Local housing need and the standard method explained

 

Local housing need (LHN) is the minimum number of homes identified as being needed in an area through the Government’s standard method. Under the August 2026 National Planning Policy Framework, the calculation itself is now set out in Annex D.

The figure matters to local plans, housing requirements, the five year housing land supply and some of the new decision-making rules. But it is often misunderstood. Local housing need is not automatically the same thing as the housing requirement in an adopted development plan, and it is not a number of homes that must simply be approved wherever somebody proposes them.

This page explains the current two-step standard method, the data it uses, how the housing requirement differs from housing need, and when the current LHN figure matters to a live planning application or appeal.

 

Local housing need in one sentence

 

The NPPF glossary defines local housing need as the number of homes identified as being needed through the standard method in Annex D. It is an unconstrained assessment of need: the calculation comes before questions about whether enough suitable land exists, whether Green Belt or other protected areas constrain growth, where the homes should go, and which sites should be allocated.

That is why a SHLAA or land availability assessment does not calculate housing need. The need figure asks how many homes are needed? The land assessment asks what land might be available to accommodate development?

 

Housing need and the housing requirement are different figures

 

This is the most important distinction on the page.

Local housing need is the evidence-based minimum need figure produced by the standard method. The housing requirement is the number of homes that the statutory development plan seeks to provide over its plan period.

Policy HO1 says a spatial development strategy, or a local plan where no spatial development strategy is in place, should start with a housing need assessment using Annex D. Policy HO2 then deals with the housing requirement.

The 2026 NPPF expects plans to seek to meet identified development needs as a minimum. A housing requirement can be higher than the standard-method need where, for example, it is appropriate to help meet neighbouring areas’ unmet needs or to support growth associated with economic development or infrastructure investment.

A lower requirement is not simply a matter of a council deciding that the standard-method figure feels too high. Policy S1 expects identified needs, including needs which cannot be met in neighbouring areas, to be provided for unless the national policies protecting areas or assets of particular importance provide a strong reason for restricting the overall scale, type or distribution of development, or the adverse impacts of meeting the need would substantially outweigh the benefits when the Framework is considered as a whole.

So the chain is broadly:

standard method → local housing need → plan-making assessment → housing requirement → land allocations and delivery.

 

The August 2026 standard method

 

The current calculation has two steps. The formula is contained directly in Annex D of the August 2026 NPPF.

Step 1: take 0.8% of existing housing stock

Use the most recent dwelling stock figure for the local authority in the Government’s Table 125: dwelling stock estimates by local authority district.

Housing stock baseline = existing housing stock × 0.008

If an area contains 62,500 dwellings, for example, the baseline is 500 homes per year.

Step 2: adjust for affordability

The baseline is then adjusted using the median workplace-based housing affordability ratio published by the Office for National Statistics. Use the arithmetic mean of the five most recent annual ratios for which data is available.

If the five-year average ratio is 5 or below, there is no affordability uplift.

If it is above 5, the adjustment factor is:

Adjustment factor = ((five-year average affordability ratio − 5) ÷ 5) × 0.95 + 1

The final calculation is:

Minimum annual local housing need = housing stock baseline × adjustment factor

The current ONS workplace-based affordability datasets provide the source ratios.

 

A worked standard-method example

 

The Government’s worked example uses an authority with 62,500 homes and a five-year average workplace-based affordability ratio of 9.

• 0.8% of 62,500 = 500
• The affordability adjustment factor for a ratio of 9 is 1.76
• 500 × 1.76 = 880 homes per year

The local housing need figure in that example is therefore 880 homes a year. It is still a need figure, not by itself the adopted housing requirement and not a planning permission.

 

Why the number changes

 

The inputs are updated. Government dwelling stock estimates are normally published annually, and the ONS affordability ratios are also updated annually. Annex D requires the most recent dwelling stock data available at the time of the calculation, while the affordability part uses the mean of the five most recent annual ratios.

