All change in the Planning System: Revisions to the NPPF and CIL

By Sophie Rae, Associate at Indigo Planning & Vice Chair of YEP London


The NPPF provides a backbone to planning policy across the UK.  This is its first revision since publication in 2012.  Billed as “new, fairer effective planning rules” to unlock land for housing delivery.  The emphasis of the revisions provide greater focus towards housing delivery compared to the previous emphasis on promoting economic growth.

Consultation timescales

The deadline to provide consultation responses is 10 May 2018.  The government’s intention is to publish the final version of the revised NPPF in the summer.  The short period between the close of the consultation and intended publication suggests that very few changes are expected between this draft and the final version.

The following sets out the key areas of change….

Viability

The revised NPPF has been published alongside new proposed guidance on viability in planning.  This includes a requirement that all viability assessments (where needed) should be made publicly available.  Interestingly, the Planning Obligations consultation which has also been published alongside the revised NPPF raises the potential for affordable housing and infrastructure contributions to be set nationally and to be non-negotiable.

Guidance on Viability

The PPG for Viability provides some clarity to the viability process including set definitions for key inputs such as Gross Development Value, Existing Use Values and Development Profits (confirmed at 20% return on GDV).

Housing supply

The standard methodology for calculating objectively assessed housing need is to be used in determining housing targets.  The unmet need from neighbouring areas should also be taken into account as per existing policy.  There is no update provided on the standard methodology consultation undertaken last year and we expect this to come forward within a further proposed guidance document.

Standard Methodology for Housing Need

The proposed standard methodology was consulted on last year in the Planning for the Right Homes in the Right Places Consultation.

The standard methodology will simplify OAN calculations to provide a centrally based figure using the DCLG household forecasts adjusted for local house prices and local earnings.

LPAs will now be required to identify 20% of all housing sites on small-sites of half a hectare or less.  This could have significant implications for under-resourced planning policy teams, it also makes a bold assumption that this amount of small-sites are actually available in each authority area.

Local plans will now provide a housing target for designated neighbourhood areas (areas identified for a neighbourhood plan).  This figure will be prescriptive and will not be re-tested during a neighbourhood plan examination.

The revised NPPF seeks to encourage and support the implementation of housing through a variety of measures.  These include increasing five-year housing land supply (5YHLS) requirements through the implementation of a 10% buffer or clarification that a 20% buffer is required if housing delivery is persistently below the housing delivery test for a period of three years.

Housing Delivery Test

The Housing Delivery Test assesses the actual delivery of housing through percentage measurement of the number of net homes delivered (including student houses and HMOs) against the number of homes required in a plan-making authority area.

The implementation of the presumption in favour of sustainable development will happen where the LPA cannot demonstrate a 5YHLS, or the housing delivery test indicates delivery substantially below (75%) the housing requirement.

If a LPA is to rely on a 5YHLS then it will need to prepare an Annual Position Statement in consultation with developers and others and this will need to have been considered by the Secretary of State.

The housing delivery test will also influence whether LPAs have to prepare action plans to address a shortage in housing delivery.  This will be required where a LPA falls below 95% of its housing requirement over a three year period.

To encourage faster implementation of planning permissions, LPAs are encouraged to impose shorter time limit conditions rather than the relevant default of three year period.

Reference to garden city principles has been removed, instead promoting new settlements based on:

  •    Existing or planned investment on infrastructure
  •    Economic potential; and
  •    The scope for net environmental gains.

Affordable housing

One of the most significant changes is to the definition of affordable housing, with much greater emphasis on finding routes to home ownership rather than support for the rental market.  The revised definition confirms that affordable housing is for those “whose needs are not met by the market (including housing that provides a subsidised route to home ownership and/or is for essential local workers)”.

New definition of affordable housing

  • Removes the differentiation between affordable and social rent (affordable rent should be 20% below local market rent and provided through a locally registered provider);
  • Introduces starter homes as affordable housing;
  • Introduces other discounted market sales housing as a further affordable produce with an eligibility based on local incomes and house prices (there is no clarification on what this might be); and
  • Sets out other affordable routes to home ownership, including:
  • Shared ownership
  • Relevant equity loans
  • Low cost homes for sale; and
  • Rent to buy.

Some of these definitions will require further clarification as it is not clear what, for example, low-cost homes for sale, could be.

A more prescriptive approach to identifying housing needs and types for different parts of the community is proposed.  This may open the door for the introduction of prescriptive affordable targets for alternative types of accommodation such as student housing and housing for older people.

The government proposes a requirement that major housing development provides at least 10% of homes to be available through affordable home ownership.

Affordable housing on small sites

Interestingly, local authorities are precluded from applying affordable housing policies to small sites (not major development eg less than 10 units or 1,000 sqm floorspace).  This provision aligns closely with the government’s small sites policy which many local authorities are currently not applying but will find it harder to avoid if the revised NPPF is brought forward.

Supporting House Building Through Developer Contributions

Alongside the NPPF publication, the government has published an additional consultation proposal to explore the potential for further CIL reforms.

The consultation document raises the potential for affordable housing and infrastructure contributions to be set nationally and to be non-negotiable.

The CIL reforms propose:

  • A streamlined process for setting CIL charging schedules;
  • Lifting the existing S106 pooling restrictions under Reg.123 in certain circumstances;
  • A more proportionate way to administer exemptions;
  • Clarifying how indexation is applied when an existing permission is amended;
  • Extending abatement provisions to phased developments;
  • Allow charging schedules to take into account land value uplift by allowing charging rates to be established by the existing use of land;
  • Index CIL rates to local-authority house prices or CPI as opposed to the BCIS; and
  • Allow combined authorities with strategic planning powers to introduce a Strategic Infrastructure Tariff.