Comment
Planning Reforms 2020: First Homes – what you need to know
Alongside Planning for the Future, Government released a summary of responses to consultation on the First Homes initiative and its response. Head of Development Viability, Matt Spilsbury MRICS MRTPI, sets out the main points.
Under the Government’s proposals to boost affordable home ownership, a new product ‘First Homes’ will be required to represent 25% of any affordable housing provision within a major development.
First Homes will constitute homes sold (by the developer) with a minimum discount of 30% from full open market value in perpetuity as (albeit with overriding price caps of £420,000 in London and £250,000 across the rest of England), and subject to eligibility criteria – specifically:
- FTBs
- Demonstrable local connection (albeit this falls away if a property is unsold with marketing for three months)
- Household income ceiling of £80,000 across England and £90,000 in London (presumably gross income)
- Remaining primary residence
- Funded by at least 50% debt finance via mortgage or Home Purchase Plan
- A time limitation of 2 years for renting the property (at full market value) unless at the agreement of the Local Authority
The proposals appear to represent the Government’s ‘beefing up’ of Policy 64 of the NPPF – essentially increasing the requirement for affordable home ownership products (with a priority for First Homes) from 10% of overall affordable housing provision to 25% affordable housing provision.
Seeking to ensure parity with the value of existing Local Plan affordable housing policy requirements defined in Local Plans when introducing the First Homes tenure into the existing policy mix, the Government proposes introducing a monetary rebalancing calculation.
To accelerate introduction of First Homes, the Government proposes to provide policy provisions within an amended NPPF and supporting planning practice guidance.
If, as the Government proposes, there is no net detrimental impact on financial viability arising through introduction of First Homes, it is expected that this will be supported by private sector developers and landowners.
However, it is anticipated this will be strongly resisted by Registered Providers and will raise serious concerns from Local Authorities due to the potential negative impact on the provision of, and accessibility to, new affordable housing supply for those in greatest need of affordable rented homes (i.e. social rent and affordable rent) or shared ownership products.
Low income households are unlikely to qualify for the requisite mortgage finance and, hence, First Homes may not be successful in supporting those most disadvantaged households onto the ladder.
To seek to allay these concerns, the Government proposes to allow Local Authorities to increase the discount to market value applied to First Homes. This must be demonstrated as viable and deliverable via production updated evidence within a Local Plan Viability Study. There will be close industry scrutiny on this evidence to ascertain the financial viability implications on developments – particularly alongside the wider host of reforms proposed by Government.
To accelerate the process, First Homes are proposed to be introduced as an affordable housing tenure without primary legislation via amendments to the NPPF and Planning Practice Guidance. The Government states an ambition to introduce First Homes via a Written Ministerial Statement in the Autumn.
However, it is stated that the Government will consult on the technical detail of the implementation of First Homes, and we will review this with interest and respond accordingly.
For more information on First Homes please contact Matthew Spilsbury.
7 August 2020