Tower Hamlets to receive over £28 million in New Home Bonus payments

The New Bonus scheme was introduced to encourage local authorities to increase the number of new homes. Under the scheme the government will match the revenue raised from council tax payments from new-build homes, conversions or empty properties being brought back into use for a period of six years.

The London Borough of Tower Hamlets will receive the biggest payment, £28.6 million. This is over £7m more than the second highest recipient, Birmingham City Council, which will receive £21m.

According to the figures, various other London councils will also obtain New Bonus Scheme payments. These include Hackney Council at approximately £18m, Southwark £16.3m and Islington Council at £15.2m.

Earlier this year the DCLG undertook a consultation to review possible amendments to the New Bonus Scheme. The proposals included reducing the payments to a period of four years and the possibility of withholding the payment if the relevant local authority failed to submit a local plan by 2017-2018. The consultation closed in March 2016 and the government has not yet issued a response.

Planning expert Susanne Andreasen of Pinsent Masons, the law firm behind Out-Law.com, said "It is not the first time Tower Hamlets has been the recipient of the largest payment under the New Homes Bonus Scheme and the council will now have received over £100m in total since the scheme was introduced."

"We are still awaiting the government's response following its consultation on changes to the New Homes Bonus Scheme. The proposed changes are aimed at reducing payments, with the savings to be redistributed towards local authorities' social care budgets," said Andreasen. "The proposals were generally not welcomed by councils. Whilst the number of councils at risk of missing out on payments may be limited given that only around of fifth of councils have not yet submitted Local Plans, those councils are likely to be under financial strain already and the proposals therefore may be seen to hinder rather than aid house building in affected areas."