How proposed NPPF changes will affect planners and developers

Out-Law Analysis | 28 Mar 2018 | 3:30 pm | 12 min. read

ANALYSIS: Proposed revisions to the National Planning Policy Framework (NPPF) and Planning Practice Guidance (PPG) appear to bolster the presumption in favour of sustainable development by incorporating earlier viability assessments and a standard methodology for assessing housing need.

Developers who are currently preparing planning applications for submission over the next six months will need to be aware of relevant changes under the new framework, and consider whether to alter aspects of their application to ensure greater consistency with the anticipated revised framework policies where local plan policies are not currently fully aligned.

Here, we look at various aspects of the revised draft framework (70-page / 545KB PDF) and guidance (56-page / 696KB PDF), and consider the implications that they might have in practice for developers and planners involved with the plan-making process or taking applications through the planning process.

Implementation

The new framework is expected to be published in final form over the summer, and its policies will be material considerations in decision-taking from the day of publication. Weight to be given to existing policies which do not correspond to the revised framework following its publication will depend upon their consistency with the revisions.

The revised policies will also need to be reflected in plans. For plans which are currently undergoing examination, no account will be taken of the changes as long as the plans have been submitted within six months of the date of publication of the revised framework. Local planning authorities (LPAs) currently involved with or finalising plan revisions will therefore need to give careful thought to how to proceed if the emerging plan policies will be inconsistent with the revised framework.

The LPA will need to balance the fact that part of its newly-prepared plan could be immediately out of date, triggering the potential for penalties and/or interventions and the presumption in favour of development being triggered, with the amount of work already undertaken on its plan revisions. The LPA will not want to lose that work and so may take the view that it will proceed to examination stage, while accepting that an early review of policies that are out of date as a result of the framework revisions will be required.

Kate Brock

Viability and plan-making

The proposed changes incorporate a significant shift in the role of viability assessments from the decision-making stage to the plan-making stage, which means that LPAs, as opposed to developers, will become primarily responsible for this work. This will place a much greater burden on LPAs, who will be required to set strategic site allocation policies not only dealing with infrastructure requirements but also the minimum level of affordable housing (AH) they consider to be viable on each site. The NPPF appears to envisage that there could be variable AH requirements across particular sites and types of development, as opposed to the general target that LPAs and developers currently work with.

For strategic sites, the draft PPG recognises the potential need for individual site specific viability assessment at the plan-making stage. Developers wanting to promote their sites for allocation may seek to challenge the LPA's viability evidence at the local plan examination stage in order to minimise the levels of AH provision set out in strategic allocations. Again, this will potentially add to the length and complexity of that process.

Perhaps in an attempt to alleviate some of this tension, the revised framework and guidance suggest that the drafting of plan policies should be informed by engagement with landowners, developers, infrastructure providers and affordable housing providers. They state that in the absence of evidence on costs and values from these interested parties, a site should not be allocated. This seems to be aimed at forcing scheme promoters to assist plan-making authorities in the provision of this evidence if they want their site to be allocated at all.

Viability and decision-making

Now that viability is intended to be dealt with at the plan-making stage, if a planning application is submitted which meets the required criteria or thresholds in an up-to-date local plan for a specific site or type of site, no viability work will be required to be submitted by a developer at the application stage.

This is intended to speed up the application process, provide certainty for developers and make the process of assessing viability more transparent at the outset. On the face of it, at least, this should make the process of putting together the funding and design for a scheme easier for developers who can meet policy requirements. The intention is that the cost of complying with the local plan policies should be factored into the original purchase price for the land.

The draft NPPF also sets out the expectation that development plans should specify the defined circumstances in which viability assessment at the decision-making stage may be required. The draft PPG provides some illustrative examples of circumstances in which plans may require viability assessment at the decision-making stage, including:

  • where development is proposed on unallocated sites;
  • where further information on infrastructure costs is required;
  • where particular types of development are proposed which may vary significantly from standard models of development for sale (for example, build to rent);
  • where a significant change in economic conditions since plan adoption results in a significant difference in costs and values.

The consultation invites views on whether it would be helpful for the revised NPPF to go further and set out the circumstances in which viability assessment to accompany planning applications would be successful.

