15 Aug 2018

On 24 July 2018, the Government published the long-awaited revised National Planning Policy Framework ('NPPF2'). This article sets out 10 key areas within NPFF2, which we consider will be of interest to our contacts involved in the housing sector. 

1.    Affordable housing

Following a controversial omission in the draft framework published in March, NPPF2 retains specific reference to the government's rent policies for "social rent" and "affordable rent". Both are included as part of a sub-definition of "Affordable housing for rent" - which is defined as housing where "rent is set in accordance with the government’s rent policy for social rent or affordable rent, or is at least 20% below local market rent". Affordable housing meeting this definition must ordinarily be let by a registered provider, and either retained in perpetuity or the subsidy recycled. 

The definition of "Affordable housing" is however much wider than was contained within the previous NPPF. It includes "Starter homes", "Discounted market sales housing"' and also "Other affordable routes to home ownership"; a broad sub-definition containing previous products such as shared ownership and equity loans, but also rent to buy and other low cost homes for sale. There is no requirement for "Other affordable routes to home ownership" to be retained in perpetuity or for the subsidy to be recycled (unless grant funded), and the express exclusion of "low cost market housing" has been removed. 

At least 10% of the homes built as part of developments including housing provision of more than 10 homes should be "affordable". Exceptions to this include where this would reduce the ability to meet the needs of identified specific groups, Build to Rent and specialist accommodation, such as purpose built accommodation for students or the elderly. 

2.    Viability

NPPF2 provides that, "Where up-to-date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable." The burden is placed on the developer to demonstrate "whether particular circumstances justify the need for a viability assessment at the application stage". This is a step back from the March draft of NPPF2 which contained a blanket statement that no viability statement would be required where a development accords with a local plan. 

It is now therefore the applicant's obligation to show that a viability assessment is required; for example where the plan or the viability evidence is out of date, or if there is a change in site circumstances.

The approach to viability is supplemented within the updated Planning Practice Guidance (PPG), which accompanied the publication of NPPF2. This contains outline changes for landowners and developers. A key message is that issues of viability should be raised early in the planning process and then adhered to throughout the development. As viability should now be tested at the plan-making stage, the PPG advises that developers must "have regard to the total cumulative cost of all relevant policies when agreeing a price for the land." Importantly, the PGG emphasises that "under no circumstances" will the price paid for land be considered a justification for failure to adhere to relevant policies set out in the plan.

 The PPG also details the expectation that an executive summary should be provided with the viability assessment. In circumstances where specific details of an assessment are commercially sensitive, the information should be aggregated in published viability assessments and executive summaries, and included as part of total costs figures.

Amid calls from campaign groups for greater transparency in the planning process, the Government now expects that where a viability statement is produced, it should be made publicly available. 

3.    Transport

For the first time, NPPF2 expressly states that planning permission may be refused on highway safety grounds, giving this consideration significantly more weight. However, there is yet to be any clarification on the "severe" nature of impacts on the local road network that could lead to permission being refused. 

4.    Design

High quality design has been placed more to the front and centre of NPPF2. It now states that the creation of high quality buildings and places is "fundamental to what the planning and development process should achieve". NPPF2 has been amended to provide that local planning authorities (LPAs) should ensure that they have access to and make appropriate use of tools and processes for assessing and improving the design of development.

In Chapter 12, adherence to 'local design standards or style guides' are identified as being essential for sustainable development. 

Additionally, further detail has been added to highlight the importance of ensuring that the quality of permitted schemes is carried through to the completion of development. Consequently the final text provides that "[LPAs] should also seek to ensure that the quality of approved development is not materially diminished between permission and completion, as a result of changes being made to the permitted scheme (for example through changes to the approved details such as the materials used)".

5.    Interaction with the National Infrastructure Commission 

Paragraph 6 of the NPPF highlights that the endorsed recommendations of the National Infrastructure Commission (NIC) may be material when deciding applications. The NIC recently published the National Infrastructure Assessment (the NIA), which set out a number of recommended updates to the system of allowing local authorities to capture a proportion of increases in land value:

  • Remove pooling restrictions on Section 106 in all circumstances, through forthcoming secondary legislation by 2020
  • Remove the ballot requirement for upper tier authorities’ powers to levy a business rate supplement of 2p or less in the pound for infrastructure, except where the supplement exceeds one third of scheme costs by 2021
  • Maintain the Housing Infrastructure Fund outside cities: Within cities, this funding should be merged into wider devolved funding for strategic transport and housing strategies.

The NIA also recommended that local councils should be given greater ability to capture "a fair proportion" of the increase in land value from newly developed infrastructure. This would include the power to impose "zonal precepts" on council tax in areas where public investment in planning and infrastructure has caused an increase in the market value of surrounding properties.

