Housing Minister Grant Shapps has finally announced the details behind the New Homes Bonus after months of speculation.  The New Homes Bonus has been invented to incentivise Councils and communities to embrace a new era of building and development as the country desperately needs to plug its enormous housing gap.

How does the bonus scheme work?

For every new home built the local Council will be paid a bonus matching the council tax raised for that property over six years. This works out at more than £9,000 for each Band D home over the full period.  The bonus for affordable housing will be 36% higher, so averaging almost £11,000 for a Band D affordable home.  This is a huge incentive for local Councils who are all feeling the pinch following the spending review.  Over the next 4 years the Government will make £1billion available for the bonus; £196million will be used over 2011-2012. 

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

“We need to get the country building again,” said Shapps of the New Homes Bonus.  “But not through a Whitehall knows best arrogance.  To kick start a housebuilding revolution, development needs to be backed by local communities rather than opposed by them.”

Over many decades local people and Councils have begrudgingly accepted new building in their areas but they have never embraced building as a good thing.  The New Homes Bonus is an excellent idea in our opinion as local Councils will have to fully embrace the scheme to financially benefit from it and let’s face it they need the money!  Also over time we hope local people will recognise the benefits too as the money raised from the Bonus will directly benefit them.  

Barratt ceo Mark Clare said the announcement was an important step forward.  “We are already talking to local authorities about what the implications of our planned developments will be in terms of additional funding for them.  However there is still some way to go to define the wider policy framework needed to ensure that the localist agenda can provide the new housing the nation needs.”