Improved evidence and practice in Strategic Housing Market Assessments

Proposition

The proposed changes to the planning system will involve the abolition of regional housing targets, and an emphasis on "bottom up" plan making. It will still be necessary in the new regime for housing allocations to be based on evidence relating to both housing requirements and the way local markets work.

Communities generally identify with smaller areas than the housing markets in which they are located, and in relation to which Strategic Housing Market Assessments [SHMAs] must be made. Acceptance of and evidence supporting a locality’s place in a housing and economic area are essential prerequisites to gaining acceptance of housing needs and demand at a very local level.

Key Points

Defining the housing market

With greater emphasis on localism and the abolition of regional housing targets, there is an increased need for robust evidence of housing needs and demand at a functional housing market level. Recent planning appeal decisions, for example, one relating to a housing development at Boston Spa near Leeds (Ref APP/N4720/A/09/2117381), have underlined the significance of robust evidence and the fact that Regional Spatial Strategies may still provide the only evidence of need that has been subject to rigorous examination.

Unless these issues are addressed, there is a danger that there will be inadequate analysis and thus evidence upon which local and neighbourhood plans can be based. Acceptance of and evidence supporting a locality’s osition in a housing and economic area are essential prerequisitesis to gaining acceptance of housing needs and demand at a very local level.

The current advice is that most housing market areas tend to be sub-regional, and assume around 50% self-containment ie. around half of all house moves are within the area rather than into or out of it. Travel-to-Work Areas are larger, with typically 67% self-containment.  More recent research suggests a series of framework SHMAs which are at a higher level still, with 77.5% self-containment.

There is a need for SHMAs to look at housing market areas that comprise a number of localities which may or may not coincide with the boundaries of a group of local authorities. They are more likely to relate to the areas of Local Enterprise Partnerships (LEPs), as these are intended to reflect the ways in which local economies actually behave. However, although a good starting point, a different approach will be needed in some areas (e.g. where the LEP covering Essex, Kent and adjoining areas relates to too large an area for a SHMA).

The duty to co-operate (clause 90 in the Localism Bill) will be a useful mandate, as there could well be tensions between cities and their more rural hinterlands, often exacerbated by different political control in the authorities concerned.

Central to the localism debate is how people see their "community". Communities overlap, and not all are spatially defined or consistent. In any community, different people will identify with a different area, with more affluent households likely to identify with a wider geographical area than the less affluent or less mobile. Some communities will need support to help them express their needs regarding the types and locations of new housing to be provided.

Defining need

The CLG's methodology, ('Strategic Housing Market Assessments: Practice Guidance' (CLG 2007) remains sound. It uses data on demographic and economic trends, current housing stock and the active market, as the basis for forecasting future housing need. All of this is valid. However, definitions of affordability and segmentation of the market require review because of two factors:

  • The change from Target Rents for social rented housing, to Affordable Rents related to market rents. This effectively merges Social Rented and Intermediate Affordable Housing, and suggests the need for a different approach to definitions of affordability.
  • The significant changes in the housing market since 2007, which are likely to endure for an extended period. This is likely to see the significant development and growth of the intermediate market, as increasing numbers of younger, economically active households delay first purchase from around 25 to 40-45 years old.

This requires a reappraisal of housing need, and an acknowledgement that the housing market is becoming increasingly segmented and complex.

Case study

Tees Valley Unlimited

The Tees Valley Local Housing Assessment Update and Strategic Housing Market Assessment (2004 and 2009) were commissioned by the five unitary local authorities in the Tees Valley: Darlington, Hartlepool, Middlesbrough, Redcar & Cleveland, and Stockton-on-Tees. These authorities now co-operate through the Local Enterprise Partnership (LEP).

The assessment builds on the earlier work undertaken to develop a case for housing market intervention in the Tees Valley, and in particular the Vitality and Viability Index of urban neighbourhoods across the sub-region. It also recognises that the spatial extent of the Tees Valley housing market extends to parts of North Yorkshire and Durham. 

Signposts