The chancellor has announced a £1bn extension to a fund for unlocking stalled housing sites.
In today’s autumn statement George Osborne said the fund would be extended for five years from 2014/15 to 2018/19 inclusive and would start with funding for nine sites capable of providing 27,000 homes.
A total of £50m of the fund will be earmarked for bids supported by Local Enterprise Partnerships.
There was some confusion over the announcement as the chancellor mentioned Manchester and Leeds as places that would receive money from the fund, but neither the Manchester City Council nor the Homes and Communities Agency, which would administer the fund, knew which projects he was referring to.
An HCA spokesman said the money announced today is an extension of the Local Infrastructure Fund, which provides loans or equity backing to housebuilders and developers to provide infrastructure to unblock stalled schemes.
The fund was announced in last year’s autumn statement with a £225m allocation and a further £102m was added in June’s spending review. That £327m covers the period up to 31 March 2015.
So far four schemes – in Cranbrook near Exeter, Fairfield in Milton Keyes, Wokingham in Berkshire and Sherford near Plymouth – have been backed by the scheme and another 14 are shortlisted and undergoing due diligence under the rounds of the scheme previously announced.
In addition, the chancellor said he would allow councils selected through a competitive bidding process to borrow £300m in 2015/16 and 2016/17 to build new affordable homes.
The councils will have to subsidise the build programmes by selling vacant, high-value social housing. The autumn statement said around 10,000 new affordable homes could be built through this programme, although it did not say how many homes would be sold to back it.
Councils have pressed for the borrowing limits on the housing revenue accounts to be lifted to allow them to build more homes.
A raft of consultations on reforms to the planning system for new housing were also announced.
Among the proposals were that sites of 10 homes or fewer should be exempt from section 106 planning gain contributions.
There will also be a pilot scheme to test out “passing a share of the benefits of development directly to individual households” – a move some have referred to as “buying off” residents to cut opposition to new development.
The chancellor also proposed an expansion of the Rght to Buy.
He added that two “challenger banks”, Virgin and Aldemore, were expected to join the Help to Buy scheme this month.
The chancellor also apeared to dismiss suggestions of a house price bubble by saying that the Office for Budget Responsibility had forecast house prices in 2018 would be 3.1 per cent lower than at the peak in 2007.
A spokesman for the Home Builders Federation said: ““The £1bn allocation for major sites is welcome measure to support longer-term housing supply.
“While not headline grabbing, a number of important changes to the planning system could be very beneficial, especially a statutory requirement for local authorities to have an adopted local plan and measures to unlock the tens of thousands of homes held up by planning conditions.
“They will make the system more efficient, speed up the rate at which sites can be brought forward and so increase much-needed housing supply.”
HCA chief executive Andy Rose said: “An additional £1bn for large-scale housing developments demonstrates the government’s commitment to supporting housing throughout the next spending period.
“It is also recognition that the HCA’s current local investment fund programme is speeding up delivery at sites such as Cranbrook near Exeter, where £20m LIF funding has helped unlock one of the largest and most significant housing and employment developments in the country.”
London Councils executive member for housing Sir Steve Bullock said: “By 2021, over 800,000 new homes will need to be built in London, but the government’s latest attempt to address this crisis through increasing council borrowing capacity does not go far enough and has too many strings attached.
“In order to qualify for extra borrowing capacity, councils will have to sell off high-value vacant housing stock. This unfairly prejudices London, which has both the most acute housing need and the highest value stock in the country.
“London Councils will continue to call for the complete removal of the artificial housing borrowing cap, among a raft of other measures, so that boroughs can properly address London’s housing crisis.”
He added that residential property owners living abroad would have to pay capital gains tax when selling from April 2015, which brings them into line with UK residents selling homes that are not their main homes.
In response, Labour’s shadow cancellor Ed Balls called for more affordable housing.