As with seemingly all Conservative governments since 1979, the current government’s housing policy is largely predicated on promoting and bolstering home ownership.
The government published its Planning for the Future White Paper consultation in February last year. That included consultation on an updated version of the First Homes initiative. The consultation concluded in May 2020 and the government published its response in August. The updated government response was published in April.
Our Director, John Paterson, reflects on the government’s recent announcement regarding First Homes and the impact on affordable housing.
The government intends First Homes to be delivered at scale (Between 10,000 and 20,000 homes per annum) and will rely on the planning system for delivery. 25% of new affordable homes delivered through planning obligations (S106 agreements) are expected to be First Homes. These will be homes sold (usually on a freehold basis) at a 30% discount. The only real difference between First Homes and the ‘discounted market sale’ product specifically regarded as not being legitimate affordable housing in the National Planning Policy Framework is that the value of the initial discount is expected to be ‘baked in’ to benefit future occupiers as well.
There are price caps applying for the initial sale price, net of discount, of £250K outside London and £420K within.
The government’s response to the consultation, published earlier this month, describes how it intends to change national planning policy to implement First Homes. It plans to roll out a pilot phase of 1,500 First Homes over the next couple of years. Not surprisingly though, some developers are already jumping the gun. ARK recently carried out a review for viability purposes of a major application in Essex and the applicant developer was already proposing to replace affordable rented and shared ownership homes with First Homes.
The attraction for developers is clear; more direct control of affordable housing obligations and a tenure viewed as more compatible with market sale. Effectively, it’s like having an adapted version of Help to Buy on offer. Where it leaves the mainstream affordable housing sector is a much less happy place. Major developing housing associations are already cutting back on S106 dependence (‘stopping being 106 junkies’ as one Development Director described it to me). First Homes will erode this supply line yet further. But where are the alternative opportunities at scale? Other than regeneration schemes, supply of housing development land not already in the control of the housebuilding industry is scarce, especially in areas of high housing demand.
Whilst the government keeps jumping back or staying on the home ownership bandwagon, the supply of badly needed affordable homes for households on low incomes continues to be severely constrained.
John Paterson, Director
John is an experienced housing professional with excellent skills in strategic and business planning, housing market analysis, development and regeneration, appraisal and viability, and supported housing.
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