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Planning for Housing in England – using the latest official household projections well

23 January 2014

Neil McDonald

The draft National Planning Practice Guidance (NPPG) advises that DCLG’s household projections should be the starting point for estimating housing need. It then notes that the projections are ‘trend-based’ and so tell you what would happen if the trends on which they are based were to continue, which they may not. That leads to the conclusion that an estimate of housing need based on the projections “may require adjustment to reflect factors affecting local demography and household formation rates which are not captured in past trends”.

...housing numbers derived from the official housing projections cannot simply be plugged into a local authority’s local plan. They need careful review and, potentially, some adjustment to make them a prudent basis for determining how many homes are needed in any locality.

This is sensible, cautionary advice about using the projections well. The basic message is that housing numbers derived from the official housing projections cannot simply be plugged into a local authority’s local plan. They need careful review and, potentially, some adjustment to make them a prudent basis for determining how many homes are needed in any locality. Without this the number of homes needed in an area could be significantly underestimated.

What the draft NPPG is not as clear on (at least as I write this) is what planners should look for in deciding whether the official projections for their area need adjustment. A recently published RTPI report, ‘Planning for Housing in England’, which I researched with Peter Williams at the Cambridge Centre for Housing and Planning Research at the University of Cambridge, helps to fill this gap. It looks at the evidence from the 2011 census that household formation patterns changed in unexpected ways in the first decade of the century and discusses what may have driven those changes. It does this on the basis that understanding what has caused the changes in the trends is an important first step in reaching an informed view on whether those changes are likely to continue. The key factors appear to be a) increased international migration, and b) changes to how the rest of the population is living, with more young adults living with parents or in shared accommodation.

As ‘Planning for Housing in England’ explains, there are good reasons for expecting that the causes of the changes in the trends will not continue indefinitely. International migration is unlikely to go on rising and may well fall, and a return to stronger economic growth may alleviate some of the pressures that have led to changes in household formation rates.  Insofar as the changes to the trends do not continue, the latest DCLG projections may need adjustment to reflect what is likely to happen in practice.

There is also another complication. The latest official household and population projections are ‘interim’ projections produced relatively quickly after the census. This meant they had to use population trends from a previous ONS population projection. This was not ideal and, as the ONS themselves have acknowledged, may have resulted in inaccuracies in some areas, including the projections of internal migration flows – people moving from one local authority area to another within the UK. For many authorities this is largest driver of population change so a small over or under-estimate can have a substantial impact on projected population increase, and hence on housing requirements. 

‘Planning for housing in England’ makes practical suggestions about how to gauge the impact on individual authorities of the three factors – increased international migration; changing household formation patterns and the under or over-estimation of internal migration flows. Working out what this means in practice is made much easier by a simple tool “Understanding the latest DCLG projections” which is available on the RTPI website. This provides immediate access to the key ONS and DCLG data for each local authority on international migration; how household formation rates have changed; and how the projected internal migration flows compare with the flows in the recent past. This does not provide a definitive answer on whether there is a need to adjust the official projections but it should help planners to decide whether there is an issue which needs further investigation.

About Neil McDonald

Neil McDonald, Cambridge Centre for Housing and Planning Research at the University of Cambridge, is former Director of Housing Management for Homelessness and Support (2010-2011) at the Department for Communities and Local Government. In his role, he gave policy advice on housing management, homelessness, the private rented sector, affordable housing tenure and allocation reform. Prior to this, he was Chief Executive of the National Housing and Planning Advice Unit (2009-2010) and Director of Planning for Major Infrastructure (2008-2009). Neil has recently taken early retirement from the DCLG, using his time to give both paid and voluntary advice on analysis, the development of effective strategies and how teams can implement them in areas which are worthwhile. His specialities include housing markets, housing affordability and planning and policy analysis.