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New Homes Bonus (NHB)

This section explains what the New Homes Bonus (NHB) is, how it works and how much we have received

What is the NHB?

NHB is a grant paid by Government paid for the first time in 2011/12. The Government intention is that:-

 "The scheme will incentivise local authorities to increase housing supply by rewarding them with a New Homes Bonus, equal to the national average for the council tax band on each additional property and paid for the following six years as an unringfenced grant. There will be an enhancement for affordable homes....The New Homes Bonus is designed to create an effective fiscal incentive to encourage local authorities to facilitate housing growth."  

The NHB is announced alongside our annual financial settlement and therefore we were told our figure for 2014/15 in December 2013.

The allocations of NHB grant for 2014/15 are available on the DCLG website via this link:

https://www.gov.uk/government/publications/new-homes-bonus-allocations-for-2014-to-2015

The grant is not ringfenced and therefore the Council is free to decide how to use the grant.

 

How does it work

The grant is calculated based on the increase in housing x the average national Council Tax rate.

To be more specific it is based on:-

  • The increase in the Council's taxbase expressed as the number of Band D properties (this is based on figures provided now each year to the Government in October)
  • This figure is then multiplied by the average national Council Tax Rate (including parish precepts). Currently this is about £1.5k.
  •  The calculated grant is then split between Upper and Lower Tier authorities. The scheme confirms that this 80% will go to lower tier authorities, such as Colchester, with the remaining 20% going to Essex County Council.
  • The calculated sum will be paid for 6 years and will then stop.
  • The process is carried out annually and therefore if there is a further increase in the taxbase then further grants are payable.

A bonus of £350 is also paid for all additional affordable homes. This is based on figures reported annually. Due to the timescales for collating this information this element of the scheme is paid in arrears.

How much have we received?

The table below shows the breakdown of how much has been received so far:-

 

 2011/20122012/132013/142014/15
 £'000£'000£'000£'000
NHB- CBC    
Growth re 09/10724724724724
Growth re 10/11 749749749
Growth re 11/12  986986
Growth re 12/13   757
Growth re 13/14    
Total basic NHB7241,4732,4593,216
Affordable Housing element 525252
re 10/11 delivery  105105
re 11/12 delivery   37
re 12/13 delivery    
re 13/14 delivery    
Total affordable homes bonus 52157194
Total New Homes Bonus7241,5252,6163,410