ED55
Tonbridge and Malling Housing Need Update
Tonbridge and Malling Borough Council
August 2020
Prepared by
GL Hearn 65 Gresham Street London EC2V 7NQ
T +44 (0)20 7851 4900 glhearn.com Tonbridge and Malling Borough Council August 2020
Contents
Section Page
1 INTRODUCTION 5
2 POPULATION AND HOUSEHOLD GROWTH 7
3 HOUSING MARKET SIGNALS AND AFFORDABLE HOUSING NEED 18
4 ECONOMIC-LED HOUSING NEED 26
5 CONCLUSIONS 28
LIST OF FIGURES
FIGURE 1: INDEXED POPULATION GROWTH (1991-2031) 8
FIGURE 2: PAST AND PROJECTED POPULATION GROWTH (2001-2031) – TONBRIDGE AND MALLING 8
FIGURE 3: NET COMPLETIONS IN TONBRIDGE AND MALLING (2011/12-2018/19) 11
FIGURE 4: THE DIFFERENCE IN AGE STRUCTURE IN 2031 (2014- AND 2016-BASED SNPP) 13
FIGURE 5: MEDIAN HOUSE PRICES (2019) 18
FIGURE 6: INCREASE IN MEDIAN PRICE (£) BY DWELLING TYPE – 2015 TO 2019 19
LIST OF TABLES
TABLE 1: PROJECTED POPULATION GROWTH (2011-31) – 2018-BASED SNPP 7
TABLE 2: PROJECTED POPULATION GROWTH (2011-31) – COMPARING PROJECTION RELEASES 7
TABLE 3: 2018-BASED VARIANT POPULATION PROJECTIONS (2011-2031) 9
TABLE 4: PROJECTED COMPONENTS OF POPULATION CHANGE – 2014- AND 2016-BASED SNPP 10
TABLE 5: POPULATION CHANGE 2011 TO 2031 BY FIVE-YEAR AGE BANDS – TONBRIDGE AND MALLING 12
TABLE 6: 2019 POPULATION FROM DIFFERENT SOURCES 13
TABLE 7: PROJECTED POPULATION GROWTH (2011-31) – 2018-BASED SNPP AND MID-YEAR POPULATION ESTIMATE 14
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TABLE 8: PROJECTED HOUSEHOLD GROWTH 2011-31 15
TABLE 9: VARIANT HOUSEHOLD PROJECTIONS (2011-33) – TONBRIDGE & MALLING 15
TABLE 10: VARIANT HOUSEHOLD PROJECTIONS + MYE (2011-33) – TONBRIDGE & MALLING 16
TABLE 11: ESTIMATED HOUSING NEED INCLUDING VACANCY ALLOWANCE – TONBRIDGE & MALLING 16
TABLE 12: SALES VOLUME – 2015 TO 2019 20
TABLE 13: WORKPLACE-BASED LOWER QUARTILE AFFORDABILITY RATIO 20
TABLE 14: MEDIAN AFFORDABILITY RATIO 21
TABLE 15: HOUSING NEED WITH AFFORDABILITY UPLIFT 25
TABLE 16: CALCULATING A BASELINE COMMUTING RATIO FOR TONBRIDGE & MALLING 26
TABLE 17: ECONOMIC LED HOUSING NEED 2011-31– TONBRIDGE & MALLING 27
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Quality Standards Control
The signatories below verify that this document has been prepared in accordance with our quality control requirements. These procedures do not affect the content and views expressed by the originator.
This document must only be treated as a draft unless it is has been signed by the Originators and approved by a Business or Associate Director.
DATE ORIGINATORS APPROVED August 2020 Ivan Tennant Paul McColgan Director
Limitations This document has been prepared for the stated objective and should not be used for any other purpose without the prior written authority of GL Hearn; we accept no responsibility or liability for the consequences of this document being used for a purpose other than for which it was commissioned.
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1 INTRODUCTION
1.1 GL Hearn was commissioned by Tonbridge and Malling Borough Council to undertake an updated assessment of housing need for the Borough. Specifically, this report seeks to assess the impact on housing need in Tonbridge and Malling as a result of the latest 2018-based Household Projections.
1.2 This follows on from the 2016 Strategic Housing Market Assessment (SHMA) which identified a need for 696 dwellings per annum (dpa) and the January 2019 Housing Needs Update which identified a need for between 664 dpa to 680 dpa, which was not seen as being a meaningful change from the 2016 SHMA.
1.3 Furthermore the January 2019 update was reliant on the 2016-based Household Projections which have been criticised by many observers, including the Government. It is therefore worthwhile comparing the outputs of this report to the 2016 SHMA as well as the more recent update.
1.4 The latest set of (2018-based) Sub-National Population Projections (SNPP) were published by the Office for National Statistics (ONS) in March 2020. Drawing from these, in June 2020, ONS published the 2018-based Sub-National Household Projections (SNHP).
1.5 The SNPP provide estimates of the future population of local authorities, assuming a continuation of recent local trends in fertility, mortality and migration which are constrained to the assumptions made for the 2018-based National Population Projections.
1.6 The SNPP and SNHP are not forecasts and do not attempt to predict the impact that future government or local policies, changing economic circumstances or other factors might have on demographic behaviour. The primary purpose of the SNPP is to provide an estimate of the future size and age structure of the population of local authorities in England.
1.7 The SNPP are also used as a common framework for informing local-level policy and planning in a number of different fields as they are produced in a consistent way.
1.8 This report seeks to interrogate the 2018-based SNPP, 2018-based Household Projections and the latest Mid-Year Estimates (MYE) (2019) to consider the potential implications for household growth and housing needs in Tonbridge and Malling.
1.9 The analysis looks at housing need over the period from 2011-31 to be consistent with previous studies carried out for the Borough. Because the projections are 2018-based and there is a known population for 2019 this essentially means that data for 2011-19 is fixed by reference to published population estimates (from ONS).
