Councils face penalties for missed house-building targets

8 Feb 19

Half of councils in England are likely to incur penalties for failing to meet house-building targets by 2020, the spending watchdog has found.

New house-building standards to be introduced this year mean already cash-strapped local authorities may be fined for failing to build enough homes.

As the government seeks to deliver on its ambition to build 300,000 new homes each year from the mid-2020s it has implemented reforms to the planning system to help local authorities determine how many, where and what type of new homes should be built.

However, the National Audit Office said that the new system is “not working well” and that the government should take the problems “much more seriously” if it is to meet housing needs.

The Ministry of Housing, Communities and Local Government’s ‘Housing Delivery Test’, which will be rolled out on an unspecified date this year, holds local authorities to account for meeting house-building targets. But the NAO said that meeting housing targets “is not fully within local authorities’ control”.

The report highlights research by Lichfields development consultancy which estimates 50% of local authorities are likely to fail the tests and face penalties.

If a council fails to show that it has a five-year supply of land for housing, it gives developers greater freedoms to build where they want, and a local authority has less control over the location of development – risking “ill-suited development”, the watchdog said.

A high percentage of councils do not have up-to-date local plans for new homes because producing them can be “complex, resource-intensive and time-consuming”, according to the NAO. It found that just 44% of local authorities have a local plan that is less than five years old.

The report also noted that, despite the government’s target of 300,000 new homes a year from the mid-2020s, the average number of new houses built between 2005/6 and 2017/18 was 177,000 – and never exceeded 224,000.

Amyas Morse, head of the NAO, said: “For many years, the supply of new homes has failed to meet demand. From the flawed method for assessing the number of homes required, to the failure to ensure developers contribute fairly for infrastructure, it is clear the planning system is not working well.

“The government needs to take this much more seriously and ensure its new planning policies about the change that is needed.”

Martin Tett, housing spokesman for the Local Government Association, said: “We remain clear that the government’s housing-needs formula does not take into account the complexity and unique needs of local housing markets, which vary significantly from place to place, and imposes unfair and undeliverable targets on communities. This risks leading to a house-building free-for-all which will bypass the needs of local communities and could damage public trusts in the planning system.”

Minister of State for Housing Kit Malthouse said: “I recognise the challenges identified by the NAO, and the simple truth that is over the last three decades, governments of all stripes have built too few homes of all types.

“We are determined to build the homes this country needs, and planning plays a key role in our desire to build more, better, faster.”

Read Neil Merrick’s feature for PF in which he asks whether councils are ready to deliver a renaissance in social housing.

The Chartered Institute of Housing recently calculated that 165,000 social rent homes have been lost in the last six years.

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