Budget ( November ’17): Housing

1 ‘Ratio of house price to workplace‑based earnings (lower quartile and median)’, Office for National Statistics, March 2017 2 ‘Help to Buy (Equity Loan scheme) and Help to Buy: NewBuy statistics: Data to 30 June 2017, England’, DCLG, September 2017 (mor e Information available in ‘Autumn Budget 2017 data sources’) 3 ‘English Housing Survey headline report 2015 to 2016: section 1 household tables’, Department for Communities and Local Governm ent, March 2017. Percentage change in homeownership for 25‑34 year olds was 20.4% between 2003‑04 (58.6%) and 2015‑16 (38.2%) 4 ‘Live tables on housing supply: net additional dwellings’, Department for Communities and Local Government, November 2017 5 ‘Housing supply; net additional dwellings, England: 2016‑17’, Department for Communities and Local Government, November 2017

Planning for more homes

5.6 The planning system needs reform to boost the availability of land in the right places for homes, and to ensure that better use is made of underused land in towns and cities. The Budget builds on the reforms in the Housing White Paper. The Budget confrms the government’s commitment to maintain the existing protections for the Green Belt. 5.7 Deallocating sites from plans – The government will consult on strengthening policy to be clear that allocated land should be taken out of a plan if there is no prospect of a planning application being made. 5.8 Intervention where there is a failure to progress Local Plans – DCLG has begun the formal process of considering intervention in 15 areas where the local authority has failed to put an up‑to‑date plan in place. The government will shortly activate powers that will enable it to direct local planning authorities to produce joint statutory plans and undertake an assessment of where they should be used. 5.9 First-time buyer led developments – The government will consult on a new policy whereby local authorities will be expected to permission land outside their plan on the condition that a high proportion of the homes are offered for discounted sale for frst‑time buyers, or for affordable rent. This will exclude land in the Green Belt. 5.10 Increasing housing density in urban areas – To ensure that our brownfeld and scarce urban land is used as effciently as possible, the government will consult on introducing: • minimum densities for housing development in city centres and around transport hubs, with greater support for the use of compulsory purchase powers for site assembly • policy changes to support the conversion of empty space above high street shops • policy changes to make it easier to convert retail and employment land into housing • a permitted development right to allow commercial buildings to be demolished and replaced with homes

Box 5.1: Housing supply and productivity

Increasing the supply of housing in the right places brings productivity gains. It supports fexible and responsive labour markets, enabling people to work where they are most productive, and allows successful towns and cities to become even more productive by realising agglomeration economies. Expanding the stock of housing in urban areas can lead to agglomeration benefts where it increases the density of economic activity. Studies fnd larger cities boost productivity: doubling a city size or density increases productivity by 3 to 8%. 5 Increasing housing supply guards against macroeconomic instability. House prices tend to rise faster in environments with lower responsiveness of new housing supply. Cross‑country studies show that lower house price variability is associated with lower variability in infation, interest rates and real incomes. 6

6 ‘Evidence on the nature and sources of agglomeration economies, Rosenthal and Strange’, 2004 7 ‘Real house prices in OECD countries: The role of demand shocks and structural policy factors’, Andrews. D, 2010

Ensuring that planning permissions are built out faster

5.11 The government is determined to ensure that land released for housing is put to the best use. It will consult on: • strengthening the Housing Delivery Test with tougher consequences where planned homes are not being built, by setting the threshold at which the presumption in favour of development applies at 75% of housing delivery by 2020 • expecting local authorities to bring forward 20% of their housing supply as small sites . This will speed up the building of new homes and supports the government’s wider ambition to increase competition in the house building market • speeding up the development process by removing the exemptions from the deemed discharge rules. This will get builders on site more quickly, ensuring that development is not held back by delays in discharging planning conditions 5.12 Review of build out – The government will set up a review panel, chaired by Sir Oliver Letwin, to explain the signifcant gap between housing completions and the amount of land allocated or permissioned, and make recommendations for closing it. The review will provide an interim report in time for Spring Statement 2018 and a full report at Budget 2018. 5.13 Register of planning permissions – The government will develop a central register of residential planning permissions from local authorities to improve information on where permissions are held and progress towards them being built out.

Developer contributions

5.14 Land value uplift – In this year’s Housing White Paper, the government committed to respond to the CIL Review. DCLG will launch a consultation with detailed proposals on the following measures: • removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where signifcant development is planned on several large strategic sites. 8 This will avoid the unnecessary complexity that pooling restrictions can generate • speeding up the process of setting and revising CIL to make it easier to respond to changes to the market. This will include allowing a more proportionate approach than the requirement for two stages of consultation and providing greater clarity on the appropriate evidence base. This will enable areas to implement a CIL more quickly, making it easier to set a higher ‘zonal CIL’ in areas of high land value uplift, for example around stations • allowing authorities to set rates which better refect the uplift in land values between a proposed and existing use . Rather than setting a fat rate for all development of the same type (residential, commercial, etc.), local authorities will have the option of a different rate for different changes in land use (agricultural to residential, commercial to residential, industrial to residential). All the protections for viability from CIL, such as the Examination in Public, will be retained • changing indexation of CIL rates to house price infation, rather than build costs . This will reduce the need for authorities to revise charging schedules. This will ensure CIL rates keep up with general housing price infation and if prices fall, rates will fall too, avoiding viability issues

8 Section 106 agreements are legal agreements between local authorities and developers. They are a mechanism which makes a deve lopment proposal acceptable in planning terms, which would not otherwise be acceptable. Section 106 agreements provide site specific mitigations .

