Cornish Social & Economic Research Group
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RSS targets replaced by locally agreed housing targets?
A CoSERG briefing June 2010
News that the Regional Spatial Strategy (RSS) targets for Cornwall are to be replaced has been generally welcomed. It is implied that these will be replaced by locally agreed targets. The main front runner would appear to be some measure of affordable housing. Ostensibly a move in the right direction - targets made and delivered in Cornwall rather than imposed top-down, and implicitly lower figures than the much decried 68,000 in the draft RSS. Yet initial figures from Cornwall Councils affordable housing paper would suggest that new replacement figures might be little different from those included under the RSS. Why? This apparently paradoxical result reflects some confusion over terminology. Analysis of the data and use of a stable population scenario suggest that actual local needs figures would be lower than the figures in the RSS and those implied in the affordable housing paper.
One of the new measures announced by the coalition government was the abolition of the RSS. One response stated - 'The new Government has announced that it plans to scrap the Regional Spatial Strategy. I presume this means that the existence of the 'draft' strategy calling - for 68,200 new properties by 2026 will no longer be used as a 'material' planning consideration by developers wishing to impose inappropriate levels of housing on Cornwall.' Councillor Dick Cole, 20th May.
Does this mean that the pressure for unsustainable development will cease? That new housing targets will be set well below the RSS figures? Possibly not.
- Affordable housing
The Affordable housing report produced by Cornwall Council in May 2010, suggests that 1,700 affordables are needed per annum, though a more realistic figure of 1,200 is attainable. This latter figure equals the 35% target of affordable housing in the RSS. This it is suggested equates to between 40-50% of the total number of dwellings needed. Using the 50% figure gives 2,400 dwellings per year or 48,000 over 20 years. Using the 40% figure gives 3,000 or 60,000 over 20 years. Suddenly we are back to a figure close to the RSS target.
This might suggest that the RSS figures were close to actual requirements after all or does it?
There is however, a clear distinction between local needs housing and affordable housing, though for many the two may appear to be mutually inclusive.
But how are the affordable figures calculated? At the moment the methodology used to produce affordable housing requirements for Kerrier is the only publicly available one we have. This approach suggested that of the 3,000 dwellings needed over a five-year period, only 530 were needed to accommodate local need largely due to changing household size. 2,440 were needed to accommodate migrants to Kerrier. Though "Adopting longer-term migration trends from the last 20 years moderates this additional requirement to around 1,850 units …" This would result in a need for an additional 2,380 units.
So most of the housing need for housing including affordables is derived from in-migration. Assuming no net in-migration and reworking the Kerrier figures we get an annual total need of 106 units with 56 affordable units. This assumes that the percentage of affordables is the same across residents and in-migrants which we doubt. What is clear is that total housing demand across Cornwall will be lower than the 63,000 cited above. How much? Again at this stage we are dependent on the Kerrier study as a basis. If we gross up the figures, multiplying by 5.25 to reach an estimate in line with the total population for Cornwall we get 557 units needed per year with a minimum of 294 affordables per year. If we multiply these by 20 to reach a figure consistent with the RSS time frame and round the figures, we get a total of 11,200 with 5,900 affordables. This is far lower than either the 40,000 or 60,000 figures referred to earlier.
Another way of estimating housing needs based on local need, is to carry out an analysis whereby it is assumed that the population of Cornwall remains stable and that extra need is generated by changes in household size. [Household size is expected to decline in the future, as there are more single person households due to divorce and people living longer, for example]. Without in-migration the population of Cornwall would fall as deaths exceed births. However, for this exercise it is assumed that the population remains broadly static.
The result is that there is a need for an additional 21,000 dwellings between 2001 and 2026. Over the period 2006 - 2026, (the RSS timeframe), the figure equals 16,800. Using the ratio used in the Kerrier work we estimate 8,900 would need to be affordables.
To summarise, under the stable population scenario, there would be a need for between 11,200 and 17,000 dwellings between 2006 and 2026. Of these between 5,880 and 8,900 would be affordables. It could be argued that the transfer of some second homes and investment homes into the permanent residence sector would reduce the total required to be built. If for example a third of second homes were transferred - 4,500 out of 13,700 - this would mean the build requirement would be reduced to between 6,700 and 12,500. Regarding empty properties, our previous analysis has suggested these may not be able to contribute as much to meeting housing need as is sometimes thought.
These can only be broad-brush figures. They are dependent on a number of assumptions regarding changes in household size and assume no additional demand for second or investment homes. If demand from outside Cornwall were curtailed we assume that house prices would drift down in real terms to reflect earnings levels in Cornwall, though to some extent due to the latent value tied up in properties the effect might be more limited than would appear from assessing the earnings/price ratio. If prices were to fall, the number of affordables required would in theory decline.
It is also useful to reiterate that simply building houses does not necessarily mean that housing needs will be met. This is often the line taken when RSS targets have been criticised. When developers build houses they do so to meet 'demand' which is not the same as need. 'Demand' can arise from people wishing to purchase a 'West Country pad within a realistic budget' those seeking investment opportunities or looking for that second home in a dream location.
The implications of this analysis are that an affordable housing strategy has to be linked to a sustainable population policy and also to a planning framework that can restrict the use of dwellings for second homes and investment purposes. Without addressing the sustainable population element, population and housing growth would continue in an unsustainable fashion.
References:
- Cornwall Council, Planning Policy Advisory Panel, (2010), Affordable Homes Policy Paper.
- Opinion Research Services, (2008), West Cornwall Housing Requirements Study 2007, Report for Kerrier District Council DRAFT: 25 April 2008.
CoSERG
05 June 2010