 Welcome to the seventh video of our suite of eight mini videos to support you through the data requirements needed to run the local housing market assessment tool, referred to as LHMA in this video. Please use these as reference resources prior to and as you populate the LHMA tool. You will need to have populated your housing market areas as shown in video one before starting this task. This video focuses on the sheet named Key Assumptions in section two of the tool. Here you will make a number of key assumptions which are needed to split the additional households into the different housing tenures. Video two, covering household projections, and video six, covering existing and met need, explain how to estimate the additional households. The first assumption concerns the affordability criteria of which there are two elements, one for market housing and the other for social rent. The default assumption for the market housing affordability criteria is households who can afford to buy are those where no more than 30% of their income equals the median rent. The default assumption for the social rent affordability criteria is households needs social rent where more than 35% of their income equals the 30th percentile rent value. These default assumptions were set by the technical working group. This group also developed the data sets and assumptions for the national and regional additional housing need estimates tool published in August 2020. In the drop down list here you can select either the default assumptions or user assumptions. If selecting the user assumptions you will need to provide your chosen percentage in these two boxes. And justify why they are more appropriate than the default percentages. The next set of assumptions considers house price paid and income levels for first time buyers. These assumptions are used to identify the households that qualify for owner occupier tenure. Table nine provides the estimated house value for first time buyers. You can select an appropriate percentile value at which first time buyers enter the housing market for each housing market area. And the tool will provide the associated house value based on the house price paid data within the tool. Alternatively if more suitable and appropriate you can estimate the house values from an exercise outside of the tool using external data. The next step is to divide the first time buyer house values from table nine by a house value to income multiplier. This determines the minimum income a household needs to qualify for owner occupier tenure. To request your local authority house value to income multiplier please email afdl-lhma.gov.wales And add this value here in the assumptions sheet. Welsh Government has sourced this data from UK Finance and it is critical to note that this information must be used specifically and solely for the Welsh Government LHMA tool. Table ten allows you to apply a different multiplier for a housing market area with supported evidence as to why this multiplier is more appropriate than the local authority multiplier. The tool will then revise the minimum income needed for households to qualify for owner occupier tenure. The tool uses the percentile income distributions to estimate the number of households with at least this minimum income. The final assumption required for owner occupier calculations is the percentage of households that qualify for owner occupier tenure that go on to buy. There is no robust data to support a particular percentage but the technical working group considered a percentage in the range of 40% to 60% as reasonable. And this concludes all the assumptions needed for the owner occupier household calculations. The households allocated to the private rented sector would be the market housing households less the estimated owner occupier households. Next we consider possible changes to rental prices, house prices and income growth over the first five years of the LHMA period. From the drop down list you will need to select the default or user assumptions. The default assumptions are based on the five year financial forecast from the Office for Budget Responsibility. Any user percentage change assumptions will need to be entered here. In the row labelled user forecast. You will also need to set an assumption as to how the distribution of household income will change over the first five years of the LHMA period. The options include greater inequality, no change, user. The greater inequality assumption is that the income at the tenth percentile will be one percentage basis point lower than the median and one percentage basis point higher at the 90th percentile. The one percentage basis point reduces uniformly from these two extreme percentiles to be no change at the median. And the final assumptions focus on intermediate housing tenure where you have three options. Option one is to split the intermediate housing need by intermediate rent and low cost homeownership outside of the tool. For this option tables 11a and 11b below should be blank. Option two is to split the intermediate housing within the tool and use the upper threshold income for social rent as the minimum income for intermediate rent. You will need to set a maximum income for intermediate rent. For this option you should leave table 11a blank and populate table 11b only. Finally, option three is an extension of option two but with additional households from the social rent tenure who are considered to qualify for intermediate rent. For this option you can set a revised lower minimum income for intermediate rent using both tables 11a and 11b. You are encouraged to use the scenario testing sheet in the output section of the tool to vary the assumptions and understand the impact on the different household tenure estimates. When complete you can tick the appropriate box on the front page of section two and that concludes the key assumption data requirements. For further information you can consult the LHMA guidance or email Welsh Government at afdl-lhma.wales.