This month saw the publication of the Ministry of Housing, Communities & Local Government's consultation on the design and delivery of First Homes, which considers how the Government should implement the "First Home Scheme".
The Government has made a commitment to "making the dream of home ownership a reality for everyone", after recognising that this is currently out of reach due to affordability barriers; driven in large by a shortage of housing supply, low interest rates and high rents limiting the ability for young people to save a deposit.
The consultation explores various measures that the Government is proposing to put in place to ensure that First Homes are affordable and available, and many of these are likely to have a huge impact on developers and first-time buyers. The key proposals are as follows:
1. First Homes should be sold with a minimum discount of 30% off the market price. This discount will apply in perpetuity; so when the purchaser sells on, a 30% discount must be applied to the subsequent sale price.
2. Local people who wish to stay in the community where they live or work but are struggling to purchase a home at market prices are to have a "right of first refusal" on First Homes.
3. Priority to be given to first-time buyers, serving members and veterans of the Armed Forces and key workers, such as nurses, police and teachers.
The consultation also makes clear that the Government intends to introduce more developer contributions through section 106 obligations, either by prescribing a percentage of affordable homes delivered through the planning obligations or prescribing that a percentage of all units delivered on suitable sites are to be sold as First Homes. This could have severe consequences for developers in terms of site viability; which would mean that developers cannot afford to build new homes. This would only be a barrier to addressing the availability issue, so clearly a balance needs to be struck.
The consultation is open now until 3 April 2020, and you can respond by completing an online survey at www.gov.uk/government/consultations/first-homes.
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