Government Response to Starter Homes Consultation

The Housing White Paper, Fixing Our Broken Housing Market, sets out the Government’s plan to help over 200,000 people become homeowners by the end of the Parliament through its programmes.

To coincide with the release of the housing white paper, the Government also released the results of its consultation on starter homes.

For young aspiring home owners who would be unable to obtain a mortgage for the full market price of a home, the Government is committed to ensuring there is a range of affordable homes to support their aspiration to buy. Starter homes will be an important part of this offer.

Starter homes are targeted at first-time buyers, between 23 and 40 years old who are unable to get a mortgage for the full market price of a home. Sold at least 20% below market value, the Government’s aim is for starter homes to be sold to those who are genuinely committed to living in an area.

The average market price for homes bought by first time buyers in November 2016 was £180,000 across England outside London and £422,000 in London. After discount, each starter home will cost no more than £250,000 outside London and £450,000 in London. The Government expect starter homes to be entry level properties priced in line with the local first time buyer market.

In May 2016, NAEA Propertymark responded to the DCLG consultation on starter homes, questioning the affordability of Starter Homes, despite their 20% discount. We also raised the issue that there was no reference in the consultation to the size of starter homes and therefore local authority planners should consider policy to reflect the changing demographic of first time buyers.

The Government has decided not to implement a compulsory starter homes requirement on councils at this point in time. The Government said they will commence the general duty on councils to promote the supply of starter homes and bring forward regulations to finalise the starter homes definition and monitoring provisions.

Consultation results

The Government will restrict the sale and sub-letting of starter homes following initial sale and will set out its plans in regulations. NAEA suggested that the restrictions on the sale and sub-letting of starter homes for the planned 5 years following initial sale should be longer.

Government have carefully considered the arguments for a longer repayment period and as a result, the restricted period will be 15 years (a period of between 8-15 years was suggested in the consultation). The Government will also incorporate a mortgage requirement through the regulations. This would require a minimum 25% mortgage and enable the use of home purchase plans in this requirement.

Flexibility will be given over the age restriction to joint purchasers looking to buy a starter home. When one purchaser is under 40 years old but the other is older than 40 and both are first-time buyers, they will be eligible to buy a starter home. Injured military service personnel and those who partner has died in service will be exempt from the age restriction.

The starter homes requirement and off-site commuted sums

The Housing and Planning Act 2016 allows for off-site commuted sums to be made in lieu of starter home provision. This would mean that local planning authorities must agree to an off-site contribution for purpose built private rented sector housing and specialist older people’s housing.

NAEA Propertymark were among the supporters for the use of commuted sums to deliver starter homes where the local planning authority agrees.

Monitoring and reporting

The Government will include a monitoring requirement on the number of starter homes granted planning permission. Local planning authorities will have the option to annex the starter homes monitoring requirements to their Authority Monitoring Reports (AMR). Reports will be required to be published on an annual basis, however to allow more flexibility, Government have not yet specified the date for the production of the first report. 

Housing White Paper

Following a consultation in December 2015, the Government will change the National Planning Policy Framework (NPPF) to allow more brownfield land to be released for developments with a higher proportion of starter homes.

Through the Housing White Paper, the Government are consulting on proposes to amend the NPPF to introduce a clear policy expectation that suitable housing sites deliver a minimum of 10% affordable home ownership units. It will be for local areas to work with developers to agree an appropriate level of delivery of starter homes, alongside other affordable home ownership and rented tenures.

The Government are also consulting on their intention to make clear through the NPPF that starter homes should be available to households with an income of less than £80,000 (£90,000 for London).

The housing white paper consultation is open for responses until 2 May 2017. 

What's next?

The Starter Home Land Fund will be committed to supporting the preparation of brownfield sites and development in rural areas – 30 partnerships with local authorities were announced on 3 January 2017, with further partnerships to be developed in due course.

Starter homes now sit alongside the Government’s efforts to build other affordable home ownership tenures (shared ownership, Help to Buy and Right to Buy). The result of these changes mean that the Government has changed its focus from starter homes, to a wider range of affordable homes. 

Housing Minister Gavin Barwell said:

“This government is committed to building Starter Homes to help young first time buyers get on the housing ladder. This first wave of partnerships shows the strong local interest to build thousands of Starter Homes on hundreds of brownfield sites in the coming years. One in three councils has expressed an interest to work with us so far.”

SOURCE: NAEA PROPERTY MARK