That means an authority’s current standard-method figure can change without anybody changing a local plan. Housing stock may increase and affordability may improve or worsen.

This is one reason it is important to identify which figure is being used for which purpose. A current LHN calculation and an adopted development-plan housing requirement can both be perfectly valid figures while being different numbers.

 

Can a council use a different method?

 

The standard method is the normal national method for assessing housing need. Current Planning Practice Guidance recognises limited circumstances where an alternative approach may be necessary, particularly where planning authority boundaries do not align with the local-authority geography for which the required data exists, or where suitable data is unavailable. National Parks and the Broads are examples identified in the guidance.

That is not a general licence to invent a preferred figure. Any alternative needs a robust evidence base using the best available information on housing stock, house prices, earnings and affordability, and it will be tested through the plan-making process.

 

What if there is a spatial development strategy?

 

The 2026 NPPF gives Spatial Development Strategies a strategic role in distributing housing requirements. HO2 says a spatial development strategy should establish a housing requirement for each local planning authority within its area. Those figures should not normally be retested when the local plan is prepared unless there has been a significant change in circumstances affecting the overall requirement and its distribution.

Where there is no spatial development strategy, the local plan establishes the housing requirement for its own area, taking account of any relevant emerging spatial development strategy.

 

When does local housing need replace the adopted requirement for 5YHLS?

 

This is where the distinction becomes particularly important to a live planning decision.

Under Annex D, the five year housing land supply is assessed against:

• the housing requirement in the development plan, where that requirement is five years old or less; or
• the authority’s current local housing need calculated using the standard method, where the development-plan housing requirement is more than five years old

This is a significant August 2026 point. Annex D itself does not preserve an old housing-requirement baseline merely because an authority has reviewed an over-five-year-old policy and concluded that it does not need updating. The separate review wording survives in footnote 75 for one of the 20% buffer routes, but not as an exception to the basic Annex D paragraph 8 baseline.

Our 5YHLS guide works through the buffers and deliverable-site rules in detail.

 

Why the 80% comparison also matters

 

A current LHN figure can matter even where an adopted housing requirement is still less than five years old.

For decision-making, Annex D contains a separate 20% housing land supply buffer where an authority has a housing requirement adopted in the last five years which was examined against a Framework published before December 2024, and its annual average housing requirement is 80% or less of the most up-to-date LHN figure. Footnote 75 also extends that route to an older requirement where the relevant development-plan policies have been reviewed and found not to require updating.

The current LHN figure can therefore be relevant without actually replacing the adopted requirement as the five-year-supply baseline.

 

A higher current LHN does not always prove unmet need

 

Annex A contains an important protection for recently adopted plans.

For the first five years after adoption, where the authority can demonstrate the required five year supply with the appropriate buffer and its Housing Delivery Test result is more than 75%, the fact that the latest LHN figure has risen above the adopted housing requirement should not by itself be treated as evidence of unmet housing need for policy S5(1)(j).

This prevents a newly adopted plan from immediately being treated as having an unmet need solely because the annual standard-method calculation has moved upwards. It does not protect an authority which cannot demonstrate the required five year supply or whose Housing Delivery Test result is not more than 75%.

See our guides to the presumption in favour of sustainable development and the Housing Delivery Test for those decision-making consequences.

 

How can local housing need affect a real planning application?

 

The most useful question is not simply whether today’s LHN figure is high. It is what legal or policy job that number is doing in this particular case.

Example 1: a three-year-old plan requirement of 600 homes and current LHN of 880

Situation: The adopted housing requirement is only three years old. The current standard-method figure has risen to 880 homes a year.

What the figures mean: The adopted requirement remains the normal baseline for the five year housing land supply because it is not yet more than five years old. However, if the relevant Annex D conditions are met and 600 is 80% or less of the current LHN, the separate 20% decision-making buffer route may apply.

What it does not mean: The difference between 600 and 880 does not automatically prove unmet housing need for S5, particularly where the recent-plan protection in Annex A applies.

