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Starter Homes - the end of affordable housing?

David Cameron is shortly to announce his plans for ensuring the development of discounted homes for first time buyers.

The new proposals will replace the more traditional rented forms of affordable housing, that developers had previously been required to provide as part of residential schemes, with 'starter homes'. The intention is that these homes will be sold to first time buyers at a 20% discount, encouraging more people off social housing waiting lists and into home ownership.

The policy is one of many recent policy shifts, which make it easier for developers to minimise the affordable housing requirements of any particular development. Other examples include:

  • the ability to re-negotiate affordable housing requirements on unviable developments set out in s.106BA of the Town and Country Planning Act;
  • the recent attempt to introduce an exemption from requirements to contribute to affordable housing requirements for small development sites, which is currently under consideration by the Court of Appeal;
  • the decision not to include affordable housing in the list of types of infrastructure that can be funded through Community Infrastructure Levy payments; and
  • policy guidance stating that s.106 contributions should be reduced on sites with viability issues in areas where CIL is in force.

Unlike, other policy changes, however, the Starter Homes proposal is likely to gain traction very quickly: the return for developers will be greater on the discounted 'Starter Homes' than on traditional models of affordable housing.

As such, this proposal, particularly when coupled with the proposed extension of Right-to-Buy to Housing Association properties has the potential significantly to reduce stocks of affordable housing.

It is recognised within the industry that affordable housing stocks lost through the Right to Buy are frequently not replaced. This leaves local authorities with a problem, namely, how to address the needs of families that cannot afford to purchase even discounted homes with diminished affordable housing stocks and fewer coming through in the development pipeline.

Given Brandon Lewis's endorsements of Build to Rent at the London Real Estate Forum in June this year; maybe the Conservatives are hoping that institutional investment in the Private Rented Sector will be the answer.

Prime minister David Cameron is set to renew his party’s pledge to build 200,000 starter homes by scrapping developers’ requirements to build affordable, rented homes

The promise of 200,000 first-time buyers’ homes by 2020 was first made in March as part of the build-up to the general election.But at the Conservative Party conference later today,

Cameron is set to announce plans to to scrap the requirement to build affordable homes to rent in developments as part of the drive to build this housing.Under the plans the definition of what is classed as affordable housing is set to change to not just include rental properties – as it does currently - but also starter homes.”