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Presentation of Draft Findings

13th July 2015

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Introduction

• Paul McColgan

‒ Planning Associate Director

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Structure

• Context and Purpose

• Methodology

• HMA review

• Housing Need

• Housing Mix

• Needs for Specific Groups

• Questions

Context and Purpose

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NPPF View

• National Planning Policy Framework

‒ Meeting in full the objectively-assessed need for market and affordable

housing in the housing market area where this would be consistent

with achieving sustainable development

‒ Meeting need and demand for homes - being more responsive to

“market signals”

‒ Housing remains a strategic issue – requiring local authorities to work

together to plan to meet housing needs, and align with economic

strategies

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Planning for Housing

• Councils working collaboratively to identify and then meet “full objectively

assessed need for market and affordable housing in their housing market

area”

• Establishing housing need through the Strategic Housing Market

Assessment

‒ How many homes?

‒ What mix of homes?

‒ Needs of different groups within the population

• “Policy-off” assessment of objectively assessed need

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Planning Practice Guidance

• Government finalised Guidance on Assessment of Housing and Economic

Development Needs in March 2014

• Indicates that starting point for assessing need is latest official Government

household projections (now 2012-based)

‒ Sensitivity analysis where appropriate.

• Overlaying other factors:

‒ Market signals - improve housing affordability

‒ Affordable housing needs

‒ Employment trends/ distribution

…. do these suggest a need to increase housing supply

in some areas?

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Key Elements of SHMA

• Objective Assessment of Housing Need (OAN)

• Need for Different Types of Homes

• Need of Specific Groups within Population

***It is not the housing target***

SHMA Approach

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Overview of Approach

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Methodology

Trend-based

Population &

Household

Projections

Testing

Migration Trends

Testing Household

Formation Rates

Market Signals

Evidence

Affordable Housing

Needs Analysis

Case for

Adjustments to

Improve Affordability

Economic Growth

Prospects

Alternative

Migration Scenarios

Objectively

Assessed Housing

Need

(OAN)

Aligning Housing &

Economic Strategy

Land Supply,

Constraints,

Sustainability

Appraisal

Unmet Needs from

Other Areas

Housing Target

in Plan

SHMA

Process

Housing Market Geographies

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Housing Market Areas

“A housing market area is a geographical area defined by household

demand and preferences for housing, reflecting the key functional

linkages between places where people live and work. It might be the

case that housing market areas overlap.

The extent of the housing market areas identified will vary, and many will

in practice cut across various local planning authority administrative

boundaries.”

- Planning Practice Guidance

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Defining Housing Market Areas

• Planning Practice Guidance identifies three sources:

‒ House prices and rates of change in prices

‒ Household migration and search patterns

‒ Contextual data such as travel to work

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Practical Issues

“One problem with drawing boundaries is that if each local planning

authority were to draw its own boundaries, there would be almost as

many HMAs as local authorities. This is because the largest migration

flows in and out of any individual authority are usually those linking it with

immediately adjacent authorities. But each of these adjacent authorities

will probably find that their largest migration flows link them to their

immediate neighbours, and the chain continues.

Thus if each local authority works independently to define an optimal

HMA, each authority may draw a different map, centred on its own area.”

PAS Technical Advice Note: June 2014

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Existing National Research CURDS 2010

• Strategic (Framework)

Housing Market Areas

‒ Based on 77.5%

commuting self-

containment

• Local Housing Market Areas

‒ Embedded within these

‒ Based on 50% migration

self-containment

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Recognising London’s Influence Commuting to Inner London

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Recognising London’s Influence House Prices

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A Practical Way Forward

• Recognising influence of London

‒ Out migration from London

‒ Duty to Cooperate

• SHMA Studies which interrogate dynamics in local markets

• Inter-connectedness / overlapping market areas

‒ Influences from adjoining areas near boundaries

• ‘Best fit’ to local authority boundaries

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Migration

• Key migration flows are principally with

adjoining authorities (per 1,000

population)

‒ Between Hounslow – Ealing /

Richmond (8.5, 6.6)

‒ Between Spelthorne and

Runnymede (5.6)

