Last edited 22 Sep 2016

Starter homes

At the Conservative Party Conference in October 2014, Prime Minister David Cameron announced that if the Conservatives won the next election, they would ensure 100,000 new homes were built on brownfield land and made available to first-time buyers in England under the age of 40 at a 20 per cent discount.

Cameron said, "I want young people who work hard, who do the right thing, to be able to buy a home of their own. So these starter homes will be sold at 20% less than the market value…. They can't be bought by foreigners, they can't be bought by buy-to-let landlords and they can't be flipped round in a quick sale. They can only be bought by hard working people under the age of 40.”

Starter homes would be built on brownfield public and commercial sites no longer needed for industrial or commercial use. Cameron suggested that this land, which is not normally available for housing, is cheaper than other housing development sites, and it is these savings that would be passed on to purchasers. It was also suggested that these homes would be exempt from the community infrastructure levy and section 106 obligations to build social housing. In addition, and quite controversially, aspects of the building regulations, such as the zero carbon homes standard (this standard has since been abandoned) would not apply. Purchasers would be eligible for the help to buy mortgage scheme, offering a 20% loan but requiring a 5% deposit. The homes could then not be re-sold at market value for a five years.

On 15 December 2014, Cameron announced further details of the ‘Starter Home Initiative’, Ref Gov.uk, 20% discount on your first home announces PM and launched an 8-week consultation process.

Central to the proposals were changes to the planning system to make brownfield land free from planning costs in return for a below market value sale price. The government suggests that builders face an average bill of £15,000 per home in Section 106 agreements and Community Infrastructure Levy charges. The announcement said that there was widespread support for the initiative and that a number house builders would consider bringing forward land to develop the new, discounted houses, from the following year.

Stewart Baseley, executive chairman of the Home Builders Federation said: “Bringing forward more land for house building, while also enabling more first time buyers to realise their ambition of home ownership would be another positive step on the way to tackling the housing shortage.”

Prospective buyers were able to register their interest in owning a starter home from January 2015.

In a speech on 2 March 2015, Cameron pledged that if the Conservative party won the next election, it would double it's commitment, providing 200,000 starter homes. Ref BBC Cameron promises 200,000 starter homes if Tories win election.

To ensure the new homes are high quality, a design panel was established including architects Sir Terry Farrell and Sir Quinlan Terry, philosopher Roger Scruton and representatives from the Royal Institute of British Architects (RIBA), the Royal Town Planning Institute (RTPI), the Design Council and Create Streets.

Sir Terry Farrell said: “This panel has the potential to make a real difference. It builds on the recommendations of the Farrell Review, which highlighted the need for more proactive planning and better placemaking as we attempt to address the housing crisis, with radically higher priority given to landscape, sustainability and the public realm…. Only by planning and designing our villages, towns and cities together with local communities can we create the kind of built environment we all aspire to and should be demanding.”

On March 27 2015, the design advisory panel published as set of exemplar starter homes designs to provoke discussion and provide a benchmark for the design of starter homes.

On 10 August 2015, the government announced £26 million one-off funding to identify and purchase underused brownfield sites for starter homes and made available up to £10 million for local authorities to prepare more brownfield land for development of starter homes. Ref Gov.uk.

On 20 August 2015, the government published its Rural Productivity Plan, which included a measure to allow starter homes to be built on Rural Exception Sites. These are small sites that would not normally be used for housing, but can be used for affordable housing in perpetuity. They suggested that this would allow local areas to allocate more sites for starter homes specifically for people who already live in the area, or have an existing family or employment connection to the area. Ref gov.uk.

In his speech to the Conservative party conference in October 2015, Prime Minister David Cameron said “For years, politicians have been talking about building what they call “affordable homes” – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own. …Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent…we’re replacing them with new rules…you can build here, and those affordable homes can be available to buy.” This is thought to signal a redefinition of affordable homes to include starter homes. There will be a cap on the cost of these homes of £450,000 in London and £250,000 elsewhere. See Conservative party conference affordable housing for more information.

On 8 December 2015, The Homes and Communities Agency (HCA) announced 27 sites that had secured grants totalling £7.2m. Ref Gov.uk Starter Homes Local Authority Funding Programme: successful bidders.

On 4 January 2016, the Prime Minister announced that the government would directly commission thousands of new affordable homes on publicly-owned land. See Government to commission affordable homes on publicly owned land for more information.

In a report published in February 2016, Savills suggested that starter homes were distorting the market, finding, '... land allocated to starter homes may return a lower value than sites allocated for shared ownership. This potentially opens up wider questions around how promotion and development of large sites are funded.' ref Savills, The impact of new housing measures on development, February 2016.

The initiative came under strong criticism during a Lord's debate about the Starter Homes Bill on 1 March 2016, when it was suggested starter homes would be unaffordable to most people. Baroness Hollis of Heigham said “For the whole of the next decade, if the government have their way, the affordable housing programme for those in the greatest need, who have least leverage in the market, whose need is highest, will have just one option, starter homes—which, we are told by Savills, will not benefit 90 per cent of them. What on earth do the government think they are doing?”

Meanwhile, a study undertaken by the Town and Country Planning Association (TCPA) in February 2016 found that 93% of councils did not think that starter homes would address affordable housing need and almost 80% did not think starter homes should be classified as affordable housing.

In April 2016, the House of Lords voted through an amendment to the Housing and Planning Bill, rejecting the 20% standard and instead giving local authorities discretion about how many starter homes should be required in new residential developments. They also changed the discount taper from 8 years to 20.

In September 2016, new housing and planning minister Gavin Barwell gave a speech at the RESI Conference during which he suggested the definition of starter homes could be widened to include rented homes.

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