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08/12/2021

Without proper foundations, First Homes are likely to crumble

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Housing / Shutterstock_509223637

Has the change in leadership in government at the Department for Levelling Up, Housing and Communities risked fewer homes being provided for those most in need? 

The First Homes policy announced in June put in place a specific timetable leading up to the almost universal introduction of First Homes from 28 December 2021, when the majority of transitional arrangements will cease. 

This took the form of a Written Ministerial Statement and an updating of the Planning Practice Guidance to legislate for the introduction of First Homes.

In his statement, the housing minister addressed the acute shortage of affordable homes for first time buyers and reiterated the government’s commitment to “supporting people to own their home and make home ownership a reality for households and families”. He introduced First Homes as part of “the most ambitious reforms to our planning system since the Second World War”.

“In fact the new NPPF creates a clear conflict with the recently published guidance”

First Homes are a form of affordable housing which is targeted at first time buyers and must be sold with a minimum discount of 30 per cent against the market value. This discount is secured in perpetuity and as such must be applied to all future sales of the property. A form of discount market tenure, First Homes are expected to account for at least 25 per cent of all affordable homes delivered, with the cost of the discount borne by developers as a planning obligation.

With a typical 30-40 per cent affordable housing requirement, a new scheme would comprise First Homes at a rate of 5-15 per cent. 

So far we have seen the Community Infrastructure Levy (CIL) Regulations amended to include First Homes as a form of affordable housing and therefore, provide CIL exemption, but little else.

Alarm bells were first heard when the NPPF was revised in July, making no mention of First Homes. In fact the new NPPF creates a clear conflict with the recently published guidance as it fails to amend Paragraph 72 to incorporate First Homes exception sites, despite these being explicitly set out in the new Planning Practice Guidance. Paragraph 72 continues to refer to entry-level exception sites, despite the WMS explicitly stating that these were being replaced.

There are also concerns surrounding strategic planning, specifically local plan timetables. For example, Bracknell Forest’s local plan reached publication stage in May, prior to the First Homes policy being announced, and its examination is imminent. 

If the council submits the plan for examination by 28 December, it will benefit from transitional arrangements and there will be no requirement for First Homes to be delivered until a new local plan review is undertaken; but if submission takes place after 28 December, the transitional arrangements will not apply and the minimum 25 per cent requirement for all new affordable housing to be delivered as First Homes will apply. This issue is playing out across the country and is creating additional uncertainty within the market.

“In some areas we may see local authorities where the requirement to deliver First Homes varies across the authority area depending on the local plan and neighbourhood plan progress”

One must also question whether it is reasonable that those local authorities which have had drawn-out local plan examinations (some taking several years) and who currently have out of date policies as a result, will remain exempt from First Homes requirements under the transitional arrangements – perhaps for a further five years, whereas those which have successfully progressed the adoption of a local plan will be forced to grapple with this additional challenge?

In areas which have emerging neighbourhood plans, a further complication exists. Transitional arrangements also apply, and so those areas with emerging neighbourhood plans which meet the transitional arrangement criteria are exempt. As a result, in some areas we may see local authorities where the requirement to deliver First Homes varies across the authority area depending on the local plan and neighbourhood plan progress. This will create further complication and confusion in the planning system.

A further issue concerns Section 106 agreements. In the Planning Practice Guidance the government undertook to provide template planning obligations for local authorities to use when preparing Section 106 agreements. It was anticipated that this would be made available substantially in advance of the policy being implemented, but this remains outstanding.

A model title restriction for the purposes of the Land Registry has been published, but until the template becomes available, there is little to inform Section 106 agreements put in place from 28 December and no scope for local authorities to update their standard drafting.

In view of the changes we’ve seen in the last six months, with a new secretary of state and rebranded government department, there is no absence of top-level change in planning. So much of the recent focus in planning has related to the Planning Bill and the government’s previous commitment to “radical reform” in order to deliver “a whole new planning system for England”, a position which now appears to be under review following backlash from Conservative backbenchers. We understand that due to the government’s review of the planning reforms much is currently on the backburner. But as a consequence, the necessary mechanisms to support and underpin the First Homes policy are missing, leaving the success of this scheme in jeopardy.

Michelle Quan is an associate director at Boyer and specialises in securing residential planning permissions in the Thames Valley

Image credit | Shutterstock

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