THE latest Glenigan Index, which gives an overview of residential development, is the bearer of bad tidings. According to the latest figures, released this week, new residential developments fell 41% in the three months to February, compared with those from a year previously.

Glenigan economist James Abraham says the fall was “greater than anticipated” and that the downturn in private housing projects, which started towards the end of 2010 continued into 2011 “amid pessimism about the strength of the housing market”.

Private housing saw a 42% decline, with a fall of 36% in social housing starts, the latter being a result of Government cutbacks expected to increase over the next two years.

Glenigan expect a return to growth for private housing starts by the end of the year, albeit hampered by poor household earnings growth, high unemployment, limited mortgage availability and stalling house prices.

But there is a chance looming very soon for local authorities to play their part in helping to kickstart the recovery from this decline when the Government's New Homes Bonus comes into being next month.

The scheme is an incentive to local authorities to allow planning permission for new homes in their areas, which they may have previously been reluctant to allow because of the additional burden that new homes place on local authority resources.

The scheme could not only help to meet the continued demand for housing, but also provide a genuine boost for the construction industry and jobs market.

Minister for Housing and Local Government, Grant Shapps said the incentive will “match fund the additional council tax for each new home and property brought back into use, for each of the six years after that home is built with an additional amount for affordable homes”.

Local authorities are being told to cut costs wherever possible, but they can balance that, to some extent, by finding new revenue streams and that is what the New Homes Bonus could prove to be, so it is a win-win situation.

Of course, there needs to be some care taken to ensure that communities do not suffer and that homes schemes are not simply passed for the wrong reasons, and I trust planning committees to protect the areas and people they serve.

However, the opportunity is there to potentially do a lot of good to the economy by injecting some life back into housing, and that should be grasped with both hands if it is to be given a chance.

For more information on Constructing Excellence in the North East, please contact chief executive, Catriona Lingwood, on 0191-3740233 or catriona@cene.org.uk.

By Nicola Neilson, Partner, Latimer Hinks Solicitors