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Reforms needed to slash cost of major council house-building drive, says think tank

By Vicky Shaw, Press Association Personal Finance Correspondent
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Reforms needed to slash cost of major council house-building drive, says think tank

A Civitas report calls for special housing zones to be designated in high-demand areas.

Special “housing zones” should be created to boost house-building and give councils powers to buy land at cheaper prices in high-demand areas, according to a think tank.

Civitas argued that its proposals could overcome a general “drip-feed” of land for new developments at prices which lead to slow build rates and squeeze out affordable housing.

It said the extra homes created could be used to increase the stock of social housing or be sold to first-time buyers at more affordable prices, according to local needs.

Civitas said ensuring that land is released for housing at cheaper prices, enabling quicker and more affordable development, “is the key to achieving a decisive breakthrough in the housing crisis”.

It claimed an overhaul of current laws is needed to enable local authorities to strike deals for land at prices closer to its existing use value, rather than values based on hopes for future development.

Civitas said special housing zones should be designated in areas with the greatest pressures on housing in order to improve the quantity and the mix of new homes.

In these areas, local authorities could have powers to acquire land that could be used for social or affordable housing directly commissioned by the authority, or sold on to builders with conditions attached concerning the rate of build and how much homes are to be sold for.

Daniel Bentley, editorial director at Civitas and author of the report, said: “The upfront costs of development could be very much reduced by reforming the land compensation rules and allowing public authorities to buy land at prices closer to their existing use value.

“In high-demand areas, this could save the taxpayer millions of pounds per hectare.

“This would come out of the unearned windfalls that are currently being enjoyed by landowners – which are not reward for their own efforts but the investments of the wider community.”

The report was welcomed by housing charity Shelter.

Chief executive Polly Neate said: “Outdated laws mean landowners can demand huge sums for their land, even if it makes building affordable homes practically impossible.”

Councillor Martin Tett, the Local Government Association’s housing spokesman, said: “An effective land market is critical to delivering more genuinely affordable homes with the infrastructure and services that communities need.

“Councils have long called for the powers to purchase land at a price which is close to its existing use, and to be able to capture increases in land value in order to fund further delivery of affordable homes and infrastructure, and for greater transparency on land ownership.”

According to Government figures, since April 2010 there have been more than 346,000 affordable homes provided in England, 248,000 of these for rent – up from the previous seven years, which saw 333,000 affordable homes delivered.

A spokesman for the Home Builders Federation (HBF) said: “Bringing forward more land for development more quickly is absolutely key to delivering further increases in housing supply.

“Any ideas need to ensure that they don’t only focus on land that would have come forward anyway, but on additional land for development.

“Simply shifting responsibility for bringing land forward from the private to the public sector will do little to actually increase land supply or housing provision.

“If we are to address our housing crisis, local authorities need to be allocating a mixture of site types and sizes that meet their housing needs – and then processing applications efficiently.”

A Department for Communities and Local Government (DCLG) spokesman said: “Affordable housing is a top priority for Government and we have made more than £9 billion available to support it.

“The latest figures show 27% more affordable properties were delivered in the last year than the previous 12 months.

“We have also introduced reforms to make compulsory purchases clearer, fairer and faster. But compensating owners at less than market value would be inherently unfair and could drive up opposition to new developments.”