NHB Calculator

Hi,

We're trying to produce a new NHB calculator based on 4 year payments and the 0.4% baseline. We need to be able to calculate the NHB generated on individual housing developments (not just empty homes) rather than the total annual receipt.

It’s easy to convert net additions to band D equivalents, multiply by the national band D average and add the affordable housing premium. What we’re struggling with is how to apply the 0.4% baseline. Again this is easy to apply to overall annual net additions, however less so for individual developments where the no. of units is less than the baseline (which is 0.4% of the total no. of dwellings in October 2016 in band D equivalents).

Has anybody created such a calculator? It’s not as easy as reducing 0.4% of the NHB as the 0.4% relates to the Oct 16 band D equivalents and not 0.4% of net additions.

Hopefully this makes sense. Thanks in anticipation.

Dan Thorning, Plymouth CC

daniel.thorning@plymouth.gov.uk

Forums: 
New Homes Bonus

Hi Dan

It depends at what point you are wanting to calculate the number. If you want to do it before you have produced your CTB return the answer is you can't. If you don't know what the CTB outcome is for net additions,for a given year then there is no way of knowing how much NHB you will have earned in total as you don't know how much is over the threshold. There would thus be no way of calculating the amount on any individual development.

If it is after the CTB outcomes have been established, then it is not very difficult. Once you have deducted the baseline from the overall figure, you can simply work out the percentage of any individual development's Band D equivalents as a percentage of the overall Band D equivalents (ignoring the baseline for these purposes) and apply that percentage to the amount of NHB earned (leaving aside affordable homes).  I guess you have figured that out anyway, but for the record:

Example (all expressed as Band D equivalents)

Total dwelling stock 100,000
Total net additions 1000 = 1%
After threshold = 1% - 0.4% = 0.6% = 600 Band D reward
National Average Band D = £1500
Total reward = 600 x £1500 = £900,000
Development A, size = 100 dwellings
Development percentage of net additions = 100/1000 = 10%
Pro rata reward = £900,000 x 10% = £90,000 [+ affordables - paid a year later]

One issue is whether you want to include or exclude the change in empties from the equation. Obviously in cash terms you have to include the empties as the amount of money you get will be based on that. But you could calculate a nominal figure for new-build that would have applied if there had been no change in the number of empties. You could also do a similar exercise taking into account the number of demolitions over the year. It depends what questions you want to answer eg if you want to disaggregate the work of the "new homes" team.

The other point I am not entirely sure about is which year's average national NHB figure is used when calculating NHB. I think it is the "current year's" i.e. if it is the October 2017 CTB then it is the 2017-18 national average NHB but I need to check. Certainly the provisonal allocations in the Autumn have to rely on that as the national average NHB for the following year is not known until the finance settlement is finalised (maybe you could check that with your finance people and let us know).

Returning to your original question, you could do some guesstimates, for example using the previous year's totals, but in my experience the year-to-year fluctuations in delivery are so significant that the results would have little meaning. 

Or, for more accuracy at the expense of more work, you could calculate how much you expect to deliver over the coming CTB period, based on all the intelligence at your disposal, which no doubt will be considerable.

You could also refine that by giving a range of figures in say 0.05% bands around your estimated total. So if you estimate that you will deliver 0.3% after the threshold has been applied, you could then show how the figures would look if the eventual outcome was  0.20%, 0.25%, 0.30%, 0.35%, 0.40%. or whatever.

The bottom line is if you are looking ahead at the projected NHB for a given development at the planning stage, or how much it has earned when it has just been completed, the answer is, there is no way of knowing the accurate figure if you want to take the threshold into account. An intelligent estimate as per the previous two paragraphs is the best you could do.

David Gibbens, Policy Lead, EHN

Hi David,

Thank you for your detailed response. You have confirmed what we suspected. We will attempt to produce a calculator for new developments based on our housing trajectory and we will most likely assume nil change in the no. of EHs with the obvious caveats.
Many thanks,
Dan

Hi Dan,

David Gibbens has a firm grasp of the impact of changes to NHB and his presentation at EHN really got the message across.

Back in Dec16 the goverment released a spreadsheet on the impact the changes to NHB. I cannot find the original source - but I have saved a copy that highlights the impact of the changes authority by authority. I can email it to you if you like.

Up to date calculator here https://www.gov.uk/government/publications/new-homes-bonus-calculator-2017-to-2018

 

Hi David,
Thanks for your email. I attended David's NHB presentation and found it very useful. The DCLG calculator for which you have provided a link helps to calculate the annual NHB receipt based on the overall net additions. What it does not do is calculate NHB on a site by site basis, hence my question.

For example, I need to be advice the NHB value for specific developments. It's not as straight forward as converting x into band D equivelents and multiplying by £1,530 because of the 0.4% threshold.

David has answered my question so I need to produce a new calculator based on Plymouth's housing trajectory. Hopefully this makes sense!

Regards,
Dan

 

Greetings all.

I'm a temporary Empty Properties Officer at Guildford BC and, having just completed a two month audit, I'm trying to ascertain the 'value' to the Council of reducing the number of long-term empties by approximately 100 units (18%)?

The NHB calculator is as clear as mud to me and seems to assume numbers of long term empties usually remain static (or rise). Reading the other answer here I'm guessing it is impossible but you never know unless you ask.

Cheers
Duncan Stone

Actually I would say your issue is fairly simple unless someone at your council wants to make it complicated. Best to provide a simple answer by claiming the full 100 but be prepared for the possible challenges by couching it in the right language eg 'on the assumption that the full benefit of the NHB associated with the LTE dwellings brought back into use accrues to the council for 4 years then the amount would be xxxxx.'

There is a possibly equally obscure discussion of some of the underlying issues in the NHB online practitioner guide.  See Section D03. You'll need to be logged in and a Full Member to access it.

If you want to use the method of claiming all the 100 additional units you can say this is the EHN-recommended method, provided you are clear about the rationale for it (which also assumes that there are at least 100 units over the deadweight). You can impress them with your knowledge by starting to talk about 'Band-D equivalents',  Also relevant of course whether you are Unitary or Shire District or London Borough as regards the actual amount of money received. But best keep it simple.

 

PS in case it is not cleaer, the reason why your scenario is easier is because you are dealing with empties whereas Dan was dealing with new homes.