DCLG launches consultation on operation of flagship New Homes Bonus

The government has today launched a consultation on the operation of the New Homes Bonus, the flagship scheme that is intended to incentivise local communities to allow new homes to be built in their area.

Under the plans, the government will “incentivise local authorities to increase housing supply by rewarding them with a New Homes Bonus, equal to the national average for the council tax band on each additional property and paid for the following six years as an unringfenced grant”. There will be an enhancement for affordable homes, and the government has set aside up to £1bn to fund the scheme.

According to the consultation paper, local authorities will be able to decide how to spend the funding in line with local community wishes. “The government expects local councillors to work closely with their communities – and in particular the neighbourhoods most affected by growth – to understand their priorities for investment and to communicate how the money will be spent and the benefits it will bring,” it says.

“This may relate specifically to the new development or more widely to the local community. For example, they may wish to offer council tax discounts to local residents, support frontline services like bin collections, or improve local facilities like playgrounds and parks.”

The consultation will look, broadly, at the following issues:

• How the government should reward local authorities for the additional properties made available in their community for the following six years
• The level of the enhancement for affordable homes and how the government should define an affordable home
• Whether the government should reward local authorities for bringing empty properties back into use
• Whether or not, in two tier areas outside London, allocating 80% of the New Homes Bonus to the lower tier and 20% to the upper tier authority is an appropriate split
• Whether the proposed methods of data collection to track increases to the housing stock are appropriate.

It also seeks wider views on the bonus, particularly where there are issues that have not been addressed in the proposed model.

Housing Minister Grant Shapps announced that all homes that are built now would benefit from the new funding. He said: "We are ending the system where the government can tell communities what and where to build – that top-down approach slowed housebuilding to a trickle, so we need to take action now to get the country building again.

"For too long communities have fought against development because they can't see how it does anything to improve their lives. I'm determined to change this. The New Homes Bonus will ensure that those communities that go for growth reap the benefits of development, not just the costs.”

Shapps said councilors would be able to lead “a mature debate” about the benefits of development. “And rather than being punished for not meeting targets, local communities will now have a reason to say yes to new homes, because they will benefit from better local services, or perhaps the redevelopment of their town centre in return for backing new housing."

The government said it was committed to investing £4.5bn in affordable housing over the next four years, claiming its programme would deliver up to 155,000 new affordable homes.

Stewart Basely, executive chairman of the Home Builders Federation, said: "The country is facing an acute housing crisis and it is imperative we have a planning system that delivers sufficient land for the homes we need. The New Homes Bonus is an essential part of the new incentive based structure and we welcome the commitment to a simple, easy to understand system."

A copy of the consultation can be found here.