02 Feb 2022
First Homes was heralded as a mechanism to increase affordable housing, but it is having the reverse effect in rural areas. This is the headline conclusion of research undertaken by the Rural Services Network (RSN) and informs four recommendations to Government. Rural housing expert and author of the RSN network First Homes report, Jo Lavis, explains more.
In November 2021, six months since the introduction of First Homes, the RSN undertook a survey of its members to gain a better understanding of how the policy was playing out. Twenty-seven of its member local authorities from across the country responded which revealed four principal findings.
Meeting the NPPG prescription that there can only be a single level of discount for First Homes across a council area places planning authorities in a quandary. Setting a low discount that makes delivery of First Homes viable in their lower value areas may not be sufficient to make the First Home affordable in their higher value rural communities.
66% (18) respondents stated that the chosen discount would result in First Homes not being affordable in parts of their area.
52% (14) respondents stated that it would be helpful if they could apply different discount rates to make First Homes an affordable option in all parts of their area, reflecting the different value housing markets in their area.
Respondents also noted that the needs of the local population will not be met as the unaffordability of First Homes will mean that they will not be sold to those with a local connection within the 3 months before the local connection criteria fall away.
Inevitably, stipulating that 25% of the affordable housing contribution on S106 sites should be First Homes will reduce supply of other tenures. This was confirmed by the survey with the vast majority of respondents now being able to evidence that this was the case. 62% also reported that the greatest reduction will be in shared ownership housing. In itself this may not be problematic if First Homes provides a more affordable product. However, 52% of respondents noted that their housing association partners had stated this will affect their ability to cross-subsidise affordable rented housing, thus potentially further reducing its supply.
Most respondents operate in Designated Rural Areas where First Homes Exception Site policy does not apply. In those where it does most felt it was too early to judge the impact. However, in the small number of cases where First Home Exception Sites have been pursued, they have both replaced rural exception sites and attracted a higher land price than would conventionally be paid for a rural exception site.
In the light of these findings the research recommends: