Leicester and Leicestershire Strategic Housing Market Assessment Leicester and Leicestershire Local Planning Authorities Report June 2014 Prepared by GL Hearn Limited 280 High Holborn London WC1V 7EE T +44 (0)20 7851 4900 F +44 (0)20 7851 4910 glhearn.com Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 Contents Section Page EXECUTIVE SUMMARY 11 1 INTRODUCTION 15 2 DEFINING THE HOUSING MARKET AREAS 17 3 POLICY CONTEXT 28 4 HOUSING MARKET DYNAMICS AND MARKET SIGNALS 31 5 DEMOGRAPHIC PROJECTIONS 80 6 AFFORDABLE HOUSING NEED 103 7 NEED FOR DIFFERENT SIZES OF HOMES 131 8 HOUSING NEEDS OF SPECIFIC GROUPS IN THE POPULATION 145 9 CONCLUSIONS AND RECOMMENDATIONS 182 LIST OF FIGURES FIGURE 1: CLG-DEFINED STRATEGIC HOUSING MARKET AREAS 18 FIGURE 2: CLG-DEFINED LOCAL HOUSING MARKET AREAS 19 FIGURE 3: SPATIAL BOUNDARIES IN EAST MIDLANDS 20 FIGURE 4: UNDERSTANDING HOUSING DEMAND 31 FIGURE 5: UK ECONOMIC GROWTH, 2007-2013 33 FIGURE 6: TRENDS IN GROSS MORTGAGE LENDING, UK 34 FIGURE 7: INTEREST RATES 35 FIGURE 8: MORTGAGE PAYMENTS AS A % OF MONTHLY INCOME 36 FIGURE 9: MEDIAN HOUSE PRICE TRENDS, 1998 – 2007 37 FIGURE 10: MEDIAN HOUSE PRICE TRENDS, 2008-2013 (Q2) 38 FIGURE 11: MEDIAN HOUSE PRICES BY TYPE – LOCAL AUTHORITIES (AUG 2012-FEB 2013) 39 GL Hearn Page 3 of 239 J:\Planning\Job Files\J031082 - Leicestershire SHMA\reports\Leicestershire SHMA Report June V6.docx Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 FIGURE 12: SALES TRENDS –OVERALL, 1998-2011 40 FIGURE 13: INDEX SALES TRENDS (2011-2013) 41 FIGURE 14: SALES INDEX (INDIVIDUAL DISTRICTS), 1998 – 2011 42 FIGURE 15: PERCENTAGE OF SALES BY TYPE – LA LEVEL, DECEMBER 2012 – NOV 2013 42 FIGURE 16: MEDIAN MONTHLY RENTAL LEVELS – 2011 - 2013 43 FIGURE 17: LOWER QUARTILE AFFORDABILITY (PRICE/INCOME) (1997 - 2012) 44 FIGURE 18: BOUNDARY OF THE LEICESTER PRINCIPAL URBAN AREA 48 FIGURE 19: INDEXED GROWTH IN DWELLING STOCK, 2001-11 76 FIGURE 20: NET COMPLETIONS 2001-2012 77 FIGURE 21: PAST AND PROJECTED TRENDS IN AVERAGE HOUSEHOLD SIZE – L&L 92 FIGURE 22: MAP OF LEICESTER PRINCIPAL URBAN AREA AND PLANNED EXTENSIONS 99 FIGURE 23: LEICESTER AND SURROUNDS BRMA 109 FIGURE 24: DISTRIBUTION OF HOUSEHOLD INCOME – LEICESTER & LEICESTERSHIRE 112 FIGURE 25: OVERVIEW OF BASIC NEEDS ASSESSMENT MODEL 113 FIGURE 26: OVERLAP BETWEEN AFFORDABLE HOUSING TENURES 127 FIGURE 27: PROPORTION OF HOUSEHOLDS WHO CANNOT AFFORD MARKET HOUSING BY INCOME CATEGORY 128 FIGURE 28: NET NEED WITHIN DIFFERENT AFFORDABILITY CATEGORIES 129 FIGURE 29: APPROACH TO HOUSING MARKET MODELLING 132 FIGURE 30: AVERAGE BEDROOMS BY AGE, SEX AND TENURE – LEICESTER & LEICESTERSHIRE HMA 133 FIGURE 31: IMPACT OF DEMOGRAPHIC TRENDS ON AFFORDABLE HOUSING NEED BY HOUSE SIZE, 2011 TO 2036 – LEICESTER & LEICESTERSHIRE HMA 136 FIGURE 32: IMPACT OF DEMOGRAPHIC TRENDS ON MARKET HOUSING NEED BY HOUSE SIZE, 2011 TO 2036 – LEICESTER & LEICESTERSHIRE HMA 137 FIGURE 33: POPULATION AGE PROFILE BY LOCAL AUTHORITY (2011) 147 FIGURE 34: TENURE OF OLDER PERSON HOUSEHOLDS – LEICESTER & LEICESTERSHIRE 150 GL Hearn Page 4 of 239 J:\Planning\Job Files\J031082 - Leicestershire SHMA\reports\Leicestershire SHMA Report June V6.docx Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 FIGURE 35: TENURE OF OLDER PERSON HOUSEHOLDS – BY LOCAL AUTHORITY 150 FIGURE 36: OCCUPANCY RATING OF OLDER PERSON HOUSEHOLDS – LEICESTER & LEICESTERSHIRE 151 FIGURE 37: INSTITUTIONAL POPULATION (AGED 75 AND OVER) 156 FIGURE 38: POPULATION WITH LTHPD IN EACH AGE BAND 160 FIGURE 39: CHANGES IN THE BME POPULATION 2001 TO 2011 – LEICESTER & LEICESTERSHIRE 163 FIGURE 40: POPULATION AGE PROFILE (2011) 164 FIGURE 41: TENURE BY ETHNIC GROUP – LEICESTER & LEICESTERSHIRE 165 FIGURE 42: OCCUPANCY RATING BY ETHNIC GROUP - LEICESTER & LEICESTERSHIRE 166 FIGURE 43: TENURE OF HOUSEHOLDS WITH DEPENDENT CHILDREN - LEICESTER & LEICESTERSHIRE 167 FIGURE 44: OCCUPANCY RATING AND HOUSEHOLDS WITH DEPENDENT CHILDREN 168 FIGURE 45: TENURE BY AGE OF HRP - LEICESTER & LEICESTERSHIRE 169 FIGURE 46: ECONOMIC ACTIVITY BY AGE (PERSONS) - LEICESTER & LEICESTERSHIRE 170 FIGURE 47: ALL HIGHER EDUCATION STUDENTS AT LEICESTERSHIRE UNIVERSITIES 171 FIGURE 48: OVERSEAS STUDENTS AT LEICESTERSHIRE UNIVERSITIES 172 FIGURE 49: MAP OF URBAN AND RURAL CLASSIFICATIONS 176 FIGURE 50: POPULATION PROFILE BY URBAN/RURAL CLASSIFICATION (2011) 176 List of Tables TABLE 1: COMMUTING FLOWS, 2011 (WORKPLACE-BASED) 24 TABLE 2: MEDIAN HOUSE PRICES, AND CHANGE SINCE Q2 2013 25 TABLE 3: COMPARISON OF MEDIAN AND LOWER QUARTILE AFFORDABILITY, 2012 44 TABLE 4: LOCAL HOUSING ALLOWANCE RENTS IN LEICESTER 49 TABLE 5: OVERCROWDING, 2011 74 TABLE 6: CHANGES IN OVERCROWDING (2001-2011) – BASED ON ROOM STANDARD 74 TABLE 7: VACANT AND SECOND HOMES, 2011 75 GL Hearn Page 5 of 239 