‒ Elmbridge and Kingston (5.5)

‒ Woking and Guildford (5.0)

‒ Runnymede and Woking (5.0)

‒ Spelthorne and Hounslow (4.4)

‒ Woking and Surrey Heath (3.9)

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Net Migration Patterns

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Where Residents Work Workplace of Runnymede & Spelthorne Residents

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Where Workers Live Homes of those working in Runnymede & Spelthorne

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Conclusions

• Strong level of commuting and migration

links across authorities in NE and W

Surrey

• Movement out from (and commuting

back in to) London

• Five clusters of links emerge looking

across Surrey and to surrounding areas

• Interplays both within and across areas

(including with London) – porous

boundaries

• We have examined housing

need for Spelthorne and

Runnymede

Rushmoor

Surrey Heath

Hart

Spelthorne

Runnymede Epsom & E

Mole Valley

Reigate & B

Tandridge

Kingston and

Elmbridge

London

Woking

Guildford

Waverley

Considering Demographic Housing Need

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Projections – Key Issues

• Starting from the latest national projections

‒ 2012 Household Projections

‒ 2012 Sub-National Population Projections

• Sensitivity Analysis

‒ Migration

‒ Household Formation Rates

• Overlaying Economic Forecasts

• Separating supply issues from assessment of need

• Supply shortfalls as a duty to cooperate issue

• Recognising labour market extending across London into Home Counties

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Demographic Projections

• “Projections do not predict the future – they roll forward what’s

happened in the past”

• Figures are particularly sensitive to:

‒ Migration

‒ Household formation rates

• Impacts of international migration and the recession on

household formation

• Starting point should be latest official population and household

projections

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Demographic Projections

• ONS 2012-Based Sub-National

Population Projections

• CLG 2012-based Household

Projections

• Updated for Mid-Year Estimates in 2013

• Prepared in May prior to 2014 MYE

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ONS 2012-Based Population Projections - Spelthorne

• ONS 2012-based projections in line with shorter term trends and above

longer term trends

85,000

90,000

95,000

100,000

105,000

110,000

115,000

120,000

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Po

pu

lati

on

Trend (2001-13) Trend (2008-13) 2012-based

Linear (Trend (2001-13)) Linear (Trend (2008-13))

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ONS 2012-Based Population Projections - Runnymede

• ONS 2012-based projections sat below short term trends post 2025 and

above longer term trends

70,000

75,000

80,000

85,000

90,000

95,000

100,000

105,000

20

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Po

pu

lati

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Trend (2001-13) Trend (2008-13) 2012-based

Linear (Trend (2001-13)) Linear (Trend (2008-13))

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Sensitivity Analysis

• 2012-based SNPP reasonable demographic projection when taking account of

past trends in population growth

• However, we have undertaken sensitivity analysis to look at longer term

migration rates and Un-attributable Population Change

• Notably high UPC in Runnymede

• Longer term migration rates result in an overall need which is around 40

dwellings per annum less than official projections

• However this increases housing need in Runnymede (+120) and reduces it

in Spelthorne (-150)

• Adjusting for UPC result in an overall need which is around 240 dwellings per

annum official projections

• This increases housing need in Runnymede (-275) and increases it in

Spelthorne (+40)

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Sensitivity Analysis

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

Pop

ulat

ion

Trend (2001-13) Trend (2008-13) 2012-based 12_year migration

UPC adjustment Linear (Trend (2001-13)) Linear (Trend (2008-13))

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Sensitivity Analysis

We do not however consider these to be appropriate alternatives:

• We require strong justification to move away from SNPP i.e. If the SNPP

moves away from both short and long term trends.

