13 Aug 2010
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Housebuilding needs bigger incentives, industry claims

Councils must be offered greater incentives if significant progress is to be made in stimulating the housebuilding market, Construction News reported.

Housing minister Grant Shapps this week said the government would match the first six years’ of council tax receipts from every new house built in England - equivalent to a total of about £8,500 for a Band D home. The New Homes Bonus will be introduced sometime after April 2011.

But housebuilders were cautious about the proposals, with some fearing the incentives might not be sufficient to encourage councils to undertake new projects.

There are particular fears about the south of England where many of the most acute housing problems exist yet where councils do not have an urgent need for cash.

A spokesman from the New Local Government Network told Construction News: “Areas of high housing demand, often in areas of the south of England where councils may be relatively affluent, are likely to require a bigger incentive than perhaps more deprived areas. I think there are strong reasons for looking at whether you need a kind of national variation.”

According to research by the National Housing Federation, plans for 85,000 homes across England were scrapped after the coalition government axed regional housebuilding targets.

A spokesman for the Home Builders Federation said further detail was needed as soon as possible and warned that some local authorities could delay housebuilding plans further. “Different local authorities are responding differently to the announcements,” he said. “For local authorities that are minded to delay as they are anti-development, any uncertainty gives them an opportunity to do so.”

Building reported that Shapps admitted that the coalition’s abolition of the regional planning system will lead to councils cancelling large housing schemes, but that he believed it was “no surprise that unsustainable schemes are being canned”.

Shapps said: “The big picture is that if you tell people they no longer have to build in areas they don’t want to build, then there’s going to be an early shake-out, and it’s good that there is.”

However, he maintained that ultimately more homes would be built under the new system, as councils realised the financial implications of halting development.