This article outlines the proposed new Standard Method (SM) approach to calculating Local Housing Need (LHN), aiming to significantly boost housing delivery. This will work alongside the intended reinstatement of the previous way of setting the level of housing land supply required.
The new SM would replace the previous four-step approach with a simpler two-step process:
- Base Calculation: Using the current housing stock in each local authority area, the base level of 0.8% represents the level of growth that has been achieved nationally over the last 10 years. This is intended to provide a stable baseline to drive delivery that is proportionate to the size of existing settlements.
- Affordability Adjustment: An uplift would then be applied based on a three-year average of the median workplace-based affordability ratio. The purpose of this is said to increase the importance of housing affordability in assessing need, in order to direct homes to where they are most needed.
The current caps on the level of increase for any individual authority would be removed, to further assist the level of delivery that is possible.
This new SM is projected to generate the construction of around 371,500 new homes annually, including 80,700 in London. It would increase identified housing need in almost all local authority areas, with a large proportion seeing an increase of over 200 homes per annum.
Key Points
- Mandatory but Flexible: The new SM is mandatory for establishing housing need in Local Plans, but allows for adjustments based on local constraints and impacts.
- Stock-Based Approach: By focusing on current housing stock rather than demographic projections, the SM aims for stability and consistency, to deliver at least 300,000 homes annually.
- Regional Impact: Every region will see increased housing need, particularly in areas previously underestimated, supporting economic growth and ‘levelling up’.
The Effect of These Changes
The Government believes this approach can meet the target of 300,000 homes per year, though achieving 1.5 million homes over five years may be challenging without additional measures to address early shortfalls. This new SM is a critical step in tackling England’s housing crisis, aiming to enhance affordability and availability. The Government have also set out that they want local authorities who are only at Regulation 18 stage of Local Plan preparation to begin using the SM immediately.
The change of methodology will bring with it the need for additional land and proposals for housing development. This opens up opportunities for sites that are currently constrained by local resistance. We welcome the shift to begin delivering the level of housing that is needed across the needed across the country.
