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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Four big issues raised by 100,000 'starter homes' plan

09/02/2015


The cost of housing means that many people are struggling to take their first step on the property ladder, but are proposals for 100,000 new starter homes the answer? Chartered Institute of Housing policy and practice officer David Pipe raises some concerns.

Building siteLast October David Cameron used his Conservative party conference speech to make a major housing announcement – 100,000 new ‘starter homes’, to be built exclusively for first-time buyers under the age of 40 at 20% below the normal price.

As our chief executive Grainia Long blogged at the time, the news that these sites would be exempt from section 106 agreements, which usually require social or affordable homes to be built as part of a development, set particular alarm bells ringing for us. Social housing is critical if we are going to solve the housing crisis – there are always going to be people who can’t afford to buy and we must provide decent, affordable homes for them too.

More recently, the government published a consultation on the policy, setting out in a little more detail how it might work in practice. In summary the proposal is to introduce ‘starter homes exception sites’ (similar to existing rural exception sites) into the planning system. They would be brownfield sites, previously used for industrial or commercial purposes and not already earmarked for housing.

On these sites there would be no obligation for the developer to fund affordable housing to rent through Section 106 contributions or improvements to the local infrastructure through the Community Infrastructure Levy (CIL). However, planning obligations would ensure that starter homes are offered at a minimum of 20% below their open market value, and only to first-time buyers under the age of 40. Purchasers would also be prevented from selling the home on at full value for a period of time.

Of course, it is positive that the government is looking at ways to bring more land forward for new homes and to improve affordability for first time buyers. When he announced the policy, David Cameron argued that many young people watched the popular Channel 4 show Location, Location, Location “not as a documentary, but as a fantasy”. The statistics back up that assertion.  In 1990 30% of first time buyers were aged under 25 - that figure is now just 16%, and many of the  young people who do manage to get on the ladder are only able to do so by drawing on the ‘bank of mum and dad’.

But despite this, we have some concerns about the proposals in their current form. Here are four big issues which we’ve asked the government to consider further:

  1. It may be difficult to find suitable sites. The proposals assume that land released for starter homes will be brownfield sites, not already earmarked for housing and available at low cost (in order to enable the 20% discount for the purchaser). However in practice many brownfield sites require expensive work to make them suitable for housing, or may simply not be well suited because of their location or a lack of infrastructure.
  2. The developments may not remain attractive places to live in the long term. In part the 20% discount is intended to be provided through cheap land and the exemption from Section 106 and CIL requirements, but we are concerned that developers will still need to find further cost savings and that this might encourage developments which are high density and/or low spec. Although the government is proposing to set up a new Design Council to encourage and promote good design among starter homes, it would not have any powers to insist on or to enforce the very highest standards. We also know that successful communities include a mix of different property types, sizes and tenures, and are concerned that developments which are built exclusively for young first-time buyers will not have the necessary balance.
  3. Some homes purchased under the scheme may end up being rented out. Planning restrictions will prevent purchasers from immediately selling their starter home on for a quick profit, however it is much more difficult to prevent them from being rented out. We are already seeing anecdotal evidence of this with right to buy, with many of our members reporting that some homes sold through the policy are then immediately being advertised for rent. This undermines the central purpose of the scheme which is intended to help people become owner occupiers.
  4. The exemptions from Section 106 contributions and the CIL could have a negative impact on existing communities. These homes will generate demands on the local infrastructure - like roads and healthcare facilities - and without investment in that infrastructure they are likely to have an impact on the local community. They could create an ‘infrastructure shortfall’ in the area, which might need to be recovered at the expense of future development.

For more information, read our response to the government’s consultation in full.


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