New homes bonus 'could be illegal' claim

The new homes bonus scheme is already running into trouble, with warnings that it could be illegal and in any case will not deliver enough new housing.

The Campaign to Protect Rural England says that the plans to incentivise councils to build more homes could be unlawful.

Yesterday, housing minister Grant Shapps announced that nearly £1bn will be set aside for the bonus in the next four years, of which £196m will be for the new financial year (2011-2012).

The Government will match the council tax raised from new homes for the first six years, which it says works out at more than £9,000 for each Band D home. The bonus for affordable housing will average almost £11,000 for a Band D affordable home.

The Government calculates that 326 local authorities will receive a share of the £196m for increasing the housing stock by 150,000 homes this year.

But the CPRE has suggested that any planning permission for new housing linked to the new homes bonus would stand a good chance of being overturned in a judicial review.

Neil Sinden, CPRE director of policy, said: “Many councils are currently facing hard financial choices. In these circumstances it will be very tempting to seek to fill shrinking coffers by permitting any development, regardless of its environmental impact.

“But decisions based solely on money, rather than on whether proposed development is appropriate and sustainable, could be hugely damaging. It could also undermine the fundamental principle that planning decisions should be taken in the public interest, taking account of land use consequences.”

Simon Rubinsohn, RICS chief economist, added his own warning: “The Government’s own impact assessment suggests that the new homes bonus is only likely to deliver an additional 14,000 homes each year for the next ten years. This represents a drop in the ocean when the population is growing by roughly 220,000 households per year.”

Meanwhile, figures yesterday revealed the number of house building completions in England fell to a record low last year, down 13% on 2009.

Just 102,570 new homes were completed in 2010 – the lowest number since 1923.

Ian Baker, group managing director for housebuilding at Galliford Try Homes, was scathing. He said: “The Government may believe that the new homes bonus is the panacea to the housing crisis: if only the solution was so simple. While acknowledging today that housebuilding is at an all-time low and will boost jobs and prosperity, the Government fails to take into account the sea-change of opinion that is needed at local community level to accept new homes.

“To dangle a financial carrot in front of communities already reeling from proposals to cut local services, as an incentive to accept new homes is to confuse two very different issues.  

“The new homes bonus is not a rubber stamping exercise. Community buy-in is crucial to gaining planning consent, and while housebuilders already invest in this valued process, sensible housing proposals could still be high jacked.

“Mr Shapps says that the new homes bonus will sit alongside the Government’s current national planning policies, yet it is these that are in need of radical change, alongside a promised reduction in regulation that we have yet to see, and concrete plans to encourage lending to homebuyers.

“The question remains: what happens if the Localism Bill fails to deliver new homes in the volume required?”