1.10 The report is split into a number of short sections considering a range of different outputs related to the new projections. These are summarised below:
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• Section 2: Population and Household Growth; • Section 3: Housing Market Signals and Affordable Housing Need; • Section 4: Economic-Led Housing Need; and • Section 5: Conclusions.
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2 POPULATION AND HOUSEHOLD GROWTH
2.1 This section sets out the projected population growth in the 2018-based SNPP and compares the findings to the 2014-based and 2016-based SNPP figures.
2.2 The table below shows projected population growth from 2011 to 2031 in Tonbridge and Malling and a range of comparator areas. The data shows that the population of Tonbridge and Malling is projected to grow by around 24,100 people. This is a 19.9% increase – this is slightly higher than the projected increase in Kent (17%) but notably above the projected increase in the region (11.2%) and for the country as a whole (11.8%).
Table 1: Projected Population Growth (2011-31) – 2018-based SNPP Population Population Change in % change 2011 2031 population Tonbridge & Malling 121,087 145,210 24,123 19.9% Kent 1,466,466 1,715,674 249,208 17.0% South East 8,652,784 9,623,462 970,678 11.2% England 53,107,169 59,389,102 6,281,933 11.8% Source: ONS
2.3 It is also possible to compare the 2018-based SNPP with the previous full set of projections. This comparison is shown for Tonbridge and Malling in the table below. This shows that the latest projections show a very slightly higher level of population growth (19.9%) over the 2011-31 period than the 2012-based (19.4%) and 2014-based projections (19.3%) but more notably higher than the 2016-based version (16.9%).
Table 2: Projected Population Growth (2011-31) – comparing projection releases 2011 2031 Change % Change
2018-based 121,087 145,210 24,123 19.9% 2016-based 121,087 141,534 20,447 16.9% 2014-based 121,087 144,456 23,369 19.3% 2012-based 121,087 144,525 23,438 19.4% Source: ONS
2.4 Figure 1 shows past and projected population growth in the period 1981 to 2031. Figures are indexed to 2011 (2011=1). For Tonbridge and Malling, the data shows relatively weak population growth in the period to about 1993, but that since then, population increases have been stronger than in other areas. This stronger level of population growth can be seen moving forward into the projections as they are trend-based.
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Figure 1: Indexed Population Growth (1991-2031)
1.3
1.2
1.1
1
0.9
Index (1=2011 Index (1=2011 Population) 0.8
0.7
Tonbridge and Malling Kent South East England
Source: ONS
2.5 It is also worthwhile focussing on this data for the more recent period (from 2001) as shown in Figure 2. The figure also includes the trend lines extrapolating trends over different periods from 2001.
Figure 2: Past and Projected Population Growth (2001-2031) – Tonbridge and Malling
150,000 145,000 140,000 135,000 130,000 125,000 120,000 115,000 110,000 105,000
100,000
2018 2021 2024 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 2020 2022 2023 2025 2026 2027 2028 2029 2030 2031 Trend 2001-18 Trend 2006-18 Trend 2011-18 Projected Linear (Trend 2001-18) Linear (Trend 2006-18) Linear (Trend 2011-18)
Source: ONS
2.6 The data shows that the population is expected to grow more slowly than past trends for much of the period to 2031, with the rate of population growth expected to reduce slightly over time (which is consistent with what is projected nationally, as a result of lower fertility rates and reduced migration).
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Variant Population Projections
2.7 As well as the principal population projections, ONS also published several variants of the 2018- based sub national population projections. These projections use a consistent set of assumptions on mortality and fertility rates but different assumptions on migration (internal and international).
2.8 As Table 3 illustrates, only the high international migration variant is higher than the principal variant. The high international variant which assumes that migration from the EU will be at 50% of historic levels.
Table 3: 2018-based Variant Population Projections (2011-2031) Change Per 2011 2031 Change % Change Annum
Principal 121,087 145,210 24,123 19.9% 1,206 10-Year Migration 121,087 142,765 21,678 17.9% 1,084 High International 121,087 146,744 25,657 21.2% 1,283 Migration Low International 121,087 143,673 22,586 18.7% 1,129 Migration Alternative Internal 121,087 143,504 22,417 18.5% 1,121 Migration Source: ONS, 2020
2.9 There is a strong rationale for looking at the 10-Year trend and alternative internal migration scenarios. These are arguably more robust from a methodological point of view than the principal projection as they use longer-term trends.
• 10-year Migrant Variant - The 10-year migration variant, as the name suggests, draws on trends from 2008 to 2018. Ten years is typically the period demographers use for examining trends. This shows a growth of around 17.9% compared to 19.9% in the principal variant. While it is reasonable to examine trends over this longer period we do not think that this projection reflects the recent changes seen in Tonbridge & Malling (such as an uplift in housing completions). • Alternative Internal Migration Variant - However, it is considered that the alternative internal migration variant is likely to be the most robust in a local context. This has been chosen as it is considered that the principal SNPP has too short a trend period (two years) to draw a trend from when looking at internal migration.
2.10 The alternative internal migration variant uses a very similar methodology to previous SNPP releases in that it draws on a five year period rather than the two year trend period in the principal variant. It can therefore be seen as a more comparable update to previous projections.
2.11 The alternative internal migration variant results in population growth of around 18.5%. This is around the mid-point of the principal variant and the 10-year migration trend variant. It is also around the midpoint of the 2016-based, 2014-based and 2012-based SNPP.
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2.12 On the basis of the more reasonable trend period, the alternative internal migration variant, as well as the principal projection, have been used as the basis for understanding future population growth, household projections and the housing need figure for Tonbridge and Malling.
Components of Population Change
2.13 The 2018-based SNPP project a 1,206 persons per annum increase. This compares to the 2016- based SNPP which projected a 1,022 persons per annum increase and 1,168 persons per annum in the 2014-based SNPP.
2.14 The majority of population growth (74%) in the 2018-based SNPP is due to the projected net number of migrants – mainly the 64% due to internal migration (see Table 4). The proportion of growth attributed to internal migration is higher than previous projections.
