Councils could lose millions by cutting housebuilding plans

Some councils stand to lose out on tens of millions of pounds in government subsidy by abandoning plans to build homes, according to figures from the Home Builders’ Federation.

The HBF made the call as the government this week confirmed the basis on which its allocation of the New Homes Bonus will be distributed. The bonus has been set up to reward councils that allow the construction of more homes in their areas, by paying them the equivalent of council tax for six years for every home built - worth on average more than £8,000.

Leeds council is the worst off, losing out on up to £27m of funding each year because it has reduced planned housebuilding in its area by more than half, from 4,740 to 2,300.

Other councils potentially to be affected include Bristol, Sheffield and Birmingham, which could lose out by £18.6m, £14.2m and £10.8m respectively. In total, eight councils stand to lose more than £10m in possible subsidy each year.

Councils have been allowed to cut building plans since the scrapping of regional housing targets in May. Stewart Baseley, executive chairman of the HBF, said: “The figures highlight the income local authorities can generate by building the new homes their areas need.”