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Cash is not king for councils under housing hammer

Government is hoping financial incentives will get councils to free up more land, but will this help solve the housing crisis?

Housing was once again in the news last week as the Government said it was prepared to incentivise
local authorities from a pot of £150 million if they can ensure that the housing stock will increase by 0.75 per cent a year.

The announcement was made in a consultation on the Housing and Planning Delivery Grant but first mooted in the Housing Green Paper. It promised these councils an extra £1,100 for every home, on top of infrastructure funding and developer contributions.

The incentive shows the work that needs to be done to combat what threatens to be a fairly entrenched difference of opinion between local and central government on how many
new homes need to be built in England.

Ministers want to see 240,000 new homes built by 2016 to satisfy housing demand, yet council leaders know they must balance new builds with residents’ fears that their once green and pleasant backyards could be about to be concreted over.

Housing affordability

A recent report from the National Housing and Advice Planning Unit – an independent body set up to advise national and regional government on housing affordability – puts into context the differences of opinion on how many homes should be built.

The report, ‘Developing a Target Range for the Supply of New Homes Across England’, shows that whether plans are regional or from Government, the overall difference it will make to a person on an average wage looking to buy is limited.

As a result, the NHPAU goes on to recommend that 270,000 homes a year need to be built, with the greatest growth in the southern regions of London, the South-east, South-west and East of England.

With growing migration, and an already fairly high push to bring empty properties back into use, it’s difficult to see what other answers there are.

Despite this, it seems unlikely that local government will be cowed into delivering the number of homes that Government currently wants, let alone the figures suggested by the NHPAU.

The South-east England regional planning assembly has said the NHPAU’s paper “risks confusing people by suggesting that we can build our way out of a crisis in house prices”.

Assembly chair Keith Mitchell claimed that a 64 per cent increase in building, to 46,000 homes a year locally, would still see the South-east prices rise from eight times average salary to 11 times average salary by 2026.

“Against a housing stock of 3.5 million homes in the South-east, adding a few thousand more every year will have almost no impact on house prices.”

Whether or not more shared ownership schemes and more homes for social rent would make a bigger impact is as yet uncertain.