Table 4: Projected Components of population change – 2014- and 2016-based SNPP 2014-based SNPP 2016-based SNPP 2018-based SNPP Number % Number % Number % Natural Change 460 39% 388 38% 317 26% Internal Migration 641 55% 536 53% 766 64% International Migration 64 5% 95 9% 123 10% Total Change 1,168 100% 1,022 100% 1,206 100% Source: ONS and GLH Modelling (excluding other changes)
2.15 Reflecting the reduction in fertility rates and the reduced assumptions on life expectancy improvements natural change has gone down as a percentage of total change. Conversely. the proportion of growth due to international migration has gone up, accounting for 10% when previously this was 9% in the 2016-based SNPP and only 5% in the 2014-based SNPP.
2.16 The higher rate of growth, particularly for internal migration can in part be attributed to the rate of completions in the two years to 2018. As Figure 3 below demonstrates, the two years which the 2018-based projections are based upon (2016/17 and 2017/18) had the highest and third-highest rate of housing delivery since 2011.
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Figure 3: Net Completions in Tonbridge and Malling (2011/12-2018/19)
1400
1166 1200
1000 912 830 800 608 600 487 444 455 394 400
200
0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Source: TBBC, Housing Land Supply Position
2.17 However, housing delivery has fallen since then. Coupling this fall with the fact that the new methodology effectively amplifies the growth in the two years to 2018 justifies the greater focus on the alternative internal migration variant as the basis for assessing housing need.
Age Structure Changes
2.18 Changes to the population through growth will also changes the area’s age profile. Table 5 summarises the findings for key (five year) age groups.
2.19 The largest growth will be in people aged 65 and over. In 2031 it is projected that there will be 31,790 people aged 65 and over. This is an increase of 11,108 from 2011, representing a growth of 53.7% (2011-31). Within this the population aged 85 and over is projected to increase by an even greater proportion (86%).
2.20 Looking at the other end of the age spectrum, the data shows that there is projected to be around 12% more people aged under 15 with the smallest increase in those aged under 5. Increases are also shown for all other age groups.
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Table 5: Population Change 2011 to 2031 by five-year age bands – Tonbridge and Malling Population Population Change in % change from Age group 2011 2031 population 2011 Under 5 7,453 7,884 431 5.8% 5-9 7,712 8,715 1,003 13.0% 10-14 8,124 9,535 1,411 17.4% 15-19 8,187 9,042 855 10.4% 20-24 5,824 5,938 114 1.9% 25-29 5,824 6,447 623 10.7% 30-34 6,587 7,489 902 13.7% 35-39 8,356 9,126 770 9.2% 40-44 9,849 10,501 652 6.6% 45-49 9,671 10,325 654 6.8% 50-54 8,361 9,650 1,289 15.4% 55-59 6,975 9,197 2,222 31.9% 60-64 7,482 9,572 2,090 27.9% 65-69 6,286 9,056 2,770 44.1% 70-74 4,908 7,281 2,373 48.3% 75-79 4,085 5,665 1,580 38.7% 80-84 2,921 5,172 2,251 77.1% 85+ 2,482 4,616 2,134 86.0% Total 121,087 145,210 24,123 19.9% Source: ONS
2.21 It is also useful to compare the age structure projections from the 2018-based SNPP with similar figures in the 2016-based and 2014-based versions. The simplest way to compare the figures is to look at the age structure in 2031. This is shown in Figure 4.
2.22 The analysis shows that compared to the 2016-based projections the 2018-based SNPP shows lower numbers of those aged over 70 as well as those aged 20-24. However, for all other age groups, there is a higher number, particularly 25-54.
2.23 The analysis also shows that compared to the 2014-based projections the 2018-based SNPP shows lower numbers of the very oldest (+70) and very youngest (under 15) populations. In contrast for those age groups between 30 and 69, there is expected to be a larger population particularly those aged 40-45.
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Figure 4: The difference in age structure in 2031 (2014- and 2016-based SNPP)
85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 Under 5
0 2,000 4,000 6,000 8,000 10,000 12,000
2018-based 2016-based 2014-based
Source: ONS
Mid-Year Population Estimates
2.24 After the 2018-based SNPP, the Office of National Statistics published updated Mid-Year Population Estimates (MYE) for each local authority at the end of June 2020 (for mid-2019).
2.25 As shown in Table 6 below, both the 2018-based principal projection and the 2018-based Alternative Internal Migration scenario slightly under-estimated population growth in Tonbridge and Malling (by 269 and 459 people respectively)
Table 6: 2019 Population from Different Sources Principal Variant Alternative Internal Migration MYE 131,884 131,694 132,153 Source: ONS
2.26 Moving the population projections on one year to incorporate this data would result in an increased population projection. As shown in Table 7 below, the principal variant of the 2018-based projections
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using the latest MYE would result in a growth of 24,635. This compares to a growth of 24,123 in the published version.
Table 7: Projected Population Growth (2011-31) – 2018-based SNPP and Mid-Year Population Estimate Population Population Change in % change 2011 2031 population Principal Variant + 121,087 145,722 24,635 20.3% MYE Alternative Internal Migration Variant + 121,087 144,173 23,086 19.1% MYE Source: ONS
2.27 If the MYE were to be applied to the alternative internal migration variant then the resultant population growth (23,086 people) would also be higher than the published version of the variant (22,417 people). It would, however, remain around 1,600 persons lower than the principal variant.
London Migration
2.28 While the SHMA provided a sensitivity around migration to and from London over different trend periods this has not been updated. We would note that the GLA no longer uses the previous methodology and now based their projections on 10-year migration scenario for their central variant population projections.
Household Growth
2.29 Having studied the population growth and the age/sex profile of the population, the next step in the process is to convert this information into estimates of the number of households in the areas. To do this, the concept of headship rates (or reference rates) is used. Headship rates can be described in their most simple terms as the number of people who are counted as heads of households (or the more widely used Household Reference Person (HRP)).