• SNPP are broadly in line with short term trends

• If there had been a shift, the older data is less reliable

• UPC reflects error in older data more than more recent trends

• ONS amended methodology post 2006

• Latest available data suggests that migration rated could be even higher

• 2012 - 2013: SNPP – 559 MYE – 1006 net in migration

• 2013 – 2014: SNPP – 685 MYE – 814 net in migration

• GLA expect increasing out migration from London

• Longer term trends reflect pre EU expansion

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Demographic “Starting-Point”

• Rebased to 2013 MYE

• Includes provision of vacant and second homes (4.9% Run - 3.6% Sp)

• Most recent official population and household result in higher percentage

growth than Surrey, South East and England

• Include some degree of suppression in 25-34 year age group

• This however does not take into account economic need, affordable

housing need nor market signals

Runnymede Spelthorne Study-area

Households 2013 33,566 40,325 73,891

Households 2033 41,848 50,187 92,035

Change in households 8,282 9,862 18,144

Per annum 414 493 907

Dwellings (per annum) 434 511 945

Considering Affordable Housing Need

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Affordable Housing Needs Model

Future Housing Need

Estimate of Newly-Forming

Households in Need & Existing

Households falling into Need over

plan period

Affordable Housing Supply

Estimate of Supply of Affordable

Housing from Relets of Existing

Properties over plan period

Affordable Housing Supply

Supply of Affordable Housing from

Vacant Stock & Development

Pipeline

Current Housing Need (Gross)

Current Households in Housing Need

based on Census and other modelled

data Total Net

Current Need

Net Housing

Need Arising

Total Net Current Need

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Affordable Housing Need: 2013-33

Area Current

need

Newly

forming

households

Existing

households

falling into

need

Total

Need Supply Net Need

Runnymede 27 393 100 521 150 371

Spelthorne 37 486 127 650 209 441

Study-area 64 879 227 1,171 359 813

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Implications of Affordable Housing Need

• Net affordable housing need of 813 dwellings per annum

‒ 86% of demographic need

‒ Could decrease with different affordability assumptions applied

‒ But also includes households already in accommodation (just not a home

suitable for their particular needs)

• However, some of this need can be met through Local Housing Allowance

and the Private Rental Sector as it currently does – over 2,700 LHA/HB

claimants currently in the PRS with 359 new claimants per annum

• Therefore some justification to consider an additional uplift on the basis of

affordable housing need

‒ This is examined alongside market signals

Housing Market Signals

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Market Signals

• Tell us about supply-demand

balance – but also relative

attractiveness of places to live

• Importance of considering

what these say about balance

over period both before and

since the recession – and

impacts on trends in

household formation

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House Prices (2014)

• Some differences within the HMA

‒ Median Values are above regional medians in both Boroughs

‒ Mean Values in Spelthorne are considerably lower than Runnymede and

below regional values

Median All

Runnymede £258,726

Spelthorne £247,000

HMA £250,000

South East £245,000

Mean All

Runnymede £369,156

Spelthorne £285,790

HMA £325,388

South East £309,634

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House Price Trends (1997 – 2007)

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House Price Trends (2008 – 2013)

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Lower Quartile Price-Income Ratios

• Affordability decreased significantly since 1997

• Prices challenge standard borrowing ratios (x9)

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Completions

• Growth has been largely above target pre recession and below it post

recession

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Changes in Tenure Profile 2001-11

• Significant Growth in Private Rented Sector and decline in owning with a

mortgage in line with national trends

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Overcrowding

• Growth in over crowding between 2001 and 2011 moderate above wider

comparators

Overcrowding

2001 2011 % Change

Runnymede 1,918 2,710 41%

Spelthorne 2,493 3,553 43%

Surrey 23,620 30,783 30%

South East 195,392 265,974 36%

England 1,457,512 1,928,596 32%

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HMOs

• Growth in Housing in Multiple Occupation/Shared Household spaces

between 2001 and 2011 in line with county trend but below regional and

national figures

‒ Significantly higher in Spelthorne than Runnymede

HMO

2001 2011 % Change

Runnymede 1337 1426 7%

Spelthorne 1527 1850 21%

Surrey 16,281 18,573 14%

South East 120,055 150,647 25%

England 749,666 995,677 33%

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Key Housing Market Signals

• There have been notable changes to the housing market in Runnymede

and Spelthorne over recent years, including:

‒ Deterioration in housing affordability over 2001-11 decade

‒ Shift towards Private Rental Sector

‒ Increasing HMO and Over-crowded households

• Combined with the credit crunch these issues are likely to have constrained

household formation

• Market signals indicate that household formation rates have been

constrained and that an upwards adjustment is required to reflect this.

