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LHNA Sept 2020 (PDF 8.52Mb) South West Hertfordshire Local Housing Needs Assessment On behalf of Dacorum, Hertsmere, St. Albans, Three Rivers and Watford Councils September 2020 Prepared by GL Hearn 65 Gresham Street London EC2V 7NQ T +44 (0)20 7851 4900 glhearn.com South West Hertfordshire Local Housing Needs Assessment, September 2020 Contents Section Page EXECUTIVE SUMMARY AND RECOMMENDATIONS 4 1 INTRODUCTION 14 2 DEMOGRAPHIC GROWTH AND HOUSING NEED 22 3 ECONOMIC LED HOUSING NEED 37 4 MARKET SIGNALS 48 5 AFFORDABLE HOUSING NEED 69 6 HOUSING MIX 116 7 HOUSING NEEDS OF OLDER AND DISABLED PERSONS 142 8 HOUSING NEEDS OF DIFFERENT GROUPS 169 9 HOUSING DELIVERY 185 Appendices APPENDIX A: DEMOGRAPHIC ANALYSIS 193 APPENDIX B: COST AND AFFORDABILITY ANALYSIS BY LOCAL AUTHORITY 211 APPENDIX C: CHANGE IN HOUSEHOLD TYPES AT A LOCAL AUTHORITY LEVEL 214 APPENDIX D: AVERAGE BEDROOM BY AGE AND TENURE 217 APPENDIX E: CHANGE IN HOUSEHOLDS BY AGE OF HOUSEHOLD REFERENCE PERSONS FOR EACH LOCAL AUTHORITIES 220 APPENDIX F: OLDER PERSONS’ ACCOMMODATION – RECENT PLANNING DECISIONS 223 GL Hearn Page 2 of 227 J:\Planning\Job Files\J039924 - South West Herts - SHMA Update\Report\September 2020 LHNA Clean V3.docx South West Hertfordshire Local Housing Needs Assessment, September 2020 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 Nena Pavlidou Paul McColgan Senior Planner 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. 3 South West Hertfordshire Local Housing Needs Assessment, September 2020 EXECUTIVE SUMMARY AND RECOMMENDATIONS • GL Hearn was commissioned by Dacorum Borough Council, Hertsmere Borough Council, St. Albans City and District Council, Three Rivers District Council, and Watford Borough to prepare a Local Housing Needs Assessment (LHNA). • The purpose of the LHNA is to assess future development needs for housing across South West Hertfordshire over the 2020-2036 period. This, in turn, will be used to inform strategic and local planning activities. It also considers the need for different types of housing, and the housing needs of different groups within the South West Hertfordshire Housing Market Area (HMA) and constituent authorities. Demographic Trends and Housing Need Projections • The new National Planning Policy Framework (NPPF2) of February 2019 has introduced a Standard Method for assessing local housing need (LHN). • Step 1 of the standard method draws on the 2014-based household projections which set out a household growth of 2,888 per annum over the period 2020-2030. • Step 2 of the standard method increases the LHN based on local affordability. On average in SW Herts the local authorities have a workplace-based median affordability ratio of 13.9. Using the prescribed formula, the local affordability ratio results in an average uplift of 61%. This increases the need from 2,888 dwellings per annum (dpa) to 4,674 dpa. On an individual basis, all of the Local Authorities had an increase of at least 52%. • To ensure deliverability Step 3 of the standard method caps the uplifts in Step 2 to 40% above the household projections (Step 1). This is because all of the Local Plans are more than 5 years old and all had a target lower than the household forecasts (Step 1). • The capped need reduces the local housing need (LHN) for the study area to 4,043 dwellings per annum. This table below sets out this calculation for each local authority. St. Three SW Dacorum Hertsmere Watford Albans Rivers Herts Average Household 731 512 638 446 562 2,888 Change (Step 1) Affordability Ratio 2018 12.3 14.3 16.8 13.7 12.5 Adjustment Factor 1.52 1.64 1.8 1.6 1.53 Adjusted LHN (Step 2) 1,108 841 1,148 715 862 4,674 Cap Applied 40% 40% 40% 40% 40% Step 3 – LHN 1,023 717 893 624 787 4,043 • Local demographics do not indicate any exceptional circumstances to move away from the LHN calculated above. • Recommendation: The local authorities seek to deliver a minimum of 4,043 dwellings per annum across the South West Herts HMA. Although calculated over the 2020-2030 period the LHN can also be applied to the latter part of a plan period beyond 2030. There is no requirement to take account of under-delivery prior to 2020. The Local Authorities can redistribute the LHN across the HMA. 4 South West Hertfordshire Local Housing Needs Assessment, September 2020 • To understand the population implications of delivering 4,043 dpa a scenario has been modelled whereby household formation rates are improved and population growth increased to a point where these homes are filled. • If 4,043 dwellings per annum are provided this would result in an additional 122,682 