Housing investment

5.15 The reforms above will ensure that there is more land for housing, but the private sector and local authorities will need support to ensure homes get built on that land as soon as possible. The government will strengthen the ability of the Homes and Communities Agency (to be renamed Homes England) to use investment and planning powers to intervene more actively in the land market. 5.16 Land Assembly Fund – The government will provide £1.1 billion for a new Land Assembly Fund, funded from the NPIF. The new fund will enable Homes England to work alongside private developers to develop strategic sites, including new settlements and urban regeneration schemes. (1) 5.17 New garden towns – The government will bring together public and private capital to build fve new garden towns, using appropriate delivery vehicles such as development corporations, including in areas of high demand such as the South East. 5.18 Increasing the Housing Infrastructure Fund – The government will invest further in infrastructure through the NPIF to support new housing in high‑demand areas. The Budget commits a further £2.7 billion to the competitively allocated Housing Infrastructure Fund (HIF) in England. This takes the total investment in the HIF to £5 billion. (2) 5.19 Strategic planning in the South East – To ensure that this investment is well‑targeted and helps grow the economy, the government will support more strategic and zonal planning approaches through housing deals in the South East, where housing need is at its most acute. As a frst step, the government has agreed a housing deal with Oxfordshire, part of its wider strategic investment in the Cambridge‑Milton Keynes‑Oxford corridor. Oxfordshire has agreed to bring forward for adoption a joint statutory spatial plan and commit to a stretching target of 100,000 homes in the county by 2031, in return for a package of government support over the next fve years, including £30 million a year for infrastructure and further support for affordable housing and local capacity. The government is also continuing housing deal negotiations with Greater Manchester, the West Midlands, Leeds and the West of England. 5.20 Small sites: infrastructure and remediation – The government will provide a further £630 million through the NPIF to accelerate the building of homes on small, stalled sites, by funding on‑site infrastructure and land remediation. (3) 5.21 Home Building Fund: SMEs – The Budget announces a further £1.5 billion for the Home Building Fund, providing loans specifcally targeted at supporting SMEs who cannot access the fnance they need to build. 5.22 Housing guarantees – The government will explore options with industry to create £8 billion worth of new guarantees to support housebuilding, including SMEs and purpose built rented housing. 5.23 Affordable housing – The government has already shown its commitment to increasing the supply of affordable homes:

Homeownership

5.27 Building more homes will not happen overnight. In the short term, there is a need to help those who have been shut out of the housing market by rising prices. 5.28 Stamp duty land tax – the government will permanently raise the price at which a property becomes liable for SDLT to £300,000 for frst‑time buyers to help young people buy their frst home. The relief will not apply for purchases of properties worth over £500,000. 95% of frst‑time buyers that pay SDLT will beneft, up to a maximum of £5,000, and 80% of frst‑ time buyers will pay no SDLT at all. 5.29 Help to Buy Equity Loan – The Help to Buy Equity Loan scheme helps people to buy a home with a 5% deposit and has supported 135,000 people so far. 9 The Budget confrms the announcement in October of a further £10 billion for the scheme, supporting another 135,000 people to buy a new home. 5.30 Creditworthiness and rental payment data – The government will launch a £2 million competition, to support FinTech frms developing innovative solutions that help frst‑time buyers ensure their history of meeting rental payments on time is recognised in their credit scores and mortgage applications. Mortgage lenders and credit reference agencies are often unable to take rental payment history into account as they do not have access to this data. This competition will support frms to solve this problem.

9 ‘Help to Buy (equity Loan scheme) and Help to Buy: NewBuy statistics: Data to 30 June 2017, England’, Department for Communitie s and Local Government, September 2017

Homelessness

5.33 Rough sleeping – The Budget sets out the government’s frst steps towards its commitment to halve rough sleeping by 2022, and to eliminate it by 2027, including the launch of the Homelessness Reduction Taskforce, which will develop a cross‑government strategy to work towards this commitment. 5.34 Housing First pilots – The government will invest £28 million in three Housing First pilots in Manchester, Liverpool and the West Midlands, to support rough sleepers with the most complex needs to turn their lives around. 5.35 Private rented sector access schemes: support for households at risk of homelessness – The government will also provide £20 million of funding for schemes to support people at risk of homelessness to access and sustain tenancies in the private rented sector. (17)

Support for renters

5.36 Longer tenancies – The government will consult on the barriers to landlords offering longer, more secure tenancies to those tenants who want them. 5.37 Targeted Affordability Funding – To support Housing Beneft and Universal Credit claimants living in areas where private rents have been rising fastest, the government will increase some Local Housing Allowance rates by increasing Targeted Affordability Funding by £40 million in 2018‑19 and £85 million in 2019‑20. This will increase the housing beneft awards of approximately 140,000 claimants in 2018‑19, by an average of £280, in areas where affordability pressures are greatest. (13)