New plans to tackle housing shortage

A “carrot-and-stick” approach aimed at forcing local councils and private sector developers to address the UK’s housing crisis will be outlined by the government on Monday.

Seeking the release of land, a so-called “Housing and Planning Delivery Grant” will direct extra resources to councils that build the most houses while penalising those who have not identified at least five years’ worth of sites ready for development.

The paper, seen by the Financial Times, marks the most interventionist attempt for two generations to tackle an issue Gordon Brown has identified as being central to his prime ministerial agenda.

In a signal that the government is prepared to override local authorities’ planning powers, the consultation document says action will be taken to overturn council decisions and give the “green light” to housing applications where councils have not identified enough land and have not granted sufficient planning permissions.

There are to be penalties and incentives for private sector developers to ensure housing targets are met.

The green paper contains at least one veiled warning that may alarm developers. It declares its commitment to “tougher action where private developers do not deliver on agreed goals”.

The document marks an intensification of the government’s drive to help first-time buyers by giving them a government-backed loan for a deposit.

Previous attempts have failed to help beleaguered 20-somethings on to the housing ladder.

Shared equity housing schemes – where buyers take a loan for a deposit from either private sector lenders or the government to get on the housing ladder – are seen as integral to encouraging first- time buyers into the market.

In the document the government is expected to set a target of 25,000 shared equity and shared ownership homes to be funded by the  Housing Corporation, which will tie in with an independent review of privately financed shared equity schemes.

In an expansion of its Open Market homebuy scheme, the government is set to launch a 17.5 per cent equity loan product that will be available from July.

A draft of the document says the government plans to spend £6.5bn on social housing and at least £8bn in affordable homes over the next three years.

The paper also says the government will look “at the lessons to be learned from the recent floods”, adding it is not realistic to prevent all development within flood risk areas as some 10 per cent of England’s housing stock is in such areas.

“But”, it goes on to say, “inappropriate development can exacerbate flood risks, not only by creating more homes and businesses at risk of flooding but also by adding to the risk of flooding of existing properties.”

It adds that flood risk is likely to increase in the future, particularly as a result of climate change impacts.

The government wants at least 70,000 more affordable homes built a year and at least 45,000 social homes a year by 2010 – a 50 per cent increase in three years, and a 130 per cent growth since 2004.

In total, the government wants to build 2m new homes by 2016, and 3m by 2020, including 100,000 homes in 29 identified “growth points” and up to 50,000 homes in at least 10 additional “growth points”. The government has called on councils to use their powers “to ensure that new properties...are being occupied as homes and not remaining empty”. It estimates nearly 150,000 properties have been empty for two years or more.

Ian Fletcher, director for residential policy at the  British Property Federation, said it was positive the government was finally addressing the housing crisis but was concerned that this could be too little, too late.