Example 2: the same plan requirement is now six years old

Situation: Nothing else has changed, but the development-plan housing requirement is now more than five years old.

What changes: Annex D now points the five year supply calculation to the current local housing need figure instead. If the authority had been measuring supply against 600 homes a year and must now measure it against 880, the supply position can change materially without a single site disappearing from the trajectory.

Planning Geek view: Always establish the age of the adopted housing requirement before arguing about the council’s headline supply figure.

Example 3: LHN has risen, but the council has a sound five year supply and HDT above 75%

Situation: A recently adopted plan requirement is below today’s LHN, but the authority can demonstrate the required five year supply and its most recent Housing Delivery Test result is above 75%.

What the policy says: Annex A can protect the recently adopted plan from the argument that the higher LHN figure, by itself, establishes unmet housing need for S5(1)(j).

What to check next: A genuine 5YHLS shortfall or a later HDT result below the relevant threshold is different. Those have their own policy consequences.

Example 4: ‘The standard method says 880 homes, so my edge-of-village site must be approved’

Answer: No. LHN is an unconstrained need figure, not a site allocation and not a planning permission. You still need to identify whether the site is within or outside a settlement, which S4 or S5 route applies, what the development plan says and whether the actual impacts of the scheme are acceptable.

Planning Geek tip: When somebody quotes a housing number, ask four questions: what is the number, how old is the plan requirement, what is the current 5YHLS position, and what is the latest HDT result? Those answers usually tell you whether the number is merely background evidence or changes the decision-making route.

 

What the standard method does not tell you

 

A standard-method result is important, but it does not answer every housing-planning question.

• It does not identify which sites should be developed. That is a land availability and plan-making exercise
• It does not prove that a council has or does not have a five year housing land supply
• It does not measure how many homes have actually been built. That is the Housing Delivery Test
• It does not determine the detailed mix of dwelling sizes, tenures or specialist accommodation needed by different groups
• It does not by itself determine the amount of affordable housing a development must provide
• It does not make an individual housing proposal acceptable in planning terms

Those questions sit elsewhere in the planning evidence and policy chain.

 

A note about the current Planning Practice Guidance

 

The live Government guidance on housing and economic needs assessment was last updated before the final August 2026 NPPF. Its core stock-and-affordability calculation matches Annex D, and it remains useful supporting guidance.

However, the NPPF now places the standard-method formula directly in Annex D and the plan-making architecture has changed. For current work, use the August 2026 NPPF as the primary national policy source and read the PPG in its supporting role, particularly where older terminology or plan-making procedures remain on GOV.UK.

 

Practical checklist: which housing number should I use?

 

• Preparing a new housing need assessment? Start with the current standard method in Annex D
• Reading an adopted local plan? Find the adopted housing requirement rather than assuming it is identical to today’s LHN
• Checking five year housing land supply? Establish the age of the adopted housing requirement first, then apply Annex D
• Comparing an older plan with today’s need? Check whether the 80% buffer route applies
• Arguing there is unmet need outside a settlement? Check 5YHLS, HDT and the Annex A five-year protection rather than relying on a higher current LHN figure alone
• Looking for land? Read the SHLAA and the adopted or emerging development plan as separate pieces of evidence

 

Where to go next

 

Once the housing need figure is understood, the next question is whether enough land exists to deliver the homes. Continue with our guides to the SHLAA and five year housing land supply. To understand how the figure becomes statutory policy, see local plans and the development plan explained.

 

Relevant policy, guidance and data

 

• National Planning Policy Framework, August 2026 – particularly S1, HO1, HO2, Annex A and Annex D;
• Planning Practice Guidance: Housing and economic needs assessment – supporting guidance on the standard method and housing need;
• MHCLG Table 125: dwelling stock estimates by local authority district – the Step 1 data source;
• ONS workplace-based housing affordability ratios – the Step 2 data source

 

Other Housing Sections

 

 

Local Housing Need Page Updated: 30th August 2026