Councils will get an £8,634 payment for an average home

Housebuilders have this morning welcomed the publication by housing minister Grant Shapps of the details of the New Homes Bonus.

The system, whereby local councils will be rewarded with funding worth six years council tax for each home built in their area, is designed to encourage councils to plan for housing growth.

The consultation paper unveiled today, the government confirmed it had set aside nearly £1bn to pay for the first four years of the bonus, beyond which any payments will be met by top-slicing the local government settlement.

This means that councils will, over six years,  receive £8,634 for every Band D property built and £10,553 for every Band E property built, with an extra £2,100 bonus if the home is affordable.

It says 80% of the cash will go to local councils, with 20% going to country councils, where they exist. It also confirmed that the payment will be made on the basis of net additions of new homes, meaning that any demolitions will count against the payment. This has led to concerns that the policy will damage estate redevelopment.

However the supplement payment for affordable homes will be based on the gross number of home produced.

The publication comes as the government has been reacting to the high court ruling earlier this week which effectively re-instated regional plans which set housing targets for councils.

Shapps said: “We also inherited a catastrophic decline in home building from the previous Government. The New Homes Bonus will encourage local authorities and communities to develop their housing plans in ways that meet their needs and concerns. I am committed to ensuring that rewards start to flow in the next financial year to those authorities going for growth.”

Home Builders Federation executive chairman Stewart Baseley said welcomed the consultation. He said: “The country is facing an acute housing crisis and it is imperative we have a planning system that delivers sufficient land for the homes we need. The New Homes Bonus is an essential part of the new incentive based structure and we welcome the commitment to a simple, easy to understand system.”

The consultation closes on the 24th of December, and is available here.