J:\Planning\Job Files\J031082 - Leicestershire SHMA\reports\Leicestershire SHMA Report June V6.docx Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 TABLE 8: HOUSING DELIVERY AGAINST FORMER RSS TARGET 77 TABLE 9: PROJECTED HOUSEHOLD GROWTH 2011-21 – CLG 2011-BASED HOUSEHOLD PROJECTIONS 81 TABLE 10: EXTENDING THE SNPP/CLG PROJECTIONS TO 2031 82 TABLE 11: EXTENDING THE SNPP/CLG PROJECTIONS TO 2036 82 TABLE 12: NET MIGRATION 2001-2012 84 TABLE 13: RELATIONSHIP BETWEEN PAST MIGRATION TRENDS AND FUTURE PROJECTION 85 TABLE 14: UNATTRIBUTABLE POPULATION CHANGE 2001-12 86 TABLE 15: PROJECTED LEVELS OF MIGRATION USED IN DEMOGRAPHIC TREND-BASED MODEL (FIRST 5-YEARS OF THE PROJECTION) 89 TABLE 16: UPDATED SNPP/CLG PROJECTIONS TO 2031 90 TABLE 17: UPDATED SNPP/CLG PROJECTIONS TO 2036 90 TABLE 18: UPDATED SNPP/CLG PROJECTIONS TO 2031 (MIDPOINT) – REDUCED HOUSEHOLD FORMATION CONSTRAINT 92 TABLE 19: UPDATED SNPP/CLG PROJECTIONS TO 2036 (MIDPOINT) – REDUCED HOUSEHOLD FORMATION CONSTRAINT 93 TABLE 20: FORECAST INCREASE IN JOBS TO 2031 AND 2036 94 TABLE 21: HOUSING NEED TO MEET ECONOMETRIC FORECASTS TO 2031 96 TABLE 22: HOUSING NEED TO MEET ECONOMETRIC FORECASTS TO 2036 96 TABLE 23: HOUSING NEED TO MEET ECONOMETRIC FORECASTS TO 2031 (AT THE HMA LEVEL) 97 TABLE 24: HOUSING NEED TO MEET ECONOMETRIC FORECASTS TO 2036 (AT THE HMA LEVEL) 97 TABLE 25: ANNUAL HOUSING NEED UNDER A RANGE OF ALTERNATIVE SCENARIOS – SUMMARY RESULTS 98 TABLE 26: HOUSING NEED IN THE PUA BASED ON DEMOGRAPHIC (MIDPOINT) PROJECTIONS (2011-2031) 100 TABLE 27: HOUSING NEED IN THE PUA BASED ON DEMOGRAPHIC (MIDPOINT) PROJECTIONS (2011-2036) 100 TABLE 28: HOUSING NEED IN THE PUA BASED ON EXPERIAN FORECASTS (2011-2031) 101 GL Hearn Page 6 of 239 J:\Planning\Job Files\J031082 - Leicestershire SHMA\reports\Leicestershire SHMA Report June V6.docx Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 TABLE 29: HOUSING NEED IN THE PUA BASED ON EXPERIAN FORECASTS (2011-2036) 101 TABLE 30: HOUSING NEED IN THE PUA BASED ON REVISED ECONOMIC GROWTH DISTRIBUTION (2011-2031) 102 TABLE 31: HOUSING NEED IN THE PUA BASED ON REVISED ECONOMIC GROWTH DISTRIBUTION (2011-2036) 102 TABLE 32: LOWER QUARTILE SALES PRICES BY TYPE AND LOCATION (2013) 106 TABLE 33: LOWER QUARTILE PRIVATE RENTS BY SIZE AND LOCATION (YEAR TO SEPTEMBER 2013) – PER MONTH 107 TABLE 34: COUNT OF RENTS RECORDED BY VOA (YEAR TO SEPTEMBER 