Strategic Housing Market Assessment - August 2023

The National Planning Policy Framework (NPPF) requires local planning authorities to undertake Strategic Housing Market Assessments (SHMA) to inform local plan policies. This will form a key document underpinning the City Plan Review. 

We appointed Iceni Projects in October 2022 to undertake a SHMA to look at demographic trends and housing needs over the period 2022 to 2041. 

The key study requirements specified were:

• to set out the city’s overall housing need based on the standard methodology set out in national planning guidance
• the need for different sizes, types and tenures of housing (including considering the effects of likely constraints on housing deliverability)
• the need for affordable housing overall and for different categories of affordable housing within the NPPF definition
• the housing needs and requirements of specific groups within the local community including families with children, older people, students, people with disabilities, service families, people who rent their homes, and people wishing to commission or build their own homes
• specific analysis of second home ownership in the city and its potential impact on the local housing market (as requested by TECC Committee). Analysis will be provided by the council's planning department

The final report was delivered in early August 2023. 

The 2021 Census shows the city's population as 277,107. This is a growth of 1.4% since 2011. This growth is much lower than that assumed in ONS Mid Year Estimates (MYE) and also much lower than 2001 to 2011 period.

Population growth has been mainly driven by International Migration. Natural change has slowed and recently resulted in a net loss.

Compared to neighbouring areas, Brighton & Hove has a higher percentage of residents of working age, and a high percentage of young professionals. There are fewer people of school age and younger and those aged 55 and over.

Brighton & Hove has a higher percentage of households living in privately rented accommodation and lower percentage of homeowners (see comparative 2021 Census breakdown attached).

The city also has a higher percentage of people living in smaller 1 bed homes and in flats. We have a lower percentage of under occupied properties, reflecting smaller average unit sizes (see comparative 2021 Census breakdown attached).

In the year up to March 2022 the median house price in the city was £392,556, with a workplace based median affordability ratio of 12.86.

Brighton & Hove has higher median prices for all types of property compared to neighbouring areas and the South East region. 

Interviews with local agents indicated sales demand is the highest for 3 and 4 bed family homes across the city, but also 1 and 2 bed flats within the central parts of the city.

We calculated the overall housing need using the Government Standard Method. It shows a need for 2,333 dwellings per annum (DPA), including the 35% urban areas uplift. 

The report considers there may be ‘exceptional circumstances’ to justify moving away from the Standard Method, as it uses 2014-based household projections (now over 8 years old) and the 2021 Census shows much lower population growth than previously assumed.

The report generates alternative household projections based on more up-to-date migration and population change figures (including looking at 5 and 10-year migration trends). 

All scenarios considered indicate much lower housing need figures, the highest being 1,251 DPA (compared with 2,333 DPA under the Standard Method). 

The consultant’s preferred scenario uses 5-year trends from the Mid-Year Estimates, which results in a housing need of 810 DPA.

The study has also generated demographic and household projections based on a constrained housing figure of 660 DPA (which is equivalent to the current City Plan target which is considered a realistic assumption for housing delivery moving forward). 

Based on this assumption, the population of the city might increase by 12,500 people from 2022 to 2041. This is with high growth in residents aged over 65, and little change or falls in other age bands.

Analysis suggests a strong need for rented affordable housing - there are 1,165 affordable homes per annum across the city.

There is a need for both social and affordable rents, although social rents are more affordable for a wider range of households and therefore could be prioritised subject to viability considerations.

The need for affordable home ownership (AHO) is less clearcut but analysis suggests many households are being excluded from the owner-occupied sector (evidenced by fall in owners with a mortgage and an increasing private rented sector).

Given local housing costs, it seems difficult to provide ‘genuinely affordable’ AHO products (shared ownership being slightly more affordable than First Homes). This suggests the Council should prioritise delivery of rented affordable housing, subject to viability.

Across all tenures there is a particular need for 2 bedroom homes, with proportions of 1 bedroom and 3 (or more) bedroom homes varying by tenure. The report recommends an indicative housing mix as set out below:

The private rental sector accounts for 33% households in Brighton & Hove. This is compared to only 20% at the national and regional level. Around 75% of these are 1 or 2 bedrooms.

Compared to other tenures, there is an over-representation of single person households (under 65), cohabiting couples with no children, and FT students.