The draft NPPF requires all viability assessments to reflect the government's recommended approach, as set out in the draft PPG. The guidance states that assessments should be based on, and refer back to, the viability assessment that informed the plan; and that the applicant should provide evidence of what has changed since then. It should also reflect the government's recommended approach to defining key inputs, which is also set out in the draft PPG. A requirement to base assessments on the viability assessment that informed the plan will place a great deal of focus on the viability work undertaken at the plan-making stage, and could ultimately lead to more legal challenges from scheme promoters who dispute the key inputs.

Where viability assessments are submitted at the application stage, the expectation is that they will be made publicly available. The draft PPG suggests the use of a template executive summary, to be published on the planning register, setting out the gross development value, benchmark land value, costs and return to developer. The consultation seeks views on whether there are any circumstances in which such publication would be problematic, and we can expect arguments to be made for exceptions to public disclosure in response to the consultation.

Jo Miles and Kate Brock

Delivering a sufficient supply of homes

The revised NPPF will implement a standard methodology for assessing housing need, as consulted on last year. The standard methodology will simplify objectively assessed need (OAN) calculations to provide a centrally-based figure using the government's household forecasts adjusted for local house prices and local earnings. The draft says this would be used to determine the minimum number of homes needed in strategic plans, "unless there are exceptional circumstances that justify an alternative approach which also reflects current and future demographic trends and market signals". Any needs that "cannot be met within neighbouring areas" should also be taken into account in the final figure, strengthening the requirement for LPAs to cooperate with each other in meeting unmet housing requirements. Details of the methodology are set out in the revised PPG.

From a developer's perspective, the fact that the calculation of housing need in an LPA's strategic plan will need to include the shortfall in neighbouring authorities should be welcomed. It should improve the chances of making a successful argument that an application for development on unallocated land, or where the proposal is in conflict with the development plan, and in either case in an LPA area where it can demonstrate a five-year supply,should be permitted if it will meet a shortfall in supply in a neighbouring authority.

Use of small sites is also encouraged. In bringing forward plans under the revised NPPF, LPAs will now be required to ensure that at least 20% of the sites identified for housing are small sites of half a hectare or less. This could have significant implications for under-resourced planning policy teams, and it also makes the bold assumption that this amount of small sites is actually available in each authority area.

The government has proposed that at least 10% of homes on major housing developments be available through affordable home ownership. Interestingly, local authorities are precluded from applying affordable housing policies to small sites. This provision aligns closely with the government's small sites policy, which many local authorities do not currently apply but will find it harder to avoid if the revised NPPF is passed in its current form. Exemptions also include where the site provides solely for build to rent homes, or is specialist accommodation for the likes of students or the elderly.

The draft NPPF clarifies that the presumption in favour of sustainable development will be triggered where an LPA cannot demonstrate a five-year housing supply or "where the housing delivery test indicates that delivery of housing has been substantially below the housing requirement over the previous three years". LPAs would be able to demonstrate a five-year supply of deliverable sites through a recently adopted local plan or an annual position statement. The draft also includes a mechanism allowing the five-year land supply position to be agreed for a one-year period, subject to a 10% buffer "to account for any fluctuations in the market during that year". A 20% buffer is required if housing delivery is persistently below the housing delivery test for a period of three years.

Sanctions will be imposed on LPAs failing to meet housebuilding targets in their local plans through the new housing delivery test. The draft proposes that, from 2020, the presumption in favour of sustainable development will apply where delivery is below 75% of the LPA's housing requirement. This should be read alongside the draft measurement rulebook (5-page / 230KB PDF) published alongside the draft NPPF. The rulebook states that the housing delivery test will assess the actual delivery of housing through percentage measurement of the number of net homes delivered, including student housing and HMOs, against the number of homes required in a plan-making authority area. 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 an LPA falls below 95% of its housing requirement over a three-year period.

Developers should note that LPAs are encouraged to impose shorter time limit conditions than the relevant default three-year period to encourage faster implementation of planning permissions. The draft NPPF would allow LPAs to consider imposing planning conditions requiring development to be bought forward within two years, unless this could affect viability or deliverability. If a shorter implementation period is imposed, careful consideration will need to be given by both developers and LPAs as to whether any pre-commencement conditions can be satisfied in time to implement the permission within the shorter period, as well as whether funding can be put in place during that time period. Early engagement between the LPA and developer will ensure conditions don't work to prevent successful scheme delivery.

The draft NPPF also confirms that planning conditions should be kept to a minimum, and that agreeing conditions early is beneficial to all parties involved in the process. Conditions that must be discharged before development commences should be avoided, unless there is a clear justification. Once the relevant provisions of the 1990 Town and Country Planning Act come into force, developers will have to give their written agreement to the terms of a pre-commencement condition unless prescribed circumstances apply.

