• Marketability: the site or relevant parts thereof can be developed during the identified period.
• Infrastructure: free from constraints, or can be provided realistically by a developer or another party.
• Land use: housing is the sole preferred planning use, or a realistic option.

2.10 PAN 2/2010 (Section 2) also introduces guidance for HLAs. The PAN sets out good practice for annual audits of housing completions and monitoring of progression of sites through the planning system. The HLA process may be adapted to suit local circumstances, such as in rural and remote areas, where the HLR and market activity may be of a more limited scale. The two key functions of HLAs are to:

• Demonstrate the availability of sufficient effective land to meet the requirement for a continuous five year supply; and,
• Provide a snapshot of available land at any point in time.

2.11 The PAN references a 2008 Scottish Government research report into the effectiveness of HLAs, which is reviewed later in this section.

2.12 The PAN notes that HLAs are informative not only for planners, but also for the development industry, infrastructure and other service providers.

2.13 Advice on the content of HLAs and methodology is provided in the PAN, which asks local authorities to consider relevant types of land and variables to monitor. Guidance on the programming of sites recognises that the exercise is “less than scientific”, and explains the risks of over or under-estimating completions.

2.14 The Scottish Government issued Draft Planning Delivery Advice - Housing and Infrastructure in February 2016. This was to provide assistance in the preparation of development plans and, once finalised to replace PAN 2/2010. The draft advice was withdrawn in December 2017.

2.15 Although withdrawn, some parts of the 2016 draft advice can provide useful information for this research project. The draft advice nested HLAs within a housing-and-infrastructure delivery framework. Appendix 2 of this report reproduces the Draft Planning Delivery Advice on Housing and Infrastructure flowchart from the advice - HLAs were shown as an output in the bottom right hand corner of the diagram. Of particular note is the bidirectional arrow to Action Programmes. This signalled a feedback loop from HLAs to site and infrastructure actions (ie. monitor and act, rather than simply observe and report).

2.16 The draft advice restated the requirement for a HNDA to inform the planning authority’s view of the housing supply target (HST) for the plan period. It explained that the housing land requirement (HLR) is the HST with an additional margin for generosity, as noted previously. The draft advice provided an example of how a 5-year effective land supply should be calculated. It noted that the calculation could lead to a shortfall or surplus against the housing land requirement.

2.17 The role and content of the HLA was set out at paragraphs 69 to 85 of the 2016 draft advice. It restated the objectives and land, and tenure types from PAN 2/2010, reiterating the need to distinguish between affordable housing sites and completions and private market housing. Definitions of affordable housing were provided in Appendix 4 of the withdrawn guidance. It also sought consistency in presentation of information from Call for Sites onwards through the plan, between annual audits and into the Action Programme. The HLA was to identify constrained sites and indicate how these would be made effective. A small number of sites may be found ineffective. An analysis of housing completions was required in order to track remaining available development land. A planning authority’s HLA was to be informed by engagement with developers, agencies and infrastructure providers, and made available to communities. This was stronger and wider than PAN 2/2010’s view that those involved should consider how engagement could be achieved. Online access to HLAs was promoted by the draft guidance.

2.18 A notable change in the 2016 draft guidance was that marketability was no longer one of the principal effectiveness criteria for housing sites (paragraph 60). Marketability is changeable and subjective; therefore, it was proposed to become an additional consideration for private sector housing, but not a determining factor in site effectiveness. Promoters could provide specific evidence in support their sites, but planning authorities were also encouraged to consider future buyers and the overall marketability of the housing land supply, using a combination of judgement and evidence. The other effectiveness criteria remained as set out in PAN 2/2010. Action Programmes were explicitly linked to site effectiveness. Transparency and clear and consistent links between sites information, Action Programmes and Housing Land Audits were recommended.

2.19 A summary of consultation responses to the 2016 draft guidance has been provided to Ryden for this research report. There was general support among the responses for a standardised methodology on how to calculate a 5-year effective housing land supply, although views on the best method to use varied. The methodology used to move from HNDA through to a housing land requirement was felt to be variable across authorities and could also benefit from standard guidance. There were different views on how to account for varying pace and scale of housing delivery.

Research

2.20 Housing Land Audits are a specialist, technical exercise, driven by planning policy requirements. Research is therefore limited and is highly focused upon HLA evidence, analysis and outputs. Wider literature exists around the housing system and the analysis of that to inform planning and development delivery. Some brief comment on that is provided in the following text.

2.21 A 2008 research report for the Scottish Government, The’ Effectiveness of Housing Land Audits in Monitoring Housing Land Supply in Scotland’, noted the key role of audits in ensuring adequate housing land supply. The report set out to ensure commonality of information, improved presentation and accessibility and to improve predictive accuracy. It was found in 2008 that audits tended to over-estimate housing completions (this is perhaps surprising given that the lead-in period was the major housing boom to 2007).

