Since immediately after the election, HBF has pushed very hard to have the 2020 extension of HtB1 confirmed by the Chancellor so that the HCA can introduce the appropriate procedures as soon as possible to allow a smooth transition from 2015-16 into 2016-17. We were very pleased the Chancellor confirmed the 2020 extension on 3 June, well ahead of his 8 July Budget, and announced funding of £1.5bn for 2016-17.
The HCA has now advised HBF how the transition from 2015-16 to 2016-17 will be managed to ensure there is no disruption to the flow of sales and production.
The HCA will undertake a review of all forecasts for 2015-16 in July 2015. It is also anticipated that house builders will be asked to provide initial indicative forecasts for 2016-17 within the next few weeks (ideally at the same time as the 2015-16 re-forecasts are compiled).
Based on house builders’ re-forecasts for 2015-16, where necessary the HCA should be able to re-allocate funds so that house builders do not experience any disruption to their HtB1 business. Money will be taken from companies that have under-performed their forecast and allocated to those which are likely to exceed their forecast. Total funds for 2015-16 should be adequate for this purpose. However, should the 2015-16 budget prove insufficient, the Treasury could be asked to approve bringing forward some of next year’s funding into 2015-16. However any such decision is not likely to be taken until much later in the year.
Once the initial forecasts for 2016-17 are set, the HCA is expected to allow reservations to be taken from July, with exchanges taking place from October/November, for legal completions in the first quarter of 2016-17. The HCA will no doubt formally advise all HtB1 house builders of this process in due course.
To avoid any pause in business, the HCA advises that where a developer is already in a position to take reservations early in July 2015 for 2016-17 legal completion, they will be asked by the HCA to indicate this on a template and the HCA will look to agree more limited initial forecasts to accommodate this.
16 June 2016
Home Builders Federation
London, SE1 9PL
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