There is also greater clarity on the role to be played by neighbourhood plans in delivering housing. Strategic plans should set out a housing requirement figure for designated neighbourhood areas, and this should not need retesting at neighbourhood plan examinations.

Reflecting the written ministerial statement of December 2016, the draft says that where a neighbourhood plan contains policies and allocations to meet its identified housing requirement, "the adverse impact of allowing development that conflicts with it is likely to significantly and demonstrably outweigh the benefits" in cases where the LPA has at least a three-year supply of deliverable housing sites and its housing delivery is "at least 45% of that required over the previous three years". This underlines the importance of developers engaging with neighbourhood plans in areas where they have development sites which they hope to bring forward as early as possible. Additional pressure is placed on LPAs, who must ensure that neighbourhood plans and strategic plans are aligned.

Victoria Lindsay and Kate Brock

Promoting sustainable transport

The thrust of the policy on sustainable travel remains the same in the revised NPPF, but with more emphasis on enabling development by flexibly addressing both transport requirements and their impacts based on locational needs.

This includes parking standards for both residential and non-residential developments, where the imposition of 'maximum' standards is formally recognised as the exception rather than the rule. Instead, evidence of minimum requirements for parking for all types of development will generally be required, giving developers a degree of design flexibility.

Developers working on schemes incorporating new transport infrastructure will be under more scrutiny from planners, who will assess plans against various NPPF requirements to maximise development opportunities around transport infrastructure. In particular, planners will consider how the scale and density of surrounding development, such as housing, could best realise the benefits of the new infrastructure.

Kate Brock

Making effective use of land

One of the core planning principles of the current NPPF is ensuring a good standard of amenity for all existing occupants of land and buildings. A shift in emphasis in the revised NPPF will require more of a balancing act from developers, particularly in relation to access to daylight and sunlight, as the draft requires increased densities for housing development particularly in areas where housing need is high and requires LPAs to refuse applications which they consider fail to make efficient use of land.

LPAs will now be required to take a flexible approach to policies or guidance relating to daylight and sunlight when considering applications for housing, albeit one that is caveated by providing that the resulting scheme should provide "acceptable living standards". This will be welcomed by developers, as the reduction of daylight and sunlight levels is almost unavoidable in achieving the policy requirement for high density development in a confined urban setting.

Daylight and sunlight was previously an important factor in the planning balance when assessing the overall levels of amenity for existing and future residents. The shift in emphasis recognises that this is often requires a trade-off with other factors, such as access to public transport or green space.

Achieving well-designed places

The revised NPPF retains its emphasis on place-making, bringing together design, land use, landscaping, social uses and open spaces. There is a re-emphasis that applications which can show genuine engagement with the local community will be considered more favourably. This should be welcome news to developers which are already engaging with local communities.

Importantly, the draft contains a requirement that planning policies set out clear design and vision expectations in supplementary planning documents and design codes, which should give both developers and LPAs more certainty. However, LPAs should be careful to ensure that these policies remain flexible enough to allow variety to create good places. This means that, inevitably, there will continue to be a degree of subjectivity concerning design.

Elizabeth Nuttall

Conserving and enhancing the natural environment

While not the most eye-catching, the revised NPPF contains some interesting amendments in respect of the natural environment and heritage. For example, the draft contains a new requirement that development should "improve local environmental conditions such as air quality". It goes on to set out in more detail how development should contribute to improving air quality, from explicitly requiring that planning policies and decisions should take into account the presence of air quality management areas (AQMAs) and clean air zones (CAZs) to identifying opportunities to improve air quality at a strategic level, such as when plan-making.

Conserving and enhancing the historic environment

Proposed amendments in respect of heritage are not extensive, reflecting the already robust production that heritage assets benefit from in statute and the original NPPF. A new overarching and purposive paragraph sets out the purpose that heritage assets of local and international value must be protected "so that they can be enjoyed for their contribution to the quality of life of existing and future generations".

There is also clarification of the existing position that great weight should be given to conserving heritage assets "irrespective of the degree of potential harm to its significance"; something which was already established in the 2014 Barnwell Manor decision by the Court of Appeal.

Reza Newton

The authors are planning and development experts at Pinsent Masons, the law firm behind Out-Law.com.