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14/05/2020

Legal landscape: First homes - Delivery or deja-vu?

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A consultation on the government’s First Home scheme raises several questions about the viability of such a scheme within the current affordable housing framework, says Meeta Kaur. Will it go the way of the failed starter homes programme?

In February the government demonstrated its resolve to follow through on its manifesto commitment to achieving affordable home ownership for all, by launching its ‘First Homes’ consultation. The headline features of First Homes, which is in essence a form of discount market housing, are as follows:

  • They will be properties sold at a discount, to be retained in perpetuity, of at least 30 per cent on market value, with independent valuations to be carried out on first and all subsequent sales to protect the discount.
  • They will be subject to a price cap, figures of £450,000 to £600,000 are suggested but possibly to be regionally defined.
  • Priority will be given to local first-time buyers: key workers and members of the armed forces.
  • They must be used as the purchaser’s sole or main residence and there will be restrictions on letting.
  • Local authorities will be tasked with administering arrangements but can outsource this function.
  • They will be exempt from CIL.

So far so (relatively) clear, but things start to become less clear when it comes to the fundamental issue of delivery. Two routes are proposed: first, creating a new requirement for developers to deliver First Homes with market housing, either through policy or legislative change; and second, amending the existing entry-level exception site policy. Although the latter is fairly straightforward, the implications of the first are rather more far-reaching.

In relation to the first route the consultation goes on to propose two options:

  • Prescribing a percentage of affordable homes required through s106 agreements be delivered as First Homes; or
  • Prescribing a percentage of all units in developments of 10 or more that must be delivered as First Homes.

“A significant impact on viability and a squeeze on other affordable housing tenures could be the fallout regardless of which option the government chooses”

It is clear that the government is concerned that local authorities will try to dodge delivering First Homes and so views the second option as more robust. But at the same time it acknowledges the impact the second option may have on viability and depressing delivery of other forms of affordable housing, infrastructure and other developer obligations.

However, a significant impact on viability and a squeeze on other affordable housing tenures could be the fallout regardless of which option the government chooses, and this is where the lack of detail in the consultation raises more questions than it answers. Will First Homes be treated as affordable housing in a formal NPPF planning policy sense and, if so, will the percentage requirement be in addition to existing policy-level requirements or will they simply be another form of intermediate tenure?

If required as a site-wide percentage of all units, could they still be used to meet some or all intermediate affordable housing requirements or, again, is this intended to be in addition to the affordable housing, but with a global percentage requirement?

The issue of how First Homes requirements will work alongside affordable housing policy in adopted development plans will also need addressing. Inserting First Homes as a bolt-on to existing development plan policy, where that policy has been arrived at by properly assessing local need and the viability of those policies at the plan-making stage, will need careful manoeuvring.

The consultation closes on 1 May.


In brief

  • The government has launched its consultation on First Homes, as promised in its manifesto 
  • But it is not clear what the delivery route will be – policy or legal change, or amending entry-level exception site policy? 
  • Either could affect viability and squeeze out other forms of affordable housing and infrastructure contributions.  
  • Will First Homes replace existing affordable housing or be an addition to it? Developers and local authorities are likely to be concerned.

Meeta Kaur is a founding partner of Town Legal LLP

Image credit | iStock

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