The Housing and Planning Act 2016 received royal assent on 12 May 2016 and the first chapter introduces new regulations with regard to the government’s starter home initiatives. The two main aims of the introduction are the increase of housing supply and to provide more affordable homes to young first-time buyers.
Under the regulation, new build-houses will be available at 20% discount to first-time buyers between the age of 23 and 40. The developer, in return, will be exempted from possible planning obligations such as the payment of Community Infrastructure Levy (CIL). Detailed regulations are expected in the autumn and the DCLG is currently in the process of preparing a template for local authorities to help them secure starter homes through Section 106 contributions.
Councils have to ensure that these homes are delivered on all ‘reasonable sized sites’ and secondary legislation is proposed to set out the percentage of Starter Homes a site has to include. A recent consultation in March 2016 suggested a requirement of 20% Starter Homes on schemes of 10 or more dwellings or sites larger than 0.5ha.
A Starter Home is not expected to be priced after the discount significantly more than the average price paid by a first time buyer. This would mean the discounted price should be no more than £250,000 outside London and £450,000 in London. The consultation also includes the proposal to restrict the resale at a full market value for a ‘taper’ period of at least 8 years from initial occupancy. In addition, it was confirmed that the Starter Home requirement would not apply to rural exception sites and exemptions could also be applied for schemes that are deemed incompatible with Starter Homes, such as residential care homes.
The act was also amended to include requirements when it is proposed to sell the property on within the time-period. Section 3(1) allows regulations to be issued requiring Starter Home owners who sell the dwelling within a specified period to ‘make a payment to a specified person’ or prohibiting them from selling the dwelling within the period except to another qualifying first-time buyer at the discount.
The commencement of the regulation is still awaited and will come into force on a date prescribed by regulations.
The provision of starter homes would be required to be monitored by the Council and the reports have to be published at least once a year from April 2017. Local Authorities will be required to update their affordable housing policies in their local plans and in addition, their CIL charging schedules.
Various concerns were raised in the planning sector with regard to the Starter Homes initiative. The relationship between starter homes and other affordable housing is currently not clear. It is expected that further guidance and regulations will stipulate that the requirement for starter homes will take precedence over other forms of affordable housing such as shared ownership or social rent. In addition, concern was voiced over the loss of CIL funding of these developments.