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First Homes (and yet more changes).

Sneaky Chris, sneaky...  

But did you spot it?  

By WMS on May 24th 2021 the Housing Minister has announced the requirement for First Homes provision to be effective from 28 June 2021.   The WMS refers to the Government publishing responses to the First Homes consultation on 1 April 2021.  My thoughts on that and the progression to First Homes from Starter Homes are here.

The NPPG has already been updated to take this into account as has the separate stand alone guidance for Housing Different Groups and a trial was already in place for Derbyshire later this year.

First Homes

First Homes will be sold at a minimum of a 30% discount and be no more than £250,000 (£420,000 in London).   The discount will be reapplied to all subsequent sales; something I have spoken out against in the past.  Unlike the Starter Homes proposal where the discount remained for an introductory period and then introduced the buyer onto the market housing ladder First Homes look set to place those in need on an entirely different ladder.  

They must sold to first time buyers and are only available with a mortgage to be used as a sole or primary residence. 

A model s.106 is being prepared to secure First Homes (despite the governments plan’s to scrap s.106 and move to a full land tax system) with a minimum of 25% of affordable housing secured to be First Homes.  Once the First Homes have been secured the Government is prioritising within the remaining 75% provision of affordable homes for rent.  First Homes are already exempt from CIL.

Key workers and those who are served in the Armed Forces should be prioritised for First Homes.

But when?

There are mid-complex provisions which apply to how the 25% threshold will work it's way into Local Plans with those at an advanced stage of preparation not needing to reflect the First Homes requirement.  Unless the plan has been submitted for examination before 28 June 2021 or is at publication stage with a submission date before 28 December 2021 new plans will be required to taken into the First Homes requirements from 28 June 2021.

Where local and neighbourhood plans do not benefit from the aforementioned transitional arrangements, the local planning authority should make clear how existing policies should be interpreted in the light of First Homes requirements using the most appropriate tool available to them.

The new First Homes requirement will not apply to: -

  • sites with full or outline planning permissions already in place or determined (or where a right to appeal against non-determination has arisen) before 28 December 2021
  • applications for full or outline planning permission where there has been significant pre-application engagement (relating to affordable housing provision) which are determined before 28 March 2022; and
  • sites where local and neighbourhood plans are adopted/made under the transitional arrangements, as detailed in paragraphs 18 and 19. These transitional arrangements will also apply to permissions and applications for entry-level exception sites.

If an applicant wishes to amend a planning application to include First Homes which is already submitted and likely to be granted before these dates, the local planning authority should be flexible in accepting First Homes as an alternative type of tenure.

Local authorities should have flexibility to accept alternative tenure mixes for planning applications that are determined within the timescales identified above, although they should consider whether First Homes could be easily substituted for another tenure, either at 25% or a lower proportion.

It is clear therefore that, with some minor exceptions, planning applications in preparation now, would be wise to account for First Homes provision.  It remains to be seen how popular First Homes will be for the developers will work with, will a fixed discount which they can administer themselves through their sales teams prove popular, or will the additional administrative burden (compared to selling a set number of units to an RP for them to administer prove costly).

Class E - PDR

This is not to forget the continuing Class E story and I note that the technical consultation on consequential changes to permitted development rights remains open until 3 June 2021.  This picks up that consequential changes may be required throughout the revised Use Classes Orders to enact both Use Class E and the new PD right for changes from Use Class E to residential.  

Some of the questions are fairly common sense based and sensible - should we delete the ability A1 to move to A2 without permission - yes of course we should, Use Class E has rendered it no longer of need.  Others will need more thought.  One thing is clear though - with over 40 different consequential amendments identified there is still work to be done to effect the intended change coming out of the new Class E.

A First Home must be discounted by a minimum of 30% against the market value; and,

after the discount has been applied, the first sale of the home must be at a price no higher than £250,000”