Proposed incentives to encourage councils build more houses will discriminate against the redevelopment of existing estates, writes Joey Gardiner. 

Building understands the New Homes Bonus will be paid to councils based on the “net” increase in new homes from a development, rather than on the number actually built. The news has raised fears that the planned incentive will spell the end of estate regeneration schemes that involve demolishing and rebuilding a large number of homes.

Housing minister Grant Shapps (pictured), speaking at a fringe event at last week’s Tory conference, referred to the New Homes Bonus being calculated on the basis of “net additions”. Sources close to the communities department later confirmed the intention of the policy was that any demolitions would count against the amount of money paid to the council.

The bonus has been designed by Shapps to encourage those councils that have reduced planned housing in their area since the abolition of housing targets to increase the number built, by guaranteeing to pay the equivalent of council tax for six years for each home.

Former Labour construction minister Nick Raynsford attacked the plan to make the bonus work on net additions. He said: “This sends out the wrong signals to councils engaged in estate regeneration, and could jeopardise the development in some of our most deprived areas.”

Councils have thus far failed to respond to the promise of the bonus, saying they need to see the detail of the announcement, and developers are sceptical of how
it will work. Since targets were abolished, councils have cut plans for 160,000 homes, or 1,300 every single day, according to the National Housing Federation.