Building of homes to increase by a third

INVESTMENT PROPERTY NEWS: DAILY TELEGRAPH

Planners will be forced to allow the building of a third more new homes every year, with the building taking place in the parts of the country where house prices are the highest, the Government said yesterday.

Gordon Brown said the Government would be looking at ways of increasing the number of homes built every year from 150,000 across Britain to 190,000, the actual rate at which new households were forming.

In doing so, he fought shy of accepting the full recommendations of Kate Barker, the Bank of England adviser who reported on the rate of house building last year, recommending that 70,000-120,000 more homes should be built each year.

Mr Brown and John Prescott, the Deputy Prime Minister, have, however, accepted Miss Barker's view that a step change in housing provision is needed with a heavy proportion of them being "affordable".

To that end, the Chancellor announced a scheme of shared equity loans to help 20,000 households into home ownership and announced a cross-cutting review that will look at ways of funding the hospitals, schools and roads the new developments will require.

The Government is also talking about "growth areas" outside the existing four growth zones - the M11 corridor, Ashford, Milton Keynes and the Thames Gateway.

With a view to funding the infrastructure for the new homes, Mr Brown launched a consultation paper on a new development tax, the local planning gain supplement, designed to scoop off some of the profits that landowners make from selling their land when it gets permission for housing.

The tax has acquired the prefix "local" since it was last mentioned in the hope of seeing off fears that the funds will automatically be appropriated by the Treasury.

Though Mr Brown and his colleagues at the Office of the Deputy Prime Minister stressed that the Government was still committed to its target of building 60 per cent of all homes on brownfield land, the failure to up this target was seized upon by some as significant.

The Campaign to Protect Rural England said that the pitfall of the new local planning gain supplement will be that it will raise more money on greenfield sites than on brownfield ones, so there may be an incentive to go for greenfield.

The ODPM also announced new design codes to speed up the delivery of high quality housing developments.

A new code will be published to ensure new housing is environmentally sustainable, there will be a new Greenbelt directive and a consultation on new draft planning policies to help manage flood risk.

The Government is also launching a number of pilot schemes to encourage local authorities to bring derelict sites back into use and build more homes for renting.

Mr Brown announced that draft legislation would be introduced later this month to pave the way for Real Estate Investment Trusts - property investment vehicles that will receive special tax treatment.

The environmental group Friends of the Earth said the new planning guidelines would allow a massive increase in house-building in areas, such as the South-East, which are already suffering the effects of over-development.

It also described the plans to reduce the impact that new houses have on the environment as "likely to be completely ineffectual", being too weak, voluntary and likely to be ignored by major housebuilders.

One of them, Wates, published a report saying that tougher standards were needed to prevent the building of thousands of homes which would need to be demolished after 30 years.

Stewart Baseley, executive chairman of the Home builders Federation, said: "Over the next 20 years there is a real possibility that housing supply can be brought into a better equilibrium with demand and aspirations, giving more people the opportunity to buy a home of their own."

- 29 November 2005