Newsflash: Lords seek to limit Starter Homes proposals

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In our earlier briefing we set out some of the key elements of the Housing and Planning Bill 2015-16 (the Bill) including, in particular, the government’s proposals that one in five properties in new residential developments should be starter homes, made available to qualifying first-time buyers under 40 for at least 20% less than market value. Other key aspects include that the starter homes requirement should apply to sites of ten units or more (or 0.5 or more hectares); that a general exemption should apply where clear evidence proves that the requirement would make a development unviable; and that regulations will exclude certain types of developments (such as specialist care accommodation, custom-build and purpose-build student housing) and will provide that private rented sector developments and specialist older people’s housing developments may meet the requirement through off-site contributions.

The government’s starter homes proposals (which are currently the subject of a technical consultation open to developers, local authorities and other interested parties until 18 May 2016) are currently making their way through Parliament and are somewhat controversial.

The government has confirmed that it is committed to increasing home ownership and improving opportunities for first-time buyers, but concerns have been raised that the Bill “[carries] a risk that a crucial supply of new affordable rented homes will be displaced, and despite 20% discounts [starter homes] will still be out of reach for the majority of people in need of an affordable home[1].

Earlier this month the House of Lords voted to introduce a minimum age of 23 years for qualifying first-time buyers, to prevent parents of higher education students from buying starter homes in their children’s names and using them as an investment opportunity. Also, to counter starter homes being used as a short term investment to be sold on  a few years later at large gain, the Lords backed an amendment to require starter home owners to repay, on a sliding scale reduced by 5% for each year of ownership [2], the initial purchase discount when the property is sold.

Another aspect of the Bill to raise concerns is its inter-relationship with other affordable housing tenures and its proposal that the starter home requirement should take priority in viability negotiations. To try to address this, the House of Lords has voted in favour of a provision requiring local authorities to have regard to the provision of starter homes based on their own assessment of local housing need.

The starter homes proposals will be of significant interest to all those involved in the delivery of residential developments. Walker Morris will continue to monitor and report.


[1] Source: Letter to the Guardian, 10 April 2016, Cllr David Hodge Leader of LGA Conservative Group, Cllr Sharon Taylor Deputy leader of LGA Labour Group, Cllr Marianne Overton Leader of LGA Independent Group, Cllr Gerald Vernon-Jackson Leader of LGA Liberal Democrat Group
[2] for a period to 20 years