The New Homes Bonus sits at the intersection of government plans to reform housing, planning and local government
finance. With figures showing housing starts and completions continuing to fall, the incentive scheme has yet to have an impact on housing supply.
At the Northern Housing Consortium, we believe that incentivisation has a role to play, and so we wanted to kick start a debate about the potential of the New Homes Bonus.
Our report found that so far, the New Homes Bonus hasn't captured the imagination of the public, or housing professionals. Polling we commissioned showed that most members of the public thought the scheme would make no difference to their attitude towards a new development of private housing in their area, with a significant minority saying that more cash for their local council would actually make them less likely to support new housing.
Planning professionals reported a similar experience. Far from winning people over, the plans have already triggered accusations that developers are trying to buy and bribe planning permissions, and provoked cynicism about the planning process.
We also conducted a survey of housing professionals here in the north of England. More than 70% felt the NHB would have no impact on delivery of housing, with the fragile state of the economy seen as a far more significant factor impeding housing delivery.
One local authority told us: "We already have a significant number of planning permissions for new build that have been granted. The issue is not one of the authority having no appetite to grow or deliver, it rests with the appetite of developers to build in a depressed market."
Given its name, it is perhaps ironic that the "New" Homes Bonus might prove most effective in bringing "old" homes back into use.
Our polling found that a clear majority of the public would be more likely to support bringing empty homes back into use if their local authority received extra funding from government in return. This, taken with the £100m of Homes and Communities Agency funding now available and the new powers around council tax announced last week, presents a real opportunity to make an impact on the empty homes problem.
Housing professionals in the north agreed: 56% said the bonus would have a positive or very positive impact on bringing empty homes back into use.
The most worrying finding is that most local authorities in the north will actually lose money when the New Homes Bonus is fully up and running. That's because government proposes to fund the vast majority of it by top-slicing formula grant allocations.
So even if authorities were to increase housing approvals, or if the economy improved so that some of the approvals already in place were built out, gains from the New Homes Bonus would be eroded through reductions in formula grant. If the scheme is to succeed in delivering sustainable development, we believe the bonus should be fully funded in future comprehensive spending review rounds.
In a post-targets world, Whitehall has few levers left to pull. With the planning system in flux, housing starts and completions continuing to fall, the New Homes Bonus has a critical role to play.
The early signs are mixed – while the scheme doesn't impress the public when it comes to new build, it does have significant potential to play a role in tackling the empty homes problem. If incentivisation is to succeed, we need government to ensure that it works effectively across the country, and a commitment at local level to proactively demonstrating the benefits new housing can deliver.
Brian Robson is policy and strategy services manager at the Northern Housing Consortium.
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