New homes bonus launched

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News article

New Homes Bonus launched

March 2011

New Homes Bonus

In a statement dated 17 February 2011 Housing Minister Grant Shapps announced the final design of the New Homes Bonus (NHB) and published a revised Bonus calculator.
 
From April this year the New Homes Bonus will match-fund the additional council tax potential from increases in 'effective housing stock', with an additional amount for affordable homes for the following 6 years. The New Homes Bonus will also be paid on empty homes brought back into use.  Almost £1 billion has been set aside over the Spending Review period for the scheme.
 
The amount of grant relating to an additional council tax band D property would be about £1,439 pa and the grant for an additional band E property would be about £1,759 pa. Outside London Bonus payments will be split between the district/borough council (80%) and the county council (20%) as a starting point for local negotiation. In London 100% would go to the borough. 

The Bonus will not be ring-fenced; its flexible funding is designed to allow the benefits of housing growth to be 'returned to communities affected by growth in a way which best met local need'.
 
Responsibility will remain with local authorities to continue to ensure that development is suitable and sustainable by meeting local needs and national planning policy. There is, however, some concern that the bonus will skew planning decisions in favour of being granted due to the financial incentive. This could in turn leave applications more open to challenge under judicial review.
 
Kay Davies, Head of the Fisher German Planning Department, comments: "The financial reward for permitting new dwellings is a more proactive ‘carrot’ incentive compared to the ‘stick’ approach lead by housing requirements and maintaining a 5 year housing land supply.  I have witnessed councils reluctant to be forced into granting permissions to meet targets forced upon them.
 
The incentive of the New Homes Bonus turns this around by rewarding those councils who embrace development.  It does, however, remain to be seen how this will work in practice and whether the threat of legal challenge will in fact simply add further delay to the delivery of housing through the planning system."
 
Further information on the New Homes Bonus final scheme design can be found at:
 www.communities.gov.uk/housing/housingsupply/newhomesbonus
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