2.22 The 2008 report made 16 recommendations including a best practice HLA working group, common dates, content and presentation, completion within 6 months, a minimum 7-year horizon, a need for better industry data and audits of past housing supply performance in the HLA format. Section 3 of this report will provide a view on whether this standardisation has been achieved.

2.23 Recommendations were also made on effective housing land, with the development industry suggesting that this must come from positive evidence rather than the absence of constraints. The researchers suggested that national guidance was required on assessing effectiveness then programming sites. National guidance was also recommended to encourage infrastructure providers to engage with the HLA process and indicate the actions and timescales to remove site constraints^[3]. Other recommendations related to defining and distinguishing between windfall sites, affordable housing, small sites and house types.

2.24 The 2008 research supported the production of PAN 2/2010, as reviewed above.

2.25 In addition to this formal Scottish Government guidance, various stakeholders in the housing system produce their own guidance and notes on the production of Housing Land Audits. These include Clydeplan Strategic Development Planning Authority Homes for Scotland, City of Edinburgh Council and Heads of Planning Scotland.

2.26 In June 2017, a RTPI Scotland thinkpiece^[4] proposed that barriers to delivery should be overcome using 2-year housing delivery programmes in the form of project management plans with corporate leadership and collaboration. The implications of this would be much tighter relationships between HLAs and Action Programmes.

2.27 Other notable housing and delivery workstreams which could have implications for the production of HLAs include:-

2.27.1 In Wales, RTPI Cymru^[5] reports a strong reliance on Welsh Government local authority area household projections to inform land-use planning, and the “considerable weight” afforded to these in LDP examinations. A shared methodology for refining and applying these at the local level has been agreed, subject to the caveat that local resources and skills to interpret, adapt and defend housing requirements vary considerably. On the face of it a consistent approach and cascade from national to local level appears to be claimed for housing land planning in Wales.

2.27.2 The UK Government’s House of Commons Library published Planning for Housing^[6] in 2017. The paper notes the abolition of national housing targets in England and thus, the freedom for local planning authorities to estimate and set aside enough land to meet housing demand, and also,
to choose a suitable methodology so long as that is based upon robust evidence and informed by policy and guidance. That paper notes a concern however that demand for housing outstripping supply is allowing developers to “gain planning permission at appeal for sites that the local authority did not intend for development.” There are some parallels here with the role of HLAs in confirming or failing SPP’s 5-year effective housing land requirement and the consequences for LDPs.

2.28 A housing white paper^[7] for England proposes that:

• local authorities agree their housing land supply annually and fixed for only one year;
• there is consultation on a standardised approach to assessing housing requirements; and,
• introducing a housing delivery test.

Each of these proposals is relevant to HLAs. The Department for Communities and Local Government responded to the White Paper with a consultation^[8] on a new standard for assessing housing need.

2.29 Two ongoing studies into the delivery of housing are at an early stage: the UK Government’s Letwin Review^[9] into the housing supply gap (including of land) in areas of high demand; and the Scottish Government’s ‘Identifying the Reasons for Delays with Decisions on Planning Applications for Housing’. These reports may have relevant information for Housing Land Audits when published.

2.30 Although the English and Welsh examples noted above are not applicable in Scotland’s devolved planning system, they are potentially relevant as those administrations seek to address comparable planning and development challenges within the wider UK national housing system.

Review of the Scottish Planning System

2.31 The independent review of the Scottish planning system^[10] (May 2016), Empowering Planning to Deliver Great Places, identified housing delivery as one of six key themes. This recommendation evolved to form part of Proposal 5: Making Plans that Deliver, in the Scottish Government’s consultation paper ‘People, Places & Planning’ ^[11] (January 2017). Following that consultation, the Scottish Government issued a Position Statement ^[12] in June 2017. The statement recognised a continued support for a plan-led system, implemented through a strong delivery programme.

2.32 The statement was expanded through a Technical Paper (September 2017) ^[13] which considers how key planning review changes could work in practice. The paper envisages that housing land requirements would be verified in early course at the newly proposed development plan ‘gatecheck’ stage. HLAs are identified as important both in informing this stage, and in then monitoring performance and identifying actions. Developing a new approach to calculating housing land requirements was suggested as a potential focus for work. A possible relationship to promote consistency between strategic and local housing needs was set out in the Paper, while allowing for continuation of local approach in areas not covered by strategic housing land requirements. The Paper indicated that new guidance on monitoring housing land availability would be produced.

2.33 A June 2017 analysis of responses to the consultation paper ^[14] attracted mixed responses to a proposal for improvements to defining how much housing land should be allocated in the development plan. The current process was viewed as complex and time-consuming, and that time could better be used on place-making and better localised understanding. Some respondents felt that any removal of the local planning element from housing land would make the process more ‘top down’.

2.34 The cascade of policy and guidance and additional research reviewed above is used in Section 3 to consider and compare existing HLAs across Scotland. It also informs the conclusions presented in Section 5.