Some 300 councils will receive a share of £200m as part of the first incentive payments to encourage house building. The aim is to increase housing stock by 1500,000 in the first year.
The Government has set aside almost £1bn to kickstart the scheme and ensure those areas that go for growth benefit now.
Through the New Homes Bonus the Government will match the council tax raised from new homes for the first six years. The bonus available for an affordable home will be up to 36 per cent more than for a similar market home, equivalent to an extra £350 per house premium every year. Empty properties brought back into use will also receive the cash bonus for six years.
This works out at payments of over £9,000 paid on average to each Band D home or almost £11,000 for an equivalent affordable home. So if an area increased the number of homes by 1,000 units this could earn a community £10m to spend as they see fit.
Although the long-term demand for housing is strong, development has consistently fallen over the last decade. On average 26,000 fewer homes were built each year from 1997 to 2009, and in 2009 there were just 118,000 completions, the lowest level of house building in peacetime since 1924.