2.30 The latest sets of household reference rates were published as part of the 2018-based Sub-National Household Projections (SNHP) in June 2020 by ONS1. By applying these rates to the population growth figures (as set out in Tables 2 and 6), it is possible to estimate the projected household growth over the period 2011-31. The result of which is shown in Table 8 below. It should be noted that the analysis also takes account of the institutional population (drawn from the 2018-based SNHP data).
1 Note that although the 2018-based household projections were published after the 2019 Mid-Year Population Estimates they did not incorporate the latter.
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Table 8: Projected Household Growth –by Edition 2011-31 Households Households Change in Per Population Source 2011 2031 households annum 2018-based Principal 48,068 59,816 11,748 587 2018-based Principal (+MYE) 48,068 59,863 11,795 590 2018- based Alternative Internal 48,068 58,957 10,889 544 Migration 2018-based Alternative Internal 48,068 59,090 11,022 551 Migration (+MYE) 2016-based 48,068 58,302 10,234 512 2014-based 48,068 60,176 12,108 605 2012-based 48,068 60,505 12,437 622 Source: Derived from ONS and CLG data
2.31 The analysis shows growth in households of 587 per annum in Tonbridge and Malling over the period 2011-31 linked to all assumptions in the latest population and household projections (i.e. this is the figure contained within the 2018-based SNHP). The figures for the 2018-based SNPP plus an adjustment for mid-year population estimates are shown at 590 per annum.
2.32 While this is a substantially higher level of growth than the 2016-based household projections they are notably lower than the 2014-based and 2012-based projections. This is despite the population projections being higher in the 2018-based SNPP than the 2016-based SNPP.
2.33 This could in part be linked to the much-criticised approach to household formation rates used in the 2016 (and by extension, because they use the same methodology, the 2018-based SNHP). Such criticism in part led to MHCLG to refer plan-makers to the 2014-based figures for the purposes of arriving at their housing needs figure. The changing age structure could also be partly responsible.
Variant Household Projections
2.34 The variant population projections (2018-based) have been translated into household projections. These apply the same household representative rates as the principal projections except the projected HRR variant which rather than keeping HRR constant from 2021 onwards continue the trends (upwards or downwards) from 2011. As with the population projections, only the high migration scenario results in a higher level of growth than the principal variant.
Table 9: Variant Household Projections (2011-33) – Tonbridge & Malling Households 2011 2031 Change % Change Per Annum
Principal 48,068 59,816 11,748 24% 587 10-Year Migration 48,068 58,786 10,718 22% 536 Alternative Internal 48,068 58,957 10,889 23% 544 Migration
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High Migration 48,068 60,377 12,309 26% 615 Low Migration 48,068 59,253 11,185 23% 559 Projected HRR 48,068 59,130 11,062 23% 553 Source: ONS, 2020
2.35 The main alternative internal migration variant, even when adjusted to take account of the latest MYE, produces a lower household growth (551 per annum) than the principal variant (see Table 10 below).
Table 10: Variant Household Projections + MYE (2011-33) – Tonbridge & Malling Households 2011 2031 Change % Change Per Annum
Alternative Internal 48,068 59,090 11,022 23% 551 Migration (+MYE) Source: ONS, 2020
Dwelling Growth
2.36 As well as providing estimates of household growth under different scenarios, it is also possible to make estimates of the number of additional homes to which this might equate. To do this a vacancy allowance is included in the data. For consistency with previous work, a vacancy allowance has been estimated from 2011 Census data and seeks to look at the uplift from occupied homes that should be applied to the data.
2.37 For Tonbridge and Malling, the vacancy allowance is set at 3.8%. It is assumed that such a level of vacant homes will allow for movement within the housing stock and includes an allowance for second homes. The analysis shows an annual need for 609 dwellings when using the 2018-based SNPP rising to 612 dwellings per annum (dpa) once the latest Mid-Year Population Estimates are taken into account.
Table 11: Estimated housing need including vacancy allowance – Tonbridge & Malling 2018-based 2018-based Principal Alternative Alternative Internal Principal Variant Variant (+MYE) Internal Migration Migration (+MYE) Per Annum 609 612 565 572 2011-31 12,180 12,240 11,300 11,440 Source: Derived from ONS and CLG data
2.38 The alternative internal migration variants result in a lower need at 565 dpa and 572 dpa when the MYE is taken into account.
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2.39 The Planning Practice Guidance2 (PPG) that supported the NPPF (2012)3 states that the official projections should be used as the starting point both overall and for the market signals adjustments. However, it is fairly common practice for this to include a vacancy rate.
2.40 Furthermore, consultants are encouraged within the PPG to use the latest data where possible and this would include the latest Mid-Year Population Estimates.
2.41 To conclude, the starting point housing need for Tonbridge and Malling, based on the most recently published household projections (2018-based, principal variant), is 587 dpa. However, we have concerns about the methodology used in the 2018 principal variant and in response we would recommend adopting the alternative internal migration variant.
2.42 We would also recommend taking into account the most recent MYEs, as well as an adjustment for vacant homes. Combined these would justify a slightly lower demographic housing need of 572 dpa.
2 https://webarchive.nationalarchives.gov.uk/20150728152330/http://planningguidance.planningportal.gov.uk/blog/guidanc e/housing-and-economic-development-needs-assessments/the-approach-to-assessing-need/ https://webarchive.nationalarchives.gov.uk/20150728152330/http://planningguidance.planningportal.gov.uk/blog/guidanc e/housing-and-economic-development-needs-assessments/the-approach-to-assessing-need/ 3 https://www.gov.uk/guidance/national-planning-policy-framework - The Tonbridge and Malling new Local Plan is to be informed by the NPPF 2012, as per the transitional arrangements as it was submitted before the 24th January 2019
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3 HOUSING MARKET SIGNALS AND AFFORDABLE HOUSING NEED
3.1 In this section, we consider the housing market signals in Tonbridge and Malling and consider whether, in line with Planning Practice Guidance (PPG) that supported the NPPF (2012), an uplift to improve affordability should be considered in the calculation of the Objectively Assessed Need (OAN).
