Affordable housing for the local community: First Homes - Kuits Solicitors Manchester
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Affordable housing for the local community: First Homes

Affordable housing for the local community: First Homes

22nd June 2021 - Published by Kuits Commercial Property team

On 4th June 2020, the Ministry of Housing, Communities and Local Government (MHCLG) launched a First Homes Scheme aimed at helping both young people and key workers on to the housing ladder, which, due to rapidly increasing house prices in certain parts of England, seems an unachievable goal for those that have been described as ‘generation rent’.

One million new homes by 2024

This announcement is the latest to support the Government’s target of one million new homes to be built by 2024.  The First Homes scheme aims to deliver at least 10,000 discounted homes annually as a way of meeting this commitment, whilst simultaneously enabling those with lower wages to own their own property. The Government’s intention is that the scheme supports those who would otherwise struggle to buy a local property and enables them to stay in their local communities despite the rising market rates.

Permanent discount of market rate

When purchasing their first home, local residents meeting the eligibility criteria can benefit from discounts of at least thirty per-cent of the open market price. Importantly, as is the case for other tenures of affordable housing, the discounts would then be continued on sale of that property to further first-time buyers. It should also be noted that First Homes should be identical in quality and size to those sold at market rate and should not exceed a £250,000, or £420,000 in Greater London, initial purchase price, after the discount has been applied.

First-time buyers

The eligibility criteria requires that purchasers must:

  • Be first-time buyers
  • Have a combined annual salary no higher than £80,000, or £90,000 in Greater London
  • Have a mortgage or home purchase plan to fund at least fifty per-cent of the discounted purchase price
  • Comply with any additional criteria specified by the relevant local authority

Local Planning Authorities are encouraged to prioritise local key workers such as nurses and teachers to ensure the needs of the local community are supported. They may set additional criteria for evidence of ties to the community, such as current residency or family connections.

Delivery through planning agreements

As with other tenures of affordable housing, the mechanism for delivery is to be by way of a planning obligation made under section 106 of the Town and Country Planning Act 1990. To qualify as a First Home, there should be a section 106 agreement securing the restrictions on the use and sale of the property. This will be accompanied by a legal restriction on the title of the property to ensure that these restrictions are applied to the property at each future sale. The Government is expected to release template planning obligations to include a mortgage exclusion clause designed to protect lenders and encourage competitive lending rates.

Site requirements

MHCLG planning policy guidance states that developers will be asked to provide a minimum of twenty five per cent of the affordable housing provision as First Homes.

Starter homes once again

This form of affordable housing is now ‘the Government’s preferred discounted market tenure’. This is not the first time that first time buyers have been identified as those in need of help to get on the housing ladder. Starter homes were launched some six years ago with very similar eligibility criteria, save for the local connection, and simply did not appear to be popular. Interestingly, when comparing First Homes to starter homes, the Government has set the same maximum value of £250,000 outside of London but starter homes had higher maximum value within London of £450,000 back in 2015, as compared to First Homes’ £420,000.

Conclusion

It will be interesting to see the reaction of planning authorities, affordable housing providers and developers to the same ‘first time buyer’ housing repackaged as not only helping first time buyers, but also helping to maintain the integrity of the local community, which the Government see as having had greater importance to people during the pandemic. Bringing ‘community’ to the forefront of planning continues the Government’s theme of placing importance on this aspect of planning, which follows on from the introduction of use classes specifically related to their use by and importance to the local community.

Get in touch with a Planning Associate in Manchester

If you would like more information on anything mentioned in this article, please contact Planning Associate Victoria Leam on 0161 503 2998 or email victorialeam@kuits.com

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