Leniency in the Housing Delivery Test will result in failure to focus on unmet demand

Because of the severe disruption faced by the construction industry as a result of the pandemic, in September last year the Department for Levelling Up, Housing and Communities (DLUHC) announced two adjustments to its Housing Delivery Test - a one-month reduction in the housing requirement for 2019/20 and a four-month reduction for 2020/21.

In a nutshell, the Housing Delivery Test (HDT) is the annual measurement of housing delivery across local authorities in England, using the number of net additional dwellings created and figures for the amount of housing required to judge supply performance over the previous three financial years.

The department has not yet published the results of the 2021 test, despite all relevant data now being available, so these adjustments seemed excessive even before data from the DLUHC showed there were 216,489 net additions to dwelling stock across England in the 12 months to March 2021 - a fall of 11 per cent on the previous year and the first fall since 2012/13.

According to our calculations*, we expect 72 per cent of local authorities to pass the test, but without the adjustment only 61 per cent would have done so. The adjustment to methodology means that local authorities in London's green belt and parts of Greater Manchester with high housing need are likely to have escaped the most severe sanction of the test: a presumption in favour of sustainable development meted out to councils delivering less than 75 per cent of housing need in the three years to March 2021.

By our analysis, 22 local authorities have avoided this sanction, representing a combined housing need of over 27,300 homes per annum under the Government's Standard Method housing need formula.

*Accurate based on available data, although some local authorities have had unexpected changes to their housing requirements in previous years