Are Strategic Housing Market Assessments still relevant?

Are Strategic Housing Market Assessments still relevant?

Wednesday 8th May 2019

Up until the introduction of the standard methodology for calculating Local Housing Need (LHN) earlier this year, Strategic Housing Market Assessments (SHMAs) were the designated vehicle for calculating full Objectively Assessed Housing Need (OAHN) under the 2012 National Planning Policy Framework (NPPF).

As SHMAs 'matured' over the years, they became ever longer, and ever more controversial. There became something of an industry around their production and virtually no local authority had the ability to prepare them. SHMAs were also supposed to be regularly updated, ideally annually, but few authorities had the resources to be able to do this on a consistent basis. They further had to be prepared in consultation/engagement with local developers, estate agents and other stakeholders - and that process was rarely a smooth one. SHMAs covered virtually every aspect of the Housing Market Area and its characteristics - and frequently took about 6 months to prepare, sometimes longer, and were amongst the biggest factors in slowing down Local Plan preparation.

The standard method, now reflected in the LHN, is intended to cut out the debate about the eventual SHMA calculation of the full OAHN, which was never completely precise and frequently expressed in the form of a range. In contrast, LHN is a simple calculation, but it is only the starting point. It lacks the analysis of the authority's Housing Market that SHMAs contained - for example housing mix, housing tenure, rental and price levels, full analysis of affordability (earnings etc). Some of that information is still necessary to enable an authority to 'convert' the LHN figure into the types of housing which will be required during a Plan period, including the percentage of Affordable Housing, housing mix, specialist residential accommodation for the elderly, etc.

So, in practice, recent SHMAs are continuing to be used to provide the data/trends for that requirement. Authorities are still working through this, bearing in mind that LHN only became a policy requirement for Plan-making from January 25th, 2019.

As we move through 2019 and 2020, authorities will have to prepare a supporting document which shows how the LHN figure has been 'converted' into the actual types of housing required (as described above), and this will need to be based on an up-to-date analysis of the Housing Market. Thus, there will still need to be some form of 'SHMA-lite' produced, albeit it is evident there is already much debate around the appropriate nomenclature!