The number of housing benefit claimants has increased slightly since 2018 largely due to increases during 2020 Covid lockdowns.

Interviews with agents reported that lettings market remains buoyant for range of property sizes, but particularly for smaller flats.

There are seven Build to Rent (BTR) developments in the city either operational or under construction, providing a combined total of 1,542 residential units. There are no Co-living developments built as yet.

Analysis of the BTR sector in the city included interviews with Circus St and Edward St (The Merchant) operators and Sackville (Hove Central developers).

The existing BTR policy in City Plan Part 2 is considered broadly fit for purpose but should be reviewed in light of the schemes coming forward in the City. It is recommended to encourage a wider range of BTR developments rather than those just focused on the higher end rental market, as currently in the city.

A similar policy should be developed for Co-living developments drawing on the recently published Interim Planning Guidance; this should specify space and amenity standards, and affordable contributions.

The study included interviews with both Universities – a combined estimate of 32,750 full-time students (including distance learning and students based on campuses outside the City). 

The cost of purpose-built student accommodation (PBSA) is challenging for students with most now charging around £250 to £260 per week.

Post pandemic there has been (anecdotal) evidence of a shift in student demand from Houses in multiple occuppancy (HMOs) to PBSA which is seen as more reliable and is generally more affordable for students. Also growth in supply of PBSA whereas private landlords are retreating from student market (anecdotal). This points to a need for continuing provision of PBSA (especially affordable accommodation).

Planned growth at the University of Sussex and the closure of Brighton University’s Eastbourne campus will lead to additional demand for PBSA, however this can be met by PBSA development already in the development pipeline.

The council’s existing policies support additional PBSA and are generally fit for purpose. Further Ideas to consider include encouraging a wider range of accommodation types and sizes where possible. Particularly housing suitable for:

• wheelchair users
• older students including research students
• those who have families

The number of residents with disabilities likely to increase substantially in the 2022 to 2041 period due to forecast 46% increase in the population aged over 65 (whereas under 65s will remain fairly static or decrease).

Over the period 2022 to 2041, there is an estimated need for:

• around 800 additional supported housing units (sheltered/retirement housing) – split about two-thirds market and one-third affordable housing; 
• 1,000+ ‘with care’ units (for example, extra-care) – the majority (60%) in the market sector; and
• around 770 additional residential and nursing care bedspaces (although no current need as of 2022)

The need for around 1,000 M4(3) wheelchair dwellings potentially equates to about 8% to 14% of existing and projected housing need. This would indicate a need to increase supply of wheelchair user dwellings as well as providing specific older persons housing.

The report considers specialist health and care accommodation needs based on input from the council’s Health and Adult Social Care (HASC) team.

Planning policies going forward should consider the different use classes of accommodation (such as C2 vs. C3) and requirements for affordable housing contributions (linked to this the viability of provision).

The 2021 Census records 7.2% of homes in the city as unoccupied, which is a significant increase over the previous 2011 Census figure of 4.2%. However, the 2021 figures may have been affected by impacts of the COVID-19 pandemic.

More recent 2022 Council Tax data indicates around 5,700 or 4.4% of homes in Brighton & Hove are vacant or second homes. Both Census and Council Tax data indicate the highest concentrations tend to be in central areas of the city, particularly Regency ward.

2021 Census data for second addresses in Brighton & Hove records only 500 homes used as a holiday home for more than 30 days per year. This is only a small proportion (5%) of all second addresses and fairly similar to the proportion at national and regional levels.

Data from online websites such as AirBnB suggests that 2,218 entire homes are being used for short term lets which equates to about 1.7% of all dwellings in the city.

It is difficult to identify any specific impacts from second homes on services in the city (for example the number of school age children is not falling in these areas faster than in the rest of the city).

Based on available data, there is insufficient evidence to support introducing a ‘Principal Residence Policy’ across the city as a whole, however the position should continue to be monitored through Council Tax data and other means.

The government is proposing introducing a registration scheme for short term holiday lets. This would help the council better understand and monitor the number and location of short term lets in the city.

The government has also recently consulted on proposals to introduce a separate Use Class for short term lets. However, the consultation also proposed introducing permitted development rights to allow change from residential use to short term lets without planning permission.

This would therefore necessitate introducing an Article 4 direction if the council wished to control loss of residential use to letting.