• Guidance suggests that this should be ‘reasonable’ but does not quantify

how it should be made

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Demographic Projections – Conclusions (cont.)

• Our approach to an upwards adjustment is informed by demographics

‒ Key impact of improving affordability (in terms of overall housing need)

would be to support increased household formation amongst younger

households. This would also result in higher affordable housing provision

• We have therefore run a sensitivity analysis which considers and seeks to

quantify the implication of returning the household formation rates of the 25-

34 age group back to 2001 levels by 2033

0.3

0.35

0.4

0.45

0.5 Runnymede

CLG 2012-based

CLG 2011-based

CLG 2008-based

0.3

0.35

0.4

0.45

0.5

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

Spelthorne

CLG 2012-based

CLG 2011-based

CLG 2008-based

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Demographic Projections – Conclusions (cont.)

Runnymede Spelthorne HMA

Households 2013 33,566 40,325 73,891

Households 2033 42,321 50,801 93,122

Change in households 8,755 10,475 19,231

Households Per annum 438 524 962

Dwellings From SNPP model 434 511 945

Potential uplift 25 32 57

Revised Dwellings (per annum) 459 543 1,002

% uplift 6% 6% 6%

Considering the Needs of the Economy

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Calculating Local Economic Growth

• Our calculations are informed by the Summer 2013 Experian Forecasts

which also inform the LEP Strategic Economic Plan projected to 2033

• Expected growth of around 30,000 jobs in HMA from 2013-33

• We have also taken into account:

• Commuting patterns;

• Double – jobbing;

• Economic Activity

– Including Changes to the Pensionable age

• Current Age structure

Runnymede Spelthorne

Jobs (2013) 66,118 41,298

Jobs (2033) 81,166 56,334

Change (2013-33) 15,048 15,036

% change from 2013 22.8% 36.4%

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Implications of Meeting Local Economic Growth

• Linking this to a 2012-based headship rate results in a need for 1,250

dwellings per annum.

• These however does not take into account:

‒ Local employment land capacity issues

‒ Potential growth of in-commuting to London linked to the City’s ambitious

job growth

‒ Impact of third runway decision at Heathrow

• Also deviate from past trends, particularly in Spelthorne where jobs declined

between 2001 – 2011

• Economic projections to be tested further

Housing Need PA 2011-31 Runnymede Spelthorne HMA

Per Annum Change in Resident Workforce 544 813 1,357

Annual Housing Need 525 725 1,250

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Bringing the Evidence Together

• 2012 based household projections (i.e. the latest official projections at

time of drafting SHMA) suggest a growth of 945 dwellings per annum

‒ These reflect reasonable migration assumptions

‒ Some suppression in household formation rates of key 25-34 year

age groups

• Upward adjustment required to improve affordability (57 dwellings per

annum) suggests a need for 1002 dwellings per annum

‒ Returns formation rate in key 25-34 year age groups to 2001 levels

• Potential need for further uplift to reflect economic need of up to 1,250

dwellings per annum

‒ However there are questions relating to reliability of forecasts and

how they can be delivered

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Bringing the Evidence Together

• Overall need for housing of up to 1,250 homes per annum

‒ Runnymede – 459 – 525 per annum;

‒ Spelthorne - 543 – 725 per annum.

0

100

200

300

400

500

600

700

800

Runnymede Spelthorne

An

nu

al

Ho

usin

g N

eed

(u

nit

s)

