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Social Housing Speed Read – Office for National Statistics suggest that only 159,000 households will be created each year

In this week's Speed Read, we discuss the latest household growth forecasts, published last month by the Office for National Statistics (ONS) and the potential effects these could have when planning future developments.

Arrival at the figure of 300,000

For housebuilders, local authorities and housing associations alike, 300,000 has been regarded as the magic number since November 2017. In the 2017 Budget, the Government announced its target of building 300,000 new homes every year in England.

This figure was decided following a recommendation by the House of Lords in their report, Building More Homes, published in July 2016 (the 2016 Report). This report stated that amongst reasons such as the increase in income and greater mortgage availability, the growth of England’s population was a key factor as to why the country requires significantly more houses to be built.

This target was met with some scepticism and widespread acknowledgement of the ambitiousness of the aim; with RICS reporting in February 2018 that merely 12% of surveyors were at least somewhat confident that the target would be met. Further, the Future Shape of the Sector Commission reported that housing associations would have to develop between 80,000 to 100,000 new houses; at least double the amount of houses they are currently building.

ONS’ latest statistics

The ONS statistics released on 20 September 2018 suggested that only 159,000 new households would be created each year, following an analysis of reported trends between 2001 and 2011. Clearly, there is a great disparity between this figure and the argument propounded in the 2016 Report, and subsequently by the Government, that 300,000 new homes should be built annually.

Joanna Harkrader, a statistician from the ONS, stated that the recently released figure reflects assumptions around the future birth rate, life expectancy and migration in addition to current trends regarding living arrangements, including living with parents or housemates. However, individuals in the housing industry have suggested that a lack of affordable housing may be the cause of such living arrangements, with Matthew Whittaker, deputy director of Resolution Foundation, stating that increasing housing supply is key to recovering the decrease in living standards, which he argues is largely attributable to housing costs.

The director of consulting at Oxford Economics, Ian Mulheirn, argues that the ONS statistics show that the Government’s ‘hysterical’ attitude towards housing need and their ambitious target has been ‘way over the top’, whilst Daniel Bentley, editorial director at Civitas, claimed that the statistics represented a ‘depressed housing formation’ resulting from the financial strains on young people.

Effect on planning of new social housing developments

The Government has taken steps to aid the building of new homes, particularly in relation to social housing, including heeding the recommendation of the 2016 Report and removing the limit on local authorities borrowing against their Housing Revenue Account, in addition to the announcement that housing associations would be able to bid for £2bn worth of additional funding from 2022. These proposals aim to give social housing providers confidence when planning long-term developments.

However, the ONS figures have certainly caused concern in the sector. Eddie Smith, the director of strategic development at Manchester City Council, stated that these figures could ‘disrupt the long-term planning processes [which] underpin residential growth in large parts of the country’. Indeed, ONS statistics are used as a basis when councils calculate council need, and are also referred to in planning appeals by planning authorities to demonstrate the demand for increased houses.

New methodology

Prior to the publication of the latest ONS figures, the Government announced that it intended to launch a consultation ‘on adjustments to the way housing need is calculated’, in the hope that it would realign the projection of housing need with their policy of delivering 300,000 new homes per year.

Planners, housebuilders and developers, in both the social housing and private sector, await this new methodology in the hope that it can accurately reflect the need for housing in their local area.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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