NHB to be discontinued?

New Homes Bonus seems set to be discontinued after 2019-20, based on statements in the government's latest Technical Consultation on the Local Government Finance Settlement for 2019-20.

Next year, too, the threshold for growth in housing stock above which NHB becomes payable is set to be increased beyond the 0.4% figure (in band D equivalents) used for 2017-18 performance.  This will hit authorities with lower housing growth even harder and means that many will probably receive nothing for their 2018-19 delivery, beyond what is received for additions to the stock of affordable housing. Authorities with lower demand and higher numbers of empties are particularly vulnerable.

The consultation section on NHB is reproduced in its entirety below:

3 New Homes Bonus

3.1 Background

3.1.1 The New Homes Bonus (the ‘Bonus’) was introduced in 2011 to provide an incentive for local authorities to encourage housing growth in their areas. Over £7 billion has been allocated to local authorities through the scheme to reward additional housing supply.

3.1.2 Although the Bonus was successful in encouraging authorities to welcome housing growth, it did not reward those authorities who are the most open to growth. In December 2016, following consultation, the government announced reforms to the Bonus as follows:

• reduction of the number of years New Homes Bonus payments are made from 6 to 5 years in 2017-18 and to 4 years from 2018-19; and

• introduction of a national baseline for housing growth of 0.4% of council tax base (weighted by band) from 2017-18, below which the Bonus will not be paid.

3.2 New Homes Bonus baseline 2019-20

3.2.1 The Government has retained the option of making adjustments to the baseline in future years to reflect significant additional housing growth and to remain within spending limits set at Spending Review 2015.

3.2.2 In 2018-19 the baseline remained at 0.4%. Due to the continued upward trend for house building, the Government expects to increase the baseline in 2019-20.

3.2.3 New Homes Bonus calculations are based on additional housing stock reported through the council tax base and decisions on the baseline for 2019-20 will be made following a review of the data when it is published in November. Any changes intended for the baseline in 2019-20 will be detailed at the time of the provisional settlement. Any funding intended for New Homes Bonus payments that is not used for this purpose will be returned to local government.

3.3 New Homes Bonus 2020 Onward

3.3.1 2019-20 represents the final year of funding agreed through the Spending Review 2015. In light of this, it is the Government’s intention to explore how to incentivise housing growth most effectively, for example by using the Housing Delivery Test results to reward delivery or incentivising plans that meet or exceed local housing need. Government will consult widely on any changes prior to implementation.

The Empty Homes Network will continue to argue for a proper national strategy to tackle empty homes rather than purely financial measures. In particular, we will argue that at local level, a proportion of Empty Homes Premium should be reinvested into local empty homes initiatives that emphasise the need for prevention of long term empties rather than cure.

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Comments

Further to David Gibben's original post, has there been any confirmation from Government about either cessation or continuation of NHB? Or the form of / timescale for potential replacement incentives? I note in the Government's 29/01/19 written statement about the final settlement that: "The consultation illustrated that the sector wants certainty on the future of the New Homes Bonus after next year. The government remains fully committed to incentivising housing growth and will consult widely with local authorities on how best to reward housing delivery effectively after 2019-20." We are currently deliberating about whether to undertake a major data cleansing exercise prior to October snapshot - the recorded number of long-term empty properties normally influencing calculation of NHB payment. If (apart from reducing the headline figure for number of LTEs) it would bring no financial reward, then it would arguably be an unjustified burgen on staff resources; but if we stand to benefit financially, as we have in previous years, then it could be worthwhile. I'd be grateful if anyone could help shed light on the situation to help us decide. Thanks in anticipation of advice.

David Clough