Housing Market Signals
3.2 In this section, we provide an update to key indicators where there is new data available. The September 2016 OAN study provided house price data to the end of 2016. Below (Figure 5), we provide updated data for 2019 which is the latest full-year available. This section sets out updated market signals for Tonbridge and Malling in comparison to trends in Ashford, Maidstone, and Kent County figures.
3.3 As Figure 5 illustrates, the overall median house price in Tonbridge and Malling was £350,000 in 2019 which was higher than any of the comparable areas. This can be further broken down to type with detached homes selling for £510,000, Semi-Detached for £355,000, Terraced £291,000 and Flats £229.0000.
Figure 5: Median House Prices (2019)
£400,000
£350,000
£300,000
£250,000
£200,000
£150,000
£350,000
£320,000
£312,000
£305,758 £290,000
£100,000 £280,000 £235,000
£50,000
£- Tonbridge Ashford Maidstone Kent HMA South East England and Malling
Source: HM Land Registry
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House Price Change
3.4 Figure 6 shows the increase in median house prices from 2015 to 2019 by dwelling type. Overall, for all dwelling types, the median price in Tonbridge and Malling increased by £61,500 (21%). All three HMA authorities saw an increase below the Kent average of £62,500 (27%).
Figure 6: Increase in Median Price (£) by Dwelling Type – 2015 to 2019
£90,000
£80,000
£70,000
£60,000
£50,000
£40,000
£30,000
£20,000
£10,000
£0 Detached Semi-Detached Terrace Flat Overall
Tonbridge and Malling Ashford Maidstone Kent HMA South East England and Wales
Source: GLH Analysis: Land Registry Price Paid Data
3.5 Over this period there has been a very high increase in the median price for semi-detached houses in Tonbridge and Malling. This has increased by £60,000 (20%) from 2015 to 2019 – which although higher than the absolute increase seen in Ashford and Maidstone was in absolute (£64,173) and percentage terms less than the Kent-wide growth (26%).
Transactions
3.6 In terms of sales volumes, the 2016 report showed that there had been a steep drop-off in the number of house sales in 2008 following the ‘credit crunch’, followed by a slow recovery through to 2014. Table 12 below sets out the sales volumes for 2015, 2017 and 2019.
3.7 This shows that the number of sales in Tonbridge and Malling has fallen again by 26.9% over the 2015-2019 period and by 15.3% over the 2017-19. This follows a similar fall (13.7%) in the 2015- 2017 period. The decline over the 2015-2019 period is lower than that seen in across Kent as a whole (-39.6%).
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Table 12: Sales Volume – 2015 to 2019 2015-2019 2017-2019 2015 2017 2019 % Difference % Difference Ashford 2,579 2,112 1,821 -29.4% -13.8% Maidstone 3,035 3,001 2,138 -29.6% -28.8% Tonbridge and Malling 2,460 2,123 1,798 -26.9% -15.3% Kent 35,308 25,800 21,317 -39.6% -17.4% Source: GLH Analysis: Land Registry Price Paid Data
Affordability
3.8 The lower quartile affordability ratio shows the ratio between lower quartile house prices and lower quartile earnings (workplace-based). The latest data at the date of publication of the September 2016 OAN report provided provisional figures up to 2015. In Tonbridge and Malling, the 2015 figure was 12.29 although this has been revised downwards to 11.43 (i.e. lower quartile house prices were 11.43 times lower quartile annual earnings). This was still substantially higher than the Ashford, Maidstone, or national figures.
3.9 Since the publication of the September 2016 OAN report, affordability figures have been published up to 2019. The 2019 lower quartile affordability ratios show that affordability pressures have eased slightly. In Tonbridge and Malling, the 2019 ratio was 11.49 which is still the highest of the three authorities.
Table 13: Workplace-Based Lower Quartile Affordability Ratio 2015 2017 2019 Increase 2017-2019 Ashford 9.53 10.63 10.3 -0.33 Maidstone 9.76 10.57 11.07 +0.5 Sevenoaks 14.35 15.62 13.56 -0.79 Tonbridge and Malling 11.43 13.65 11.49 -2.16 Tunbridge Wells 10.51 13.28 11.88 -1.41 Kent 9.24 10.73 10.45 -0.28 England 7.11 7.26 7.27 +0.01 Source: DCLG Housing Market Live Tables
3.10 This represents a decrease of 2.16 on the 2017 figure although it is slightly higher than the 2015 figure. This level of decrease was substantially greater than that seen in any of the comparator areas within the wider area. It also represents an improvement in affordability for younger households to enter the housing market that is significant.
3.11 As well as lower quartile affordability we have examined below (Table 14) the workplace-based affordability ratio based on median earnings of those working in Tonbridge and Malling and the median house price in the Borough. By this measure, affordability has marginally deteriorated in
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Tonbridge and Malling. This is in contrast to most of the other comparators where affordability has improved.
Table 14: Median Affordability Ratio
2015 2017 2019 Change 2017-2019
Ashford 9.02 9.83 9.39 -0.44 Maidstone 9.05 10.12 10.4 +0.28 Sevenoaks 13.86 14.72 13.12 -1.60 Tonbridge and Malling 9.97 11.78 11.79 +0.01 Tunbridge Wells 10.98 13.45 12.48 -0.97 Kent 8.81 10.17 9.88 -0.29 England 7.52 7.91 7.83 -0.08 Source: DCLG Housing Market Live Tables
Affordable Housing Needs
3.12 The other necessary consideration in determining the scale of an affordability uplift for the calculation of OAN is affordable housing need. We have not re-assessed affordable housing need as part of this study.
3.13 The Borough’s estimated level of affordable housing need is set out in the Tonbridge and Malling Strategic Housing Market Assessment (SHMA) (GLH, March 2014). This identifies a net need from 4,989 households between 2013-31, equating to a need from 277 households per annum.
3.14 The affordable housing evidence suggests that a modest uplift to the demographic-based need figure to improve the delivery of affordable housing in the Borough may be justified. We have examined the key judgement as an illustration of the most appropriate response.
