A concerted region-wide response is required if we are going to get close to delivering the new homes required across the south of England. With the March 2017 deadline for Local Plans approaching, our analysis of housing numbers shows that a much stronger pro-growth stance is required and the duty to cooperate must be meaningfully applied to ensure the numbers add up.

Growing pains

London’s population is at a record high and continues to grow. Housing supply however is falling far short of required levels, with the London Plan housing target below that needed to meet even the lowest measures of need.

London’s adopted housing target is 42,000 per year. The London SHMA, published in 2013, concluded that housing need in London was 49,000 per annum. This figure assumes that the substantial backlog caused by past under-delivery is worked out over the whole plan period of 20 years. In this context, the stated policies of the main mayoral candidates to build at least 50,000 new homes per annum appear to be in line with requirements.

An alternative assumption put forward in the SHMA is that the backlog could be erased within ten years. This scenario gives rise to housing need of 62,000 per annum. A more usual approach, and the one most commonly used in five-year land supply assessments, is the Sedgefield method, i.e. to clear backlog in five years. This is the approach used in a recent paper from the TCPA and, using the 2012 based household projections, puts London’s housing need at 87,000 per annum until 2020. Oxford Economics’ employment-driven forecast indicates an annual housing need of 64,000 per annum over the next five years, although it makes no allowance for meeting the backlog.

In contrast to these figures indicating higher levels of requirement, our analysis of the sites coming through the development pipeline over the next five years in London suggests that 37,000 new homes per year will be delivered. This represents an annual shortfall of 5,000 homes against the target and between 12,000 and 50,000 against the various housing need assessments. This persistent shortfall in housing delivery leaves London with three options or a combination thereof:

■  A comprehensive review of density policies, including substantial increases in the number of homes delivered near key transport nodes. Our paper for London First, “Redefining Density”, looks at this option in more detail. Increasing density doesn’t have to include large numbers of tall buildings and so it can still be consistent with the priorities of the leading mayoral candidates.

■  A strategic review of the Green Belt with the possibility of extending the designation elsewhere. A process of Green Belt ‘swapping’ could ensure a focused release of land around existing or proposed transport links.

■  Export the housing problem beyond the Green Belt. This is in effect what has already been happening. Unmet housing demand and even sub-market need is being shifted to surrounding housing markets. This has driven up prices and unaffordability across the south of England while increased numbers of social rented tenants have been moved out of the capital. A proactive response to this could be for central Government to commit to a new programme of Garden Village/ Town/City developments. The 2016 Budget introduced financial support for Garden Villages, but it remains to be seen whether the financial commitment is sufficient to deliver enough new sites to address need as well as overcoming infrastructure capacity constraints.

All of the options require investment in strategic infrastructure and some form of ‘larger than local’ planning initiative, perhaps associated with strengthening the duty to cooperate. In 2014 we called for an ‘Arc of Cooperation’ around London, wherein local authorities would work jointly to meet London’s overspill housing requirement. To date such a joined-up approach has yet to be realised.

Bursting out

For at least the last 40 years, and probably the last 75, London has seen a net outflow of people to the wider south of England and rest of UK. Young people from across the country and the world come to London for work or study, then tend to move out to the wider south of England as they get older, have families and look for larger and more affordable housing. London’s failure to sufficiently meet its housing need results in increased pressure on housing stock outside its administrative boundaries.

^{Source: ONS}

This effect is compounded by the tendency of districts in the south of England to set housing targets that do not meet or exceed housing need. So far, 31 boroughs in the East and South East regions have adopted post-NPPF plans, but the housing targets in these boroughs leave a 3,500 homes shortfall against their locally assessed levels of housing need (a 70,000 home shortfall over a 20-year period). Therefore, the estimated total shortfall in housing targets compared to housing need across London, the East and South East regions is between 15,000 and 53,000 per year.

Addressing this housing shortfall will require a substantial change in approach, but there are a number of challenges and constraints to overcome. The south of England is part constrained by environmental designations including Special Protection Areas, Areas of Outstanding National Beauty and the South Downs National Park. This is compounded by the sensitive issue of widespread Green Belt designations. Transport and utilities infrastructure are also key issues.

London is clearly the epicentre of the problem, with the cost and lack of new housing regularly cited as a drag on economic performance. New development should focus on providing additional homes for those working in London as the most efficient way of meeting the shortfall. Infrastructure capacity is likely to be a barrier and hence the imperative for new investment in strategic infrastructure such as Crossrail 2, with its associated target of delivering 200,000 new homes or more.

The analysis shown on the map attempts to quantify the magnitude of the solution needed by sharing the identified shortfall amongst the well-connected districts with substantial quantities of unconstrained land. It’s clearly only one way of looking at the problem but the debate needs some meaningful numbers in order to understand the scale of the challenge.

The analysis indicates substantial increases in local housing targets are required. No local plan target has yet made such a significant contribution to this shortfall. Local plans need to stop aiming for the lowest possible housing number and recognise the longer term consequences of failing to deliver new homes in adequate numbers.

^{Source: Savills Research}