2013) 108 TABLE 35: MAXIMUM LHA PAYMENTS BY SIZE 109 TABLE 36: MONTHLY AVERAGE SOCIAL RENT LEVELS (INCLUDING SERVICE CHARGES) 110 TABLE 37: INDICATIVE INCOME REQUIRED TO PURCHASE/RENT WITHOUT ADDITIONAL SUBSIDY 111 TABLE 38: HOUSEHOLD INCOME LEVELS BY LOCAL AUTHORITY 113 TABLE 39: ESTIMATED NUMBER OF HOUSEHOLDS IN UNSUITABLE HOUSING 115 TABLE 40: ESTIMATED NUMBER OF HOUSEHOLDS IN AFFORDABLE HOUSING NEED (CURRENT NEED) 115 TABLE 41: ESTIMATED LEVEL OF AFFORDABLE HOUSING NEED FROM NEWLY FORMING HOUSEHOLDS (PER ANNUM 2011-2036) 117 TABLE 42: ESTIMATED LEVEL OF HOUSING NEED FROM EXISTING HOUSEHOLDS (PER ANNUM) 118 TABLE 43: SUPPLY OF AFFORDABLE HOUSING BY LOCAL AUTHORITY 119 TABLE 44: ESTIMATED LEVEL OF AFFORDABLE HOUSING NEED (2011-36) 119 TABLE 45: ESTIMATED LEVEL OF AFFORDABLE HOUSING NEED (PER ANNUM) 120 TABLE 46: ESTIMATED ANNUAL LEVEL OF AFFORDABLE HOUSING NEED WITH DIFFERENT ‘BACKLOG’ PERIODS (ALL FIGURES PER ANNUM) 121 TABLE 47: NET AFFORDABLE HOUSING NEED AS % OF OVERALL HOUSING NEED FROM MIDPOINT SCENARIO 121 TABLE 48: SCALE OF OVERALL HOUSING DELIVERY TO MEET AFFORDABLE HOUSING NEED ON CURRENT POLICY BASIS PER ANNUM 122 TABLE 49: LHA CLAIMANTS IN THE PRIVATE RENTED SECTOR 123 GL Hearn Page 7 of 239 J:\Planning\Job Files\J031082 - Leicestershire SHMA\reports\Leicestershire SHMA Report June V6.docx Leicester and Leicestershire Strategic Housing Market Assessment, May 2014 TABLE 50: ESTIMATED PROFILE OF DWELLINGS IN THE HMA IN 2011 BY SIZE 134 TABLE 51: MODELLED SIZE OF DWELLINGS NEEDED FOR THE HMA 2011 TO 2036 – AFFORDABLE HOUSING 135 TABLE 52: ESTIMATED PROPORTION OF AFFORDABLE ONE BEDROOM HOUSING NEED DUE TO THE AGEING OF THE POPULATION 136 TABLE 53: MODELLED AFFORDABLE HOUSING NEEDED BY LOCAL AUTHORITY, 2011-2036 137 TABLE 54: MODELLED SIZES OF DWELLINGS NEEDED 2011 TO 2036 – MARKET HOUSING 137 TABLE 55: DEMOGRAPHICALLY-DRIVEN NEED FOR DIFFERENT SIZES OF HOMES, 2011 TO 2036 139 TABLE 56: MODELLED AFFORDABLE HOUSING NEEDED BY LOCAL AUTHORITY, 2011-2036 140 TABLE 57: SIZE OF STOCK IN SOCIAL RENTED SECTOR 141 TABLE 58: OVERCROWDING AND UNDER-OCCUPANCY IN THE SOCIAL RENTED SECTOR 141 TABLE 59: GUIDANCE ON AFFORDABLE HOUSING MIX 142 TABLE 60: ESTIMATED DWELLING REQUIREMENT BY NUMBER OF BEDROOMS (2011 TO 2036) – MARKET SECTOR 143 TABLE 61: GUIDANCE ON MARKET HOUSING MIX 143 TABLE 62: RECOMMENDED MIX OF AFFORDABLE AND MARKET HOMES