Supporting EconomicGrowth

Improving Affordability

Demographic Baseline

Housing Mix

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Housing Mix

• Implications of changing

demographics

• Welfare and benefit reforms drive

more close relationship between

household and home size in

affordable sector

• Taking account of balance within

current housing mix

Housing Mix

Current Imbalances

Transport / Regeneration

Age Structure

Demographic Trends

Welfare & Benefit

Reforms

Economic Growth

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Mix of Market Housing

• Focus of demand towards 2 & 3 bed properties

• Implications of growing older population – supporting downsizing

Size 2013 2033

Additional

households

2013-2033

% of additional

households

1 bedroom 6,123 7,110 987 8.4%

2 bedrooms 17,175 20,769 3,594 30.5%

3 bedrooms 26,298 31,364 5,066 42.9%

4+ bedrooms 14,145 16,292 2,147 18.2%

Total 63,741 75,535 11,794 100.0%

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Mix of Affordable Homes

• Analysis takes account of benefit reforms, turnover/ management issues

and long-term demographic trends

• Focus on providing balanced profile of affordable homes

• Need for more smaller 1 and 2 bedroom properties

Size 2013 2033

Additional

households

2013-2033

% of additional

households

1 bedroom 3,760 6,489 2,730 43.0%

2 bedrooms 2,795 4,511 1,716 27.0%

3 bedrooms 3,165 4,843 1,678 26.4%

4+ bedrooms 430 658 228 3.6%

Total 10,150 16,501 6,351 100.0%

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Mix of Market Homes – Tenure

• Mix identified should inform district wide policies on mix as well as site

allocations and affordable housing negotiations

1-bed 2-bed 3-bed 4+ bed

Market 5% 30% 45% 20%

Affordable 35-40% 25-30% 25-30% 5-10%

All dwellings 15% 30% 40% 15%

Need for Specific Groups

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Needs of a Growing Older Population

• Supporting people to stay in their homes – adaptions to properties,

floating support

• Providing choice and opportunities for downsizing

Age group Runnymede Spelthorne HMA

Under 55 11.2% 8.9% 10.0%

55-64 29.1% 27.6% 28.3%

65-74 38.6% 40.5% 39.6%

75-84 41.4% 38.2% 39.6%

85+ 116.7% 114.4% 115.4%

Total 19.9% 18.4% 19.1%

Total 55+ 42.6% 41.5% 42.0%

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Needs of a Growing Older Population

• Projected growth of 77% in people with dementia and 64% of those

with mobility problems

• Projected need for 93 units of specialist housing per annum (sheltered

and extra care) – the majority in the market sector. This is within the

housing need.

• Additional need for 12 C2 (residential care) bedspaces per annum –

this is in addition to the housing need

Type of illness/disability 2013 2033 Change % increase

Dementia 2,329 4,113 1,783 76.6%

Mobility problems 5,968 9,790 3,823 64.1%

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Specialist Housing Needs

• The following have been reviewed in the main document

‒ BME Households

• Provide advice and ensure PRS quality is suitable

‒ Families

• Lone parent particularly disadvantaged

• Projections suggest a 15% increase in the number of Children

‒ Young People

• Important due to economic potential they bring

• High levels of unemployment and reliance on PRS

• Monitor HMOs

• Decreasing number of students living off campus

‒ Custom Self Build

• Around 450 people have registered interest across HMA

Questions

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Emailed Questions

• To what extent does the SHMA recognise added pressure from London?

‒ Our approach is trend based and assumes what happens in the past

will continue

• To what extent does the SHMA recognise benefit cuts will increase out

migration from London?

‒ No evidence to suggest benefits cuts in the past have impacted local

demand. Possible that the new cuts will increase out migration from

London but it is not possible for us to accurately quantify that impact.

• What are the consequences of London Boroughs placing homeless

households in the Local PRS?

‒ Not possible for us to speculate how this will change but if it happened

in the past it will be included in past trends.

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Emailed Questions

• Will the changes to planning legislation announced in the budget

increase the supply of homes and what consequences will have on

employment on this area?

‒ The SHMA is focussed on demand, it does not review supply

side issues. This was also prepared prior to the budget

announcements

• What allowance has been made for the probable expansion of

Heathrow?

‒ None, any impact of Heathrow expansion will be in the distant

future if this happens at all

Moving Forwards

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Programme

• Two week period for feedback

• Final Report

‒ Early August

• Employment projections to be updated later this year

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Feeding Back

• Paul McColgan

‒ Paul.McColgan@GLHearn.com

‒ 0207 851 3748

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