New Homes Bonus

by Mark Johnston

Britain now has the worst housing crisis in a generation!

Local authorities, it seems, can play a central role in facilitating economic and social growth. In housing this potentially means building strong partnerships with the private sector, releasing land for development and also engaging with their local communities to ensure that their future plans are based on their views.

Grant Shapps, housing minister, said “for too long communities have fought against development because they can not see how it does anything to improve their lives. The new homes bonus scheme will ensure that those communities that go for growth recoup the benefits of development and just the costs”.

Many communities know they need new homes and the new homes bonus gives them the incentive to welcome them.

The new homes bonus is a key part of a wider framework of incentives to support growth. It aims to have localism at its heart and to re-energise communities by encouraging local politicians to lead a debate with communities about the benefits of new homes.

The incentive is designed to encourage local authorities to facilitate housing growth.

The new homes bonus is a simple and transparent incentive that ensures that those areas which are growing have the resources to meet the needs of their new residents and also their existing community.

The bonus sees the government match the council tax on any new properties for the first 6 years to help support the development by providing or improving local facilities.

Simply put, it means that when local councils build new homes in their area they get rewarded. Specifically it means that for every pound of council tax they get from the family living in the ‘new home’, the government will give the area that pound again.

Local authorities are then able to decide how to spend the extra funding, in line with local community wishes.

The government does however expect local councillors to work closely with their communities to help them to understand their priorities for investment and to communicate how the money will be spent and the benefits it will bring.

Although recent research has shown that 70% of councils in England have not spent their share of the £200 million new homes bonus cash on their communities.

A report published by ‘inside housing’ has revealed that of all of the 349 councils that received the bonus just 29% have used the money to further support housing development or other community projects.

Of the councils that received the bonus, 54% said the money had been allocated to the general council fund and 18% said it had not yet made a decision on how it would be spent.

Jack Dromey, shadow housing minister, said of this: “we know the new homes bonus was unfair, distributing money from the most deprived authorities to the most affluent and now we know it does not work”, he also added that “cash strapped local authorities are being forced to divert the money to protect essential services”.

A spokesperson for the communities and local government department said ‘it is for the individual councils to decide how the money is spent’.

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