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‘Optimism bias’ could lead to 86,000 shortfall in new London homes

by LLP Staff Reporter
3rd Dec 20 1:13 pm

OVER optimistic projections for housebuilding in London could result in a shortfall of over 86,000 homes over the next decade, new research reveals.

Planning and development consultancy Lichfields finds that, cumulatively, the 32 London boroughs have identified land for 498,000 new homes up to 2029 in an analysis of the New London Plan targets.

However, many of these land supply projections are out-of-date and, if the recent rate of delivery from these boroughs is taken into account, only 400,000 homes might realistically be delivered –  86,000 below the combined ten-year housing target of 486,200 homes for the 32 Boroughs.

Lichfields’ Senior Planner Harry Bennett, one of the authors of the report entitled ‘Mind The Gap’, said: “Taking the data at face-value, the London Boroughs have identified enough supply to meet the New London Plan ten-year housing targets to 2029.

“While one could never expect any Local Planning Authority to be 100% accurate in forecasting its supply, our analysis shows the London Boroughs forecasts are often out-of-date and – on average – are overestimating the supply of homes even in the following year by a significant margin.

“Borough forecasts do not appear to be accounting for inherent difficulty of turning theoretical capacity into actual supply in the context of the practical difficulties bringing forward development in London.”

Lichfields’ analysis digs deeper into what it describes as the ‘Optimism Bias’ at the heart of the existing forecasts.

Gaps in record keeping meant Lichfields was able to review forecasting accuracy in 29 of the 32 Boroughs.

On average, the Boroughs’’ Year 1’ forecasts over-estimated supply by 20%, and looking beyond ‘Year 1’ forecasts, the data shows that in ‘Year 2’ and ‘Year 3’ the Boroughs’ forecasting becomes even less accurate.

Lichfields found that, in general, Boroughs that publish monitoring data more regularly come closer to accurately predicting housing supply levels in their area.

Only one Borough published detailed information on its land supply that included the clear evidence on sites necessary to satisfy the national policy requirements of the NPPF.

Bennett added: “It is not enough to simply identify capacity on paper. Delivery is critical to meeting the pressing need for new housing in London and Boroughs must consider whether and when the land they identify will deliver the number of homes envisaged, and if not, what they can do to bridge the gap in good time.”

Lichfields highlights that New London Plan targets are capacity-based which leaves little room for manoeuvre should identified supply not come forward.

Bennett said, “Boroughs should be proactively supporting release of more land for housing to allow for the significant London problem of turning permissions into completions – this may need to be through their Local Plans and – where relevant – include Green Belt review.

“Our findings of systemic ‘optimism bias’ also have implications for the design of the future planning system as envisaged by the recent Planning White Paper.

“In a nutshell, any new planning system will need to think about the unique challenge of housing land supply in London and ‘mind the gap’.”

Planning White Paper

Under the proposals in the Planning for the Future White Paper, future local plans will designate land as ‘growth’, ‘renewal’ or ‘protect’ areas with plans, with ten-year horizons, unlikely to be updated more than every five years.

The White Paper proposes to remove the requirement for local authorities to maintain a rolling five-year housing land supply. This makes it more important that that Boroughs’ Local Plans are founded on realistic estimates of housing land supply, otherwise there is no advance mechanism for addressing a shortfall, in the event plan-led schemes do not come forward as envisaged.

The problem of accurate housing land supply could also relate to whatever method the Government adopts for setting binding housing requirement figures; if it is supplied with data by Boroughs that is not reliable, it could distribute its housing targets in a way that proves not to be effective.

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