people in the study area (over the period 2020-2036). This can be disaggregated to the local authorities on the following basis. Dacorum Hertsmere St. Albans Three Rivers Watford SW Herts 31,724 21,765 26,128 18,294 24,771 122,682 Economic Growth and Housing Need • This report examined the potential employment growth in SW Hertfordshire which the standard method would support drawing on a range of datasets and reports. • In translating this into housing need the calculations have made several assumptions relating to double-jobbing, commuting, economic activity rates and household formation rates. • The Standard Methodology would help support a considerably higher rate of job growth (64,844) than that set out in the SW Herts Economy Study (20,553). At a local authority level, the following number of additional jobs would be supported. Change (20- 36) Dacorum 16,069 Hertsmere 10,871 St. Albans 13,470 Three Rivers 8,029 Watford 16,405 South West Herts 64,844 • Recommendation: There is no requirement for the Councils to increase the number of homes they plan for to support local economic growth. • The Councils should as far as possible strive to achieve delivery of new housing where the jobs are to minimise the mismatch between the location of new houses and jobs in South West Hertfordshire. • If the local authorities cannot deliver the level of identified employment growth this will likely result in a surplus labour force within South West Herts. This will impact commuting as residents seek work elsewhere. • The councils should work through the duty to cooperate with neighbouring authorities/HMAs to ensure housing need is not being double counted and that any required infrastructure improvements are planned for. 5 South West Hertfordshire Local Housing Needs Assessment, September 2020 Market Signals • This update does not fully consider market signals on the basis that much of the evidence has not changed since the 2016 SHMA was published. It remains the case that there are some signs of market signals pressures evident across the market which is impacted by its proximity to the Capital. In particular: • House prices in the HMA are 91% above the national average, 55% above the regional and just 6% below London’s 2017 housing values. • Over the 5 years to Q3 2017, the HMA has seen an increase in house prices of 47% compared to 24% nationally; 42% regionally and 44% in London. • Over the 10 and 15 years to Q3 2017, housing values in South West Hertfordshire have grown above both the regional and national equivalents but just below London’s growth. • Rents have grown since 2011 by 32% reaching £1,135 pcm which is similar to London’s median rent and well above the wider comparators, including the general Consumer Price Index (CPI) and the Housing CPI. • All the affordability ratios examined herein suggest that there are affordability pressures across the HMA. Both median and lower quartile workplace-based rates are above all the comparators including London’s average. • Stakeholder engagement reveals: Sales Market: • The uncertain market is currently due to an increase in interest rates and the uncertainty surrounding Brexit. • Prices have been static and sales volumes have decreased compared to 2016 and 2014. • Limited investors’ activity – mainly small local investors currently. • Diverse profile of buyers from first-time and young professionals, to families and retirees. • Most popular properties are those with 2- and 3- bedrooms in proximity to train stations. • Lack of new build provision in the market. Rental Market: • Appears stronger compared to the sales market and it is very active even in the current political climate. • Tenants’ profile: a wide mix of demographics similar to the sales market. • According to agents the most sought after properties are 1-2 bed homes near train stations and 2-3 beds in more rural areas with good transport links. • Lack of new builds in the market. • Renters are typically young professionals and families. • The rental market is fairly buoyant despite Brexit. • In summary, there are some severe affordability issues in South West Hertfordshire. This is addressed through the standard methodology, specifically the 40% uplift within steps 2 and 3. • Recommendation: There is no requirement to make any further uplifts to housing need or the housing requirement related to market signals. Affordable Housing Need • Analysis has been undertaken to estimate the need for affordable housing in the 2020-2036 period. The analysis is split between affordable housing to rent and affordable housing to buy.
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