Kings Lynn v Elm Park Holdings (July 2015)
3.15 The case of Kings Lynn and West Norfolk Council vs. SSCLG and Elm Park Holdings decided in July 2015, involved the Council’s challenge to an inspector’s granting of permission for 40 dwellings in a village. Although much of the case was about the approach to take with regards to vacant and second homes, the issue of affordable housing was also a key part of the final judgment.
3.16 Focussing on affordable housing, Justice Dove considered the "ingredients" involved in making a Full Objectively Assessed Need (FOAN) and noted that the FOAN is the product of the Strategic Housing Market Assessment (SHMA) required by paragraph 159 of the National Planning Policy Framework (NPPF) (March 2012). It is noted that the SHMA must identify the scale and mix of housing to meet household and population projections, taking account of migration and demographic change, and then address the need for all housing types, including affordable homes.
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3.17 He continued by noting that the scale and mix of housing is ‘a statistical exercise involving a range of relevant data for which there is no one set methodology, but which will involve elements of judgement’. Crucially, in paragraph 35 of the judgment, he says that the ‘Framework makes clear that these needs [affordable housing needs] should be addressed in determining the FOAN, but neither the Framework nor the PPG suggest that they have to be met in full when determining that FOAN. This is no doubt because in practice very often the calculation of unmet affordable housing need will produce a figure which the planning authority has little or no prospect of delivering in practice’.
3.18 This is an important point, given the previous judgements in Satnam and Oadby & Wigston. And indeed, in relation to Oadby and Wigston, he notes that ‘Insofar as Hickinbottom J in the case of Oadby and Wigston Borough Council v Secretary of State [2015] EWHC 1879 might be taken in paragraph 34(ii) of his judgment to be suggesting that in determining the FOAN, the total need for affordable housing must be met in full by its inclusion in the FOAN I would respectfully disagree. Such a suggestion is not warranted by the Framework or the PPG’.
3.19 Therefore, this most recent judgement is clear that an assessment of affordable housing need should be carried out, but that the level of affordable need shown by analysis does not have to be met in full within the assessment of the FOAN. But should still be a consideration in determining the FOAN.
3.20 The approach in Kings Lynn is also similar to that taken by the inspector (Simon Emerson) to the Cornwall Local Plan. His preliminary findings in June 2015 noted in paragraph 3.20 that ‘National guidance requires consideration of an uplift; it does not automatically require a mechanistic increase in the overall housing requirement to achieve all affordable housing needs based on the proportions required from market sites.’ Several similar conclusions have been drawn at other local plan examinations.
3.21 It seems clear from this that the expectation is that it may be necessary, based on the affordable needs evidence to consider an adjustment to enhance the delivery of affordable housing, but that this does not need to be done in a “mechanical way” whereby the affordable need on its own drives the OAN.
Implications of Housing Market Signals
3.22 The updated market signals show that housing affordability has not worsened in Tonbridge and Malling over the last two years although it has not improved dramatically either. House prices have increased in the past year and the affordability ratio between house prices and earnings has improved by one measure (lower quartile) but stayed the same by another (median). However, the housing market signals suggest that, in accordance with PPG, an uplift to the demographic projections is still appropriate.
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3.23 The PPG that supported the NPPF (2012) sets out that “A worsening trend in any of the housing market signals indicators will require upward adjustment to planned housing numbers compared to ones based solely on household projections”. In the context of the PPG, the appropriate test is therefore whether an upward adjustment should be made from the starting point household projections to take account of market signals.
3.24 There is however no guidance as to what an appropriate upwards adjustment should be instead the PPG sets out that it should be “at a level that is reasonable”. There have been several inspectors’ reports which have examined what is “reasonable”. These are set out below.
Inspectors’ Views on Market Signals Uplifts
3.25 Two of the earliest inspectors’ reports where market signals were considered in detail are in Eastleigh and Uttlesford. In both cases, different inspectors suggested that the local authorities should consider increasing housing need by 10% as a result of the evidence. Key quotes from these reports are provided below.
• Eastleigh (February 2015) – ‘It is very difficult to judge the appropriate scale of such an uplift. I consider a cautious approach is reasonable bearing in mind that any practical benefit is likely to be very limited because Eastleigh is only part of a much larger HMA. Exploration of an uplift of, say, 10% would be compatible with the “modest” pressure of market signals recognised in the SHMA itself’ • Uttlesford (December 2014) – ‘I conclude that it would be reasonable and proportionate, in Uttlesford’s circumstances, to make an upward adjustment to the OAN, thereby increasing provision with a view to relieving some of the pressures. In my view it would be appropriate to examine an overall increase of around 10%...’
3.26 However, more recently some inspectors have taken a stronger approach to market signals adjustments this includes:
• Waverley where the inspector applied a 25% uplift based on a median affordability ratio of 15.45; • Mid Sussex where the inspector applied a 20% uplift based on a median affordability ratio of 12.6; • Canterbury where the inspector applied a 20% uplift based on a median affordability ratio of 10.6; • Runnymede where the inspector applied a 20% uplift based on a median affordability ratio of 11.93; • Reading where the inspector applied a 10% uplift based on a median affordability ratio of 6.58;
3.27 For balance, it should be noted that some inspectors have not suggested any need for an uplift due to market signals and these would include:
• Mendip (October 2014 – Appendix 7) where the median affordability ratio at the time of examination was 9.0 – ‘these findings indicate that trends in Mendip sit fairly comfortably alongside county, regional and national trends and do not, therefore, justify an upward adjustment of the housing numbers that came out of the housing projection’
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• Crawley (May 2015 – Appendix 8) where the median affordability ratio at the time of examination was 7.2 – ‘I am not convinced that the market signals uplift is justified by the evidence, for the various indicators reveal a situation in Crawley which is not as severe as in other North West Sussex authorities, and one that has not worsened in recent years’ (this is an interesting case given that the Council themselves had suggested an uplift for market signals) • Cornwall (June 2015) where the median affordability ratio at the time of examination was 9.0 – ‘National guidance is that a worsening trend in any relevant market signal should result in an uplift. But for the reasons given below I do not consider that I should require such an uplift to be made for Cornwall at this time’ (this one is also interesting given that it was the same inspector as Eastleigh)
Considering Market Signals and OAN
3.28 The approach to calculating an affordability uplift taken in the 2016 OAN study (September 2016) - which focussed on the 2014-based projections – was to model the implication of increasing the household representative rates of the 25-34 age group.
