The recent (20th February) Interim Conclusions of the Planning Inspector tasked with examining the Mid Sussex District Local Plan have highlighted the importance of robust market signals and employment evidence when determining the Objective Assessment of Overall Housing Need (OAHN).
Mid Sussex District Council (MSDC) submitted their Local Plan with a housing requirement of 800 dwellings per annum (dpa), 2014-2031, based on an OAHN of 754 dpa, and an additional 46 dpa to meet unmet need from surrounding authorities. This OAHN was arrived at by applying a 3% increase to the starting point estimate (730 dpa) of OAHN (the latest 2014-based DCLG household projection) for market signals pressure.
Approach to Challenging the OAHN
Our National Research team were involved in the OAHN sessions as part of a consultant team working on behalf of a consortium of developers. Through a combination of the OAHN steps required by the methodology of the Planning Practice Guidance (PPG, ID2a), the team concluded that the OAHN should be significantly higher than the Council’s OAHN. Added to this it was argued that the Council’s contribution of 46 dpa for unmet need from neighbouring authorities should be increased.
Inspector’s Interim Conclusions
Following hearing sessions in late 2016/early 2017, the Inspector published his interim conclusions on housing matters. His overall conclusion on the OAHN was for a 20% uplift to the starting point estimate of OAHN, increasing it from 730 dpa to 876 dpa. His reasoning was summarised as follows; “From all the material that has been submitted this figure is in my view the most well-founded and most realistic, being compatible with the greatest part of the evidence base. Evidence indicates that it would counter worsening affordability and would accommodate most of the affordable housing need for reasonable preference groups. It would also align with the range of employment forecasts.”
In translating this to the housing requirement the Inspector concluded that both an OAHN of 876 dpa and 150 dpa of Crawley’s unmet need could be accommodated in the District Plan, sustainably and without conflicting with Framework policies. He concluded that:
“The evidence also demonstrates that the market can sustain such figures. That leads to a minimum housing requirement for the plan period of 1,026 dpa, or 17,442 dwellings over the 17 year life of the plan.”
In reaching his OAHN conclusions the Inspector noted how the Council had prepared their market signals evidence similarly to the other two authorities in the Housing Market Area (Crawley and Horsham) in their respective Local Plan Examinations. However he rejected this approach, highlighting the ‘serious and growing’ affordability problem that Mid Sussex faces as the 22nd least affordable Local Authority in England, outside of London.
In considering the Council’s view that a significant uplift for market signals was unnecessary based on MSDC’s house prices being similar to its neighbours, he stated that “if each authority simply had regard to similar trends in neighbouring authorities, and each plan were to replicate the OAN approach of its neighbours, the cycle would be perpetuated and there would be no adequate response to continually worsening affordability.”
In rejecting the 3% market signals uplift of the Council, the Inspector went on to say that there was no evidence that a 24 dpa uplift to the starting point estimate would improve affordability in general or for the targeted 20-34 year olds. This emphasised the importance of including robust market signals evidence, as the Inspector went on, “The affordability modelling [prepared by consultants] suggests that with a 24 dpa uplift, the affordability ratio would continue to deteriorate to between 13.59 and 14 by the end of the plan period.”
In concluding on the Council’s market signals evidence he commented on MSDC’s view that it could not improve affordability by itself, as follows; “these concerns are founded on the assumption that, if Mid Sussex were to make a substantial market signals uplift, it would be acting in isolation. That overlooks the fact that it is government policy to boost housing supply through the plan-led system, which will result in the raising of the housing requirement by other planning authorities.” In this context he found the Plan to be unsound.
The evidence submitted by the consultant team included a range of approaches to improving affordability, and the Inspector concluded that the approach, resulting in a range of 854-918 dpa, “has a sense of realism about it; and it correlates reasonably well with other forecasts and with a comparative analysis of other authorities.”
The Inspector then turned to the OAHN based on economic growth. This was based on an agreed position between MSDC and the consultant team, that employment growth ranged from 424-514 jobs per annum based on past trends and forecasts submitted to the examination by the Council. The Inspector concluded that; “A range of scenarios using the 424-514 range are tested in work carried out by the consultant team using the PopGroup demographic model employed by the Council. These translate to a range of 862 dpa to 945 dpa. These figures again point to a higher OAN than that referred to in the plan and broadly lend support to the range 854 dpa to 918 dpa derived from the affordability analysis.”
In summary this decision has shown how Planning Inspectors are willing to make significant upwards adjustments to Local Plan housing requirements if detailed, robust OAHN evidence is put forward to challenge the Local Authority’s evidence. In this case the OAHN was increased by 20% from the Council’s figure (754 – 876 dpa), with the overall housing requirement increased by 28% from the Council’s figure (800 dpa – 1,026 dpa).
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Local Plans, Research, Sussex, Development Economics