Government figures out last Thursday revealed that in England only 102,570 new homes were built, the lowest level since 1923. This is 13% less than a year before and the lowest recorded level in peacetime since 1923. These figures are from statistics provided by the Communities and Local Government. The severe weather that the country faced in the final quarter of 2010 resulted in double digit decreases in the number of homes being started and finished by the construction industry. 23,000 homes were started to be built in the last three months of the year which was 11% less than the previous quarter and 23,190 homes were completed, this was down 13% from the previous quarter. Completions of houses by private developers dropped by 18% whilst housing association completions rose by 3%.
It is estimated that 232,000 homes need to be built in England each year in order to keep up with the demand. The 102,570 homes that were built fall far below the required level. This could deepen the housing crisis unless action is taken relatively quickly. The shortage of available mortgages and the radical changes that the planning system is going through at the moment is only making the problem worse.
The government has set aside £1billion for a New Homes Bonus scheme which will give local councils extra money if they build more homes in their area. The incentive will be that the government will match the council tax raised through new builds for the first six years. However councils will receive 36% more for affordable homes which are built. If councils renovate empty properties then they will also receive money. So for every band D home that is built the council will get £9,000 or if it is an affordable home they will get £11,000, this is over a six year period. For councils which are cash strapped this is a very good incentive. The government is estimating that if a council builds an extra 1,000 properties during this time then they could earn £10million from the scheme. The local community will then have some say as to how this money is spent.
The government is hoping that with this incentive in place there will be 140,000 extra homes built in the next ten years. Housing minister Grant Schapps believes that the practice that councils used before did not work, telling communities what is going to be built and when failed. If development is backed by the community a housing revolution can take place.
The first £200million will be shared amongst 326 local authorities, Tower Hamlets in London will get the most at £4.3million. Islington will get £3.7million and Birmingham will receive £3.2million. Milton Keynes, Manchester, Bradford, Leeds and Bristol all make the top ten. Economists have backed the plans by the government but feel that more needs to be done if the housing crisis is to be lessened. At the moment 1.8million households are on waiting lists and millions of people are simply priced out of the property market. Affordable housing is the only way forward in tackling housing shortage. The incentive by the government of 140,000 more homes over the next ten years equates to 14,000 new homes every year when this goes nowhere near the actual number of houses needed. Britain needs to get building again if the housing shortage is going to be conquered.