3.29 The projections showed a decline in household representative rates in younger people (those aged between 25 and 34) over the period 2001-2011. The model calculated the number of dwellings required to return the formation rates of 25- to 34-year olds back to 2001 levels (i.e. before the rate started to decrease) by 2031. The report also set out an approach to increasing the annual growth rate to 1.3%. This required an uplift equivalent to 12.5% on the 2014-based SNPP. However, on the balance of judgement, a larger adjustment may now be required.
3.30 Additionally, it can be noted that the 2018-based SNHP are generally regarded as building in a greater degree of suppressed household formation. The MHCLG housing need consultation of October 2018 notes that the projection methodology focuses ‘more acutely on a period of low household formation where the English housing market was not supplying enough additional homes’ (paragraph 11). This further points to a higher market signal uplift in response to both factors.
3.31 Given the need for a higher market signals it would seem reasonable that an adjustment of up to 25% would be appropriate. However, affordability by at least one measure has improved and bringing this in line with more recent examining inspectors’ reports, particularly Runnymede a justification of 20% could also be made.
3.32 As per the relevant PPG this should be applied to the starting point of 587 dpa, as well as also (for comparison) the additional modelling that includes the demographic conclusion which draws on the alternative internal migration variant and adjusts for the 2019 Mid-Year population estimates and a vacant home allowance.
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Table 15: Housing Need with Affordability Uplift Starting Point Alternative Internal Migration (2018-based HH) Variant (+MYE) Demographic Need 587 587 572 572 Affordability Uplift (%) 20% 25% 20% 25% Affordability Uplift (dwellings) 117 147 114 143 2016-based SNPP with 704 734 686 715 Affordability Uplift
3.33 As shown, the 25% uplift results in an OAN of between 715 dpa and 734 dpa which is around 19 dpa to 38 dpa higher than the conclusions of the September 2016 SHMA report (OAN of 696 dpa). This difference of between +2.7% and +5.5% is not considered to be a meaningful change.
3.34 If we were to examine the need based on a 20% uplift, the OAN would range from 686 dpa to 704 dpa which is only 10 dpa lower and 8 dpa higher than the conclusions of the September 2016 SHMA. This would be less of a meaningful change.
3.35 The adjustment for market signals is intended to help future improvements to local affordability. It would also have the added benefit of enabling a significant contribution to meet the affordable housing needs in the area.
3.36 Given the year-on-year changes to the affordability ratio and the fact that only one measure is reducing, albeit significantly, the higher uplift would provide more flexibility to mitigate against this being a single year change rather than a trend. Although continued improvement would justify a shift towards a lower uplift.
3.37 Furthermore, it would also provide a greater supply of economically active population to help meet local economic growth (this is examined in more detail in the following chapter) as well as improve local household representative rates.
3.38 This is particularly important given the criticism of the 2018-based household projections, which as previously noted focus on trends in a period (2001-2011) where both household formation and housebuilding (at least at a national level) were low.
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4 ECONOMIC-LED HOUSING NEED
4.1 The Planning Practice Guidance (PPG) that supported the NPPF (2012) sets out that trend-based demographic projections should provide the starting point for assessing housing need. However, the approach set out in the PPG requires plan makers to consider how the economy might perform, and if higher housing provision might be needed to support growth in jobs. It outlines that:
‘Plan makers should make an assessment of the likely growth in job numbers based on past trends and/or economic forecasts as appropriate and also having regard to the growth of the working age population’. And that: ‘Where the supply of working age population that is economically active (labour force supply) is less than the projected job growth, this could result in unsustainable commuting patterns (depending on public transport accessibility or other sustainable options such as walking or cycling) and could reduce the resilience of local businesses. In such circumstances, plan makers will need to consider how the location of new housing or infrastructure development could help address these problems.’
4.2 The latest evidence concerning economic growth in the Borough is set out in the “Update of Employment Land Needs in Tonbridge and Malling” (November 2017) which was produced by Turley. That report sets out an expected growth of 720 jobs per annum over the 2011-31 period.
4.3 To consider the level of housing provision which might be needed to support the 14,400 expected growth in jobs over the 2011-31 period we need to take account of the number of people with more than one job (double-jobbing), commuting ratios and changes to unemployment.
4.4 Based on a long term average (2004-2020) the Annual Population Survey estimates that around 3.6% of those working in Tonbridge and Malling hold down more than one job. We have assumed this stays constant. Similarly, we have assumed that commuting ratios as set out in the 2011 census (which although dated is the best available evidence) also stay constant.
4.5 Table 16 below sets out the commuting ratio for Tonbridge and Malling. The commuting ratio is 0.997 which means that for every 1,000 people commuting into the borough for employment 997 commute out. There is a, therefore, a very broad balance of commuting.
Table 16: Calculating a baseline commuting ratio for Tonbridge & Malling Tonbridge & Malling Live and work in the Borough 17,501 Work at or mainly from home 6,917 No fixed workplace 5,284 In-commuting 30,778 Out-commuting 30,624 Work in the Borough 60,480 Live in the Borough and are working 60,326 Commuting Ratio 0.997 Source: ONS, Census 2011
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4.6 The commuting ratio (0.997) is multiplied by the level of double jobbing (0.964) to get to an adjustment factor. The adjustment factor is then multiplied by the number of jobs for Tonbridge and Malling this means that 13,840 economically active residents would be required to support 14,400 additional jobs.
4.7 The final adjustment uses data from NOMIS (modelled unemployment) which sets out a fall in unemployment of 1,300 people from 2011 to 2019 and so the increase in economically active residents would be 1,300 lower (i.e. 12,540). We have not assumed any further changes to unemployment.
