Latest Public Sector News

25.11.15

Osborne to double housing budget with more stamp duty and public land sales

Chancellor George Osborne has committed to release public sector land in order to give way to 160,000 new homes, matched with a pledge to regenerate brownfield sites in the green belt and large council estates.

In today’s Spending Review, Osborne vowed to double the overall housing budget to £2bn a year in an effort to meet the government’s ambition of delivering 400,000 affordable housing by 2020-21 – “not just affordable to rent, but affordable to buy as well”.

Of these, 200,000 will be starter homes sold at a 20% discount compared to market value to young first-time buyers, in addition to those delivered through reforming the planning system. This had already been announced in October’s Conservative conference and was part of their original party manifesto.

Unused or previously undeveloped commercial, retail and industrial land will be released for starter homes. Previously developed brownfield sites in the green belt will also receive regeneration support that allows them be developed in the same way as other brownfield land – as long as it contributes to starter homes, and subject to council consultation.

Commenting on this, Tony Armstrong, Locality chief executive, said: “We will be monitoring the great government sell-off of public assets closely. The eyes of authorities taking a narrow approach to assets disposal must be opened to the social value and additional savings they can realise from transferring assets to community ownership.”

Another 135,000 houses will be shared ownership homes under the Help to Buy scheme. The scheme will be open to all households earning less than £80,000 outside London and £90,000 in London, as well as remove previous restrictions including councils’ rights to set extra eligibility criteria.

And 10,000 homes will allow tenants to save for a deposit while they rent, which had already been promised in the party’s manifesto, while 8,000 specialist homes will be provided for older people and people with disabilities.

Whitehall has also removed existing constraints that prevent private sector organisations to helping deliver housing programmes, including the constraint to bid for government funding.

From tomorrow, five housing associations will help launch a pilot of the Right to Buy scheme in order to inform the design of the final scheme. This will build on commitments detailed in October, but already set out in the Conservative manifesto, to extend the scheme to housing association tenants.

The planning system will be further reformed, including by making councils subject to a new delivery test that ensures they are building the number of homes set out in their Local Plans. Part of this will include amending the planning policy to support small sites in order to back SME housebuilders.

Whitehall has promised £2.3bn in loans to help regenerate large council estates and invest in the infrastructure needed for major housing developments.

Alongside that, £310m will be used to create the first new garden city in nearly 100 years at Ebbsfleet, part of a wider £700m regenerating programme that, combined, is expected to support up to 60,000 new homes.

A new stamp duty rate for people buying homes as buy to let properties or second homes, 3% higher than normal stamp duty, will take effect from April 2016.

The government will then use some of the extra tax collected to reinvest £60m in communities where the impact of second homes is “particularly acute”. These tax receipts will also help towards doubling the housing budget as promised.

Responding to today's housing announcements, LGA's housing spokesman, Cllr Peter Box, reminded the government that not everyone is ready to buy, with 60,000 people currently living in temporary accommodation and over a million more still on council waiting lists.

And national housing reforms, especially the planned £12bn cuts by 2020, will actually threaten "severely hampering" councils' ability to build new homes.

“Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists. This is the best way to reduce waiting lists and housing benefit, keep rents low and help more people get on the housing ladder.

“Planning is not the barrier to growth, skills are. If we are to see the homes desperately needed across the country built and jobs and apprenticeships created, councils must also be given a leading role to tackle our growing construction skills shortage. The industry is clear that skills gaps are one of the greatest barriers to building," Box continued.

“Devolving careers advice, post-16 and adult skills budgets and powers to local areas would allow councils, schools, colleges and employers to work together to help unemployed residents and young people develop the vital skills to build to ensure the government’s housing promises are met.”

Housing benefit

Separately, as part of his benefit reforms, the chancellor will implement a cap on the amount of rent that housing benefit will cover in the social sector to the relevant housing allowance.

“In other words, the same rate paid to those in the private rented sector who receive the same benefit,” he said in his announcement.

According to Whitehall, this will mean that housing benefit will no longer fund families living in social houses they can’t afford, as well as “better align the rules” in the private and social rented sectors.

The cap will apply to tenancies signed after 1 April next year, with housing benefit entitlement changing from April 2018 onwards.

In the same vein, the chancellor has decided to cut off housing benefit for claimants who are outside the country for more than 30 days, also from April 2016. At the moment, housing benefit claimants can go abroad for up to 13 weeks while still receiving the grant.

And “additional discretionary housing payment funding” will be handed to councils in an effort to protect the most vulnerable, including those in supported accommodation.

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