New Homes Bonus not fit for purpose

By guest blogger Bill Peters

The latest planning application figures published by CLG give little comfort to the view that we are seeing a resurgent housebuilding sector emerging on the back of the New Homes Bonus and generous government support to the housebuilding industry.  (For background on the NHB see this House of Commons Library paper and previous Red Brick posts).

It is of course hard to disentangle the NHB impact given the data is not readily available and it sits at odds with the more traditional housing starts and completions data sets.  The Hansard record of the debates between Shapps and the eagle eyed Nick Raynsford (including for example this one)  point up the fact that the NHB output includes empty homes coming back into use  and a large number of new one bedroom flats which seem either to be conversions of existing larger  and possibly multi-occupied homes plus new student residences.

Either way the evidence regarding the incentive effects of NHB are very poor to date raising the question about whether it is fit for purpose as a central plank of housing supply policy.

Alongside this is the funding and support given to the housebuilding industry in a variety of schemes – FirstBuy, NewBuy, Build now Pay Later, Get Britain Building and more. There appears to have been no stated agreement with the housebuilding industry about increasing output on the back of this support, rather it has been used to underpin existing balance sheets and to secure viability much in the same way as help to mortgage lenders did, though there at least targets re small business lending were imposed.

As matters stand we have the flimsiest of housing policies backed onto a weak housing market. If and when the economy and that market recover any vitality the government is going to look very exposed.

No doubt Grant Shapps is hoping by then he will have got another job. However if the current unravelling continues – the Newham relocations being the latest  – he may never get one!

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