4.8 Having estimated the likely required change to the workforce (12,540), the next stage is to estimate how much population growth is implied by this and the resultant housing need. This entails making assumptions about how economic participation might change in the future. Data has been modelled using the Office of Budget Responsibility rates – national dataset adjusted to a local baseline.
4.9 Note for completeness of updating, information from the 2019 mid-year population estimates (MYE) has also been included. As set out in Table 17 below the economic led housing need results in a need for 567 dpa.
Table 17: Economic Led Housing Need 2011-31– Tonbridge & Malling Households Households Change in Dwellings Per annum 2011 2031 households per annum 48,068 58,991 10,923 546 567 Source: ONS, Census 2011
4.10 The demographic need with market signals adjustments results in a higher need by any of the four measures examined. This would be more than adequate to meet the identified economic need herein. There is, therefore, no need for a further increase to the OAN as a result of economic growth. Maintaining the emerging housing requirement of 696 dpa would also more than provide for the economic-led housing need.
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5 CONCLUSIONS
5.1 Overall, the 2018-based Sub-National Household Projections (SNHP) for Tonbridge and Malling show an average annual household growth (2011-31) of 587. This is higher than the 2016-based projections but lower than the 2012-based and 2014-based equivalents. When the latest mid-year population estimates are included within the calculations the need increases to 590 dpa.
5.2 However, there are concerns relating to the methodology for these projections particularly the use of the two years’ worth of data for the internal migration element of the population growth. The ONS themselves recognises the difficulty in drawing trends from just two years of data on their website4
“There is a chance that using only two years of data will create unusual averages for local authorities experiencing abnormal migration patterns over this short period
5.3 On examining completions within Tonbridge and Malling this appears to be the case as housing delivery was significantly higher during the two year trend period than periods before or since. This would justify the use of the alternative internal migration variant which draws on a longer trend period (five years) and shows a lower rate of growth even when the latest MYE are included (551 households per annum).
5.4 To translate household growth into dwellings we apply a vacancy rate of 3.8%. This resulted in a housing need of 612 dpa using the principal variant and 572 dpa using the alternative internal migration variant, both of which have been updated to include the MYE. This reflected our demographic conclusions whereby the official projections are at the lower end of the range and the forecasts adjusted for MYE are at the upper end.
5.5 This report has not re-assessed affordable housing needs. The March 2014 SHMA identifies an affordable housing need of 277 dpa.
5.6 Following Planning Practice Guidance (PPG) that supported the NPPF (2012), we next considered whether it would be appropriate to consider any uplifts to account for economic growth or to improve housing affordability.
5.7 We have provided an updated analysis of housing market signals. This analysis shows that housing affordability is not a significantly worsening issue (if at all) in Tonbridge and Malling over the last two years. However, in accordance with Planning Practice Guidance (PPG) that supported the NPPF (2012), an uplift to improve affordability is still required.
5.8 Considering the above factors, we considered that a 12.5% uplift based on adjustments applied in the previous report (SHMA, September 2016) was insufficient given recent decisions. We have
4 https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/metho dologies/subnationalpopulationprojectionsacrosstheukacomparisonofdatasourcesandmethods
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applied uplifts of 20% to 25% to the demographic projections as published and as per the PPG which is 704 dpa to 734 dpa.
5.9 We have also uplifted the demographic conclusion of 572 dpa, based on the alternative internal migration variant plus the MYE. This calculates an overall housing need of between 686 dpa and 715 dpa.
5.10 We would place greater weight on the higher end of the concluded range (715 dpa to 734 dpa, based on a25% uplift) given our (and ONS’) concerns about the use of shorter-term trends (two years) and the high level of completions in the two year trend period. The greater uplift would also better address affordability and take into account potential year-on-year variations in affordability ratios. Although this should be monitored and continued improvement to affordability could justify a lower uplfit.
5.11 Finally, we considered whether the demographic growth adjusted for market signals was sufficient to support economic growth in the Borough. To do this we have used the same methodology as the September 2016 OAN Update report as the core scenario. This resulted in an economic led need for housing of up to 567 dpa. Therefore, in drawing conclusions on the OAN a further upward adjustment to support economic growth is not justified.
5.12 This report therefore concludes that the OAN in Tonbridge and Malling for the period 2011 to 2031 is between 715 dpa and 734 dpa based on a 25% uplift. This would be sufficient to respond to market signals, including affordability, as well as making a significant contribution to affordable housing needs.
5.13 The PPG that supported the NPPF (2012) indicates that housing assessments are not automatically rendered outdated every time new projections are issues and that the question is whether the latest projections result in a “meaningful change in the housing situation”.
5.14 It is notable that the level of need identified in this report is slightly higher than the 664 dpa to 680 dpa OAN identified in the Housing Need Update (January 2019) which examined the impact of the 2016-based Projections.
5.15 However, the conclusion of the January 2019 report was to reconfirm the appropriateness of the previous OAN of 696 dpa. The 16 – 32 dpa difference between the newer figures (January 2019) and the 2016 SHMA figures was not seen as being a meaningful change.
5.16 In our opinion, the assessment of OAN of between 715 dpa and 734 dpa within this report is still not a “meaningful change” from the 2016 SHMA assessment of OAN of 696 dpa which informed the submitted Local Plan, given the difference is only around 19 dpa to 38 dpa (+2.7% to +5.5%).
5.17 Maintaining the previous OAN of 696 dpa for planning purposes would also meet the expected demographic and economic growth and provide further improvements to local affordability. It is also worth considering the significant contribution it would make to meeting affordable housing need.
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General Disclaimer
This report has been prepared by GL Hearn Limited (GL Hearn) in favour of Tonbridge and Malling Council (“the Client”) and is for the sole use and benefit of the Client in accordance with the agreement between the Client and GL Hearn dated January 2019 under which GL Hearn’s services were performed. GL Hearn accepts no liability to any other party in respect of the contents of this report. This report is confidential and may not be disclosed by the Client or relied on by any other party without the express prior written consent of GL Hearn.
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