51 local planning authorities (LPAs) in England will face the most severe penalties following the latest Housing Delivery Test (HDT) results for 2021, which were published on 14 January 2022 by the Department for Levelling Up, Housing and Communities (DLUHC). In these authorities, opportunities exist for developers to submit speculative planning applications which would otherwise be considered contrary to the Development Plan.

What is the Housing Delivery Test?

The Housing Delivery Test (HDT) is an annual measurement of the number of homes built in LPAs across England over a three-year period.  The Housing Delivery Test compares the net homes delivered over the previous three financial years to the homes required over the same period.

Under the National Planning Policy Framework (NPPF), all LPAs have to demonstrate a five per cent land supply buffer as standard, in addition to their required five-year supply of deliverable housing sites.  There are also penalties for those councils delivering less than 95 per cent of their requirement.  The most severe penalty, which was first triggered in November 2020, is for those LPAs that delivered under 75% and now face the ‘presumption in favour of sustainable development’.  

The presumption in favour of sustainable development essentially means that planning permission should be granted, unless the site is protected under the NPPF or the adverse impacts demonstrably outweigh the benefits.  Consequently, this will also have repercussions for land promotion in these areas and the potential opportunity for more speculative planning applications to be submitted.  

The 2021 Housing Delivery Test Results

There are a total of 51 councils that have failed to deliver 75 per cent of their three-year housing target during 2021 and consequently now face ‘the presumption in favour of sustainable development’.  As a result, more speculative planning applications for non-allocated sites are likely to be submitted and potentially approved in these areas, albeit these would be subject to any other national planning policy protections.

Additionally, 19 authorities delivered under 85 per cent of their housing requirement and will have a 20 per cent buffer added to their five-year housing land supply target compared to the usual five per cent. In instances where this has resulted in authorities no longer being able to demonstrate a housing land supply of five years or more, the presumption in favour of speculative development is triggered, and again the opportunity could exist to submit a speculative application. The residual 23 authorities that failed the test recorded between 85 and 95 per cent and will therefore be required to publish a housing delivery action plan demonstrating how their provision will be increased.

Our findings also demonstrate that there is a relatively high correlation of LPAs within the ‘presumption’ category that also include Green Belts within their jurisdiction (76%).  Nevertheless, due to the requirement to demonstrate ‘very special circumstances’ to justify new housing developments in the Green Belt, the ‘presumption in favour of sustainable development’ or the ‘tilted balance’ is effectively disengaged by the NPPF in a high proportion of ‘presumption’ cases.  Some have argued that this also disincentives some the most poorly performing LPAs from catching up with years of past under-delivery.  Approximately one quarter of the LPAs within the presumption category are, however, not in the Green Belt and a number of LPAs have less than 25% Green Belt coverage in their areas.

Presumption authorities not in the Green Belt: 

Source: DLUHC

Presumption authorities with less than 25% Green Belt coverage:

Source: DLUHC

Under the 2020 HDT results, 107 councils failed the test, while 55 were subject to the presumption penalty.  The 2021 HDT results show that the overall number penalised, at 93, is 13 per cent lower than last year, while the number scoring under 75 per cent is down by seven per cent.  It is also worth noting that the Housing Minister Christopher Pincher announced, in September 2021, that the 2021 Housing Delivery Test would be calculated using a four-month adjustment to the housing requirement figures for 2020/21 to account for fluctuations in construction output due to the Covid-19 pandemic.  This has effectively changed the ‘goal-posts’ which has skewed the results and also had some beneficial consequences for some LPAs who have escaped or down-graded their penalties compared to the previous year.  

Housing Delivery Test results by Local Planning Authority 

Right click or scroll on the map below to zoom in.

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Source: DLUHC

Regional Analysis

The majority of LPAs which failed the HDT and face the most severe ‘presumption in favour of development’ penalty are located in the East of England or the South East.  There is, however, a grouping around Greater Manchester albeit many of these also include some element of Green Belt coverage.

Source: DLUHC

Looking to the future

Whilst 2021 saw the United Kingdom placed in and out of Covid-19 restrictions, the house-building industry continued largely as normal, and to date, the Government has not announced any intention to adjust the 2021 Housing Delivery Results (likely to be published in early 2022). This could lead to more LPA's facing harsher penalties next year. 

Of the 23 LPA's who scored between 85% and 95% on the HDT, and are consequently required to produce an Action Plan, only 6 of these authorities have an up-to-date Local Plan, or are likely to adopt a Local Plan by the end of 2022. 17 of the authorities are yet to progress beyond the Regulation 18 stage of plan preparation, and in some cases, begin to prepare a new plan at all. These authorities are arguably at risk of facing more severe penalties next year, as the Local Plan should be seen as the primary tool used by LPA's when identifying new residential development sites. 

Mary-Jane O’Neill, Head of Planning – London & South at LSH, commented:

“Attaining the volume of housing needed to sustain the UK’s growing population requires a harmonised approach to viability, planning, investment and delivery and LPAs, now more than ever before, need to work closely with private sector partners to unlock unallocated and undeveloped sites, or face being stripped of some of their planning powers. We are currently advising a range of clients across England and we would be happy to expand on the findings and what this means for your specific development portfolios or delivery rates in more detail.”