Further to our blog last month, another hot topic in the debate that led to the recent Housing and Planning Act 2016 was starter homes, ie, houses that are to be sold at prices at least 20% below market value and aimed at first-time buyers under the age of 40. To be honest, we’re not convinced this is going to help to make housing affordable or to provide the requisite number of affordable houses.
What does affordable mean?
Starter homes are intended to provide a new type of ‘affordable housing’ and to increase the offering. The Government has advised that the discounted price should be no more than £250,000 outside of London and £450,000 within London, but there is concern about how realistic and affordable these figures are.
Another major concern is that developers will ‘pay for’ the discount by being exempted from funding affordable housing and wider infrastructure improvements not directly related to the development. So providing cheaper housing to meet a perceived gap in the market may end up harming the wider development and surrounding community by placing increased strain on existing services that are not supported by additional development funding. This has the potential for even greater objection to planning applications, despite the fact the proposal is simply seeking to comply with a Government edict.
Another important development in the planning world is a Court of Appeal judgment, which has seen reinstated a previous government decision that says developments of 10 or less houses shall not have to provide for any affordable housing provision or tariff-style financial requirements.
Pros and cons
This will be welcomed by small and medium-size housebuilders. By taking out the cost of affordable housing it will allow them to be more confident and to be exposed to less risk. We saw a lot of small housebuilders go to the wall during the recession, and hopefully this will encourage them to grow and even to re-enter the industry. A rise in the number of developers can only be a good thing, potentially leading to a greater variety of house types and, of course, housing supply.
However, on the downside, the loss of affordable housing from smaller sites could result in Councils trying to recoup the numbers of affordable homes ‘lost’ by setting a higher starting position for the provision of such housing from larger housing development sites. Of course there will always be negotiation over these numbers, but this is likely to slow down the whole process.
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