6.    Neighbourhood Plans

NPPF2 attempts to attain a balance between the Government's commitment to boosting the delivery of housing and giving local communities a clearer voice in decision making; two goals that often seem to be incongruous. The revised framework addresses the potential for conflict between the presumption in favour of sustainable development and up-to-date neighbourhood plans. Plans should apply the presumption, unless where the adverse harm of allowing the conflicting scheme would "demonstrably outweigh the benefits". This is provided the LPA has at least a three year supply of deliverable housing sites and has a record of delivering at least 45 percent of required homes over the last few years.

It is of note that the London Plan has been exempted from NPPF2, in order to avoid any delay to existing developments, albeit in a recent open letter the Housing Secretary, James Brokenshire, urged the Mayor of London to produce a revised London Plan in line with NPPF2 "as soon as possible". 

7.    Housing Requirement and Objectively Assessed Need

The consultation that followed the announcement of NPPF2 was accompanied by a proposed methodology for calculating Objectively Assessed Need (OAN). This methodology starts from the Government's official projection and then requires councils to calculate the average growth projected over the next ten years, and then uplift that number by a factor relating to the local 'affordability ratio’ (the relationship between house prices and earnings). 

The projected likely "new" national housing target using this formula was 266,000 homes, which notably is lower than the target of 300,000 new homes a year set out in the Conservative manifesto, to be achieved by the mid-2020s. However, the Government statement accompanying NPPF2 indicates that the methodology will be revised upon the release of relevant housing projection figures in September 2018. This has fuelled discussion around the appropriateness of the Government's 300,000 homes goal, and has also already led to several local authorities delaying their plan-making as they await the revised figures. 

November this year will see the introduction of the housing delivery test, which will judge the success of local authorities in delivering homes, measured against planned delivery. This will increase the pressure on local authorities, as, from 2020, in circumstances where delivery is below 75 per cent of the identified requirement the framework's presumption if favour of sustainable development will apply to applications for housing. 

8.    Identifying land for homes

Larger scale developments are identified as the best way to achieve large numbers of housing, through for example new settlements or significant extensions to existing villages and towns. A new proviso has been added, which qualifies that this is the case "provided they are well located and designed, and supported by necessary infrastructure and facilities".

Reference to "Garden City Principles" has been added to NPPF2 (having been excluded in the March draft) as an example of how "clear expectations for development quality can be laid down". This is the only reference to the Garden City principles in government policy. 

In their response note to NPPF2, the Government explains that as a result of the consultation it has amended the requirement to deliver housing on smaller sites. The NPPF2 now states that small and medium sized sites can make an important contribution to meeting the housing requirement of an area. This follows responses to the consultation that LPAs should identify, though the development plan and brownfield registers, land to accommodate at least 10 per cent of their housing requirement on sites no larger than one hectare. This is a lowered target from that of 20 per cent which had been in the draft.

The re-use of brownfield sites is supported through a specific reference to the reduction of affordable housing contributions when vacated buildings are being redeveloped, which may well see more LPAs embracing this. 

9.    The Green Belt

The policy on green belt considerations has been revised. Proposals for new green belt must be supported by a strategic policy, which demonstrates its necessity and how the green belt would meet the other objectives of the NPPF. 

In addition alterations to the boundary of the green belt will only be allowed in "exceptional circumstances" which are "fully evidenced and justified". This stronger wording was added as a reaction to the response to the March draft. In order to demonstrate that the "exceptional circumstances" criteria has been met, LPAs will need to prove that "all other reasonable options", including the development of brownfield sites, have been examined and discounted. 

NPPF2 details the exceptions to the presumption against the construction of new buildings in the green belt. This includes the redevelopment of previously developed land, where this would:

  • not have a greater impact on the openness of the Green Belt than the existing development
  • not cause substantial harm to the openness of the Green Belt, where the development would re-use previously developed land and contribute to meeting an identified affordable housing need within the area of the local planning authority.

10.    Notable absences 

The definition of "affordable homes" does little to distinguish between "social rent" from other affordable homes, including starter homes, which some commentators have said are often inaccessible for people on low incomes and are unlikely to assist homeless families in need.

To some surprise, the Government did not amend para 177 (para 119 of the 2012 NPPF), despite the ECJ's ruling in the recent "People Over Wind" case, which challenged the long-held position that mitigation measures could be included at the screening stage and prior to an appropriate assessment taking place (thereby meaning an appropriate assessment may not be required). NPPF2 retains the position that the presumption in favour of sustainable development does not apply where appropriate assessment is required. The People Over Wind ruling has left it likely that more appropriate assessments will be required (because you cannot take into account mitigation at that earlier stage) and it had been hoped that the Government would use the NPPF2 to clarify this position for developers. This seems a potential ground of challenge and area of contention.