Councils’ New Homes Bonus payments could be reduced, warns minister

18 Oct 17

Councils could see a reduction in the money they receive to ensure a target numbers of homes are built in their areas, the housing minister has warned.

Alok Sharma, speaking at the launch of a Localis report on homeownership this week, spoke of the government’s proposals to withhold the New Homes Bonus from local authorities “that aren’t planning effectively”.

He highlighted a Local Government Finance Technical Consultation, released last month, which proposed “linking payment of the bonus to the housing delivery test or the standard approach to local housing need”.

The housing delivery test was set out in the housing white paper at the start of the year and will look at whether councils are hitting their targets for numbers of new homes in their areas, which they do through the planning system.

From next month if delivery falls below 95% of an authority’s annual housing requirement the government will require it to publish an action plan giving the reasons for the situation and how they plan to resolve it.

Part of the government’s plan, in the consultation out last month, is to reduce the NHB payment in line with the number of homes allowed on appeal.

A DCLG spokesperson said: “As part of the Local Government Finance Technical Consultation we’re consulting on whether to reduce payments for homes where planning permission is later granted on appeal.

“We intend to go further in 2019/20, including looking at linking payment of the bonus to the housing delivery test or the standard approach to local housing need.”

Ministers are also looking at whether county councils should be included in calculations for future rewards when they are in two tier areas - and receive 20% of bonus payments - but are not the planning authority for decisions involving residential development.

Since 2011 the government has allocated £6bn to local authorities through the scheme to reward housing supply. Since the bonus was introduced over 1,200,000 homes – including conversions and long-term empty properties - have been delivered. The consultation ends on October 26.

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