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General Report Template Strategic Housing Market Assessment London Borough of Richmond upon Thames Final Draft Report June 2016 Prepared by GL Hearn 280 High Holborn London WC1V 7EE T +44 (0)20 7851 4900 glhearn.com Strategic Housing Market Assessment, Final Draft Report, June 2016 London Borough of Richmond upon Thames GL Hearn Page 2 of 194 J: \Planning\Job Files\J035222 - Richmond SHMA\Reports\Final Draft Report JUNE 2016 v2.docx Strategic Housing Market Assessment, Final Draft Report, June 2016 London Borough of Richmond upon Thames Contents Section Page EXECUTIVE SUMMARY 5 1 INTRODUCTION 10 2 POLICY CONTEXT 12 3 SPATIAL DYNAMICS 24 4 THE BOROUGH’S POPULATION 42 5 TREND BASED DEMOGRAPHIC PROJECTIONS 54 6 INTERACTION WITH ECONOMIC PERFORMANCE 78 7 AFFORDABLE HOUSING NEED 94 8 HOUSING MARKET CONDITIONS AND MARKET SIGNALS 118 9 NEED FOR DIFFERENT TYPES OF HOMES 139 10 HOUSING NEED OF PARTICULAR GROUPS WITHIN THE POPULATION 167 11 CONCLUSIONS 190 GL Hearn Page 3 of 194 J: \Planning\Job Files\J035222 - Richmond SHMA\Reports\Final Draft Report JUNE 2016 v2.docx Strategic Housing Market Assessment, Final Draft Report, June 2016 London Borough of Richmond upon Thames 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 June 2016 Paul McColgan Nick Ireland, Associate Director Planning 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. GL Hearn Page 4 of 194 J: \Planning\Job Files\J035222 - Richmond SHMA\Reports\Final Draft Report JUNE 2016 v2.docx Strategic Housing Market Assessment, Final Draft Report, Relevant Planning Policies London Borough of Richmond upon Thames EXECUTIVE SUMMARY 1. This summary brings together the key findings of the SHMA Report. It is structured to set out the policy context and then GL Hearn’s conclusions in turn: regarding the geography of the housing market area; the overall objectively assessed need for housing; and then findings relating to the need for different types of homes and the housing needs of specific segments of the population. Relevant Planning Policies 2. The 2015 London Plan (as updated) sets a minimum 10 year target for 3,150 homes between 2015- 25 (315 per annum) for Richmond Borough. 3. The 2009 Core Strategy for LB Richmond sets a minimum housing target for 2,700 dwellings in the Borough between 2007-17 (270 per annum). Policy CP14 requires the maximum intensity of use of a site to be made compatible with the local context whilst respecting the quality, character and amenity of existing neighbourhoods. Development is expected to take place on brownfield land, with no greenfield development expected. 4. CP15 provides policies regarding affordable housing provision. 50% on-site affordable housing provision is expected on sites of over 10 dwellings (with a financial contribution expected from smaller sites). 40% is expected to be delivered for social rent, and 10% intermediate housing. The policy in particular promotes delivery of larger social rented units. 5. Further to that, most recent Housing and Planning Act introduced Starter Homes- a governmental initiative to help young (below 40), first-time buyers to purchase a home. This shall have implications on the delivery of more traditional forms of affordable housing, such as social/ affordable rent. Housing Market Area 6. The Borough’s housing market is closely integrated with those in other West and South West London Boroughs, and also forms part of a wider London housing market that extends across the Capital and has strong links and inter-relationships into the Home Counties. 7. LB Richmond’s strongest links are with Hounslow, Wandsworth and Kingston Boroughs. The evidence points to a net inflow of those in their late 20s and their 30s into the Borough, these groups are particularly seeking family-sized accommodation. 8. Demographic trends have seen an increase in all age groups over 40, together with children, in the recent past. There is a modest net out-migration of those in all age groups over 40 – this is to a range of areas outside London, including to Surrey. 9. Due to the complex interactions between Boroughs and across the Capital, London is defined by GLA as a housing market area in its own right. This report deals solely with the need in the London Borough of Richmond. GL Hearn Page 5 of 194 J: \Planning\Job Files\J035222 - Richmond SHMA\Reports\Final Draft Report JUNE 2016 v2.docx Strategic Housing Market Assessment, Final Draft Report, Housing Market Area London Borough of Richmond upon Thames Overall Housing Need 10. The latest official demographic projections are the starting point for this and other assessments of housing need. The analysis in this report has reviewed a range of demographic projections. It concludes that the GLA Long-Term Migration Projections provide a reasonable assessment of demographic trends, if land supply constraints are ‘left aside.’ For Richmond projections expect 16.3% population growth between 2014-33 in the Borough, and result in a housing need for 913 dwellings per annum. Population Population Change in % change 2014 2033 population GLA – short-term 193,849 229,457 35,609 18.4% GLA – long-term 193,777 225,337 31,560 16.3% GLA (SHLAA) – short-term 193,849 208,310 14,461 7.5% GLA (SHLAA) – long-term 193,777 197,256 3,479 1.8% 2012-based SNPP 194,039 233,549 39,510 20.4% 2012-based SNPP (as updated) 193,585 231,971 38,386 19.8% 11. The analysis concludes that these are the most appropriate unconstrained projections although consideration should also be given to the GLA SHLAA Long-Term Projection which reflect a supply constrained position. 12. GL Hearn have also considered 2012- based household projections as reasonable projections for LB of Richmond. However, there are concerns about the projected direction of the rates for some age groups. In particular, younger age groups (aged up to 44) show reducing household formation rates (which may indicate a degree of suppression) whilst older age groups (65+) show increases in formation rates – a scenario considered unlikely given improvements to life expectancy. 13. Alternative scenarios developed to hold formation rates constant (from 2014) do however show similar levels of household growth; confirming the CLG Projections (when taken across all age groups) as providing reasonable outputs. GL Hearn Page 6 of 194 J: \Planning\Job Files\J035222 - Richmond SHMA\Reports\Final Draft Report JUNE 2016 v2.docx Strategic Housing Market Assessment, Final Draft Report, Housing Market Area London Borough of Richmond upon Thames Projected housing need – range of demographic based scenarios and 2012-based headship rates – Richmond Dwellings Households Households Change in Per annum (per 2014 2035 households annum) GLA – short-term 82,592 101,863 19,271 1,014 1,052 GLA – long-term 82,327 99,055 16,728 880 913 GLA (SHLAA) – short-term 82,592 93,311 10,719 564 585 GLA (SHLAA) – long- 82,327 87,787 5,460 287 298 term 2012-based SNPP 82,563 103,803 21,240 1,118 1,160 2012-based SNPP (as 82,681 103,621 20,940 1,102 1,143 updated) Source: Demographic Projections 14. The headship rates used in the 2012-based Household Projections are considered to be more reliable than the previously published (2011-based) Interim Household Projections. The 2012-based Household Projections generate a higher level of anticipated household growth for a given population than the previous (2011-based interim) Household Projections. If headship rates remained static then the housing need would be around 815 dwellings per annum. 15. Once applying the formation rates from the 2012-based household projections to the long-term population estimates (and including a vacancy allowance) it is concluded that the (unconstrained) demographic-based need for housing in the Borough is for around 895 - 915 dwellings per annum in the 2014-33 period – linked to the GLA 10-year migration projection. This is at the bottom end of the range identified by the demographic projections but is consistent with past trends in population growth. Evidently taking account of land supply, expected growth will be lower, which could result in a stronger relative ageing of the population in the Borough. 16. In drawing conclusions on the potential OAN, these figures should be regarded as a minimum level of provision. Economic factors do not provide an upside to this assessment of need: they show a need for 741 – 893 homes per annum based on forecasts which potentially overstate the likely performance of the Borough’s economy given in particular a diminishing stock of office floorspace available to accommodate jobs growth. 17. In respect of affordability issues, in terms of market signals and affordable housing need, whilst in an unconstrained situation these might be considered as justifying higher housing provision relative to the demographic need, this is unrealistic set against a constrained land supply. A notional ‘unmet housing need’ should be measured against the demographic-based need set out (895 – 915 dwellings per annum). Affordable Housing Need & Market signals 18. Market signals section indicates that house prices increased by a third between 2010-15 and are higher than in many Outer London Boroughs. Rental costs have increased 39% between 2011-15, alongside a substantial increase of PRS between 2001 and 2011 but particularly in the post recessionary period.
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