This House of Commons Library briefing paper explains the Government's starter homes initiative. The homes will be available at a minimum 20% discount on market value to first-time buyers under the age of 40. The paper outlines legislative provisions in the Housing and Planning Act 2016 to enact the initiative, together with planning policy reforms and a £1.2 billion Starter Homes Land Fund to support starter homes delivery. The starter homes initiative only applies in England.Jump to full report >>
Rising house prices and restricted access to mortgages have seen falling levels of home ownership in recent years. Younger households in particular have been disproportionately affected by this decline. Yet, the aspiration to buy and own a home remains strong for the majority of households.
In December 2014 the Coalition Government announced a starter homes initiative which was intended to deliver 100,000 discounted starter homes for first-time buyers. The Government subsequently implemented a starter homes exception site policy to encourage the provision of starter homes on under-used or unviable commercial and industrial land. The policy exempted developers from certain planning requirements on these sites, in return for offering starter homes at a discount to younger first-time buyers.
Policies intended to increase home ownership and drive up housing supply featured prominently in the Conservative Party Manifesto 2015, including a commitment to expand the starter homes initiative to deliver 200,000 homes by 2020. The Government’s 2015 Productivity Plan set out a range of measures to fulfil this commitment, including “bringing forward proposals to ensure every reasonably sized housing site includes a proportion of starter homes”.
The Housing and Planning Act 2016 provides the statutory framework for the delivery of starter homes. The Act defines starter homes as new homes costing up to £250,000 (£450,000 in London), to be available at a minimum 20% discount on market value to eligible first-time buyers. The legislation includes provisions to introduce a general duty on planning authorities in England to promote the supply of starter homes, and a specific duty to require a minimum number or proportion of starter homes on certain residential development sites. The starter homes legislative provisions are not yet in force.
Much of the detail of the statutory starter homes scheme will be set out in regulations. The Government consulted on the content of the Starter Homes Regulations between 23 March and 30 June 2016. Views were sought on a number of issues including: elements of the definition of a starter home; requirements relating to the provision of starter homes (e.g. the number of starter homes and the type of site on which they should be delivered); and restrictions on the resale of starter homes. The Starter Homes Regulations will need to be approved by both Houses of Parliament.
The starter homes provisions in the 2016 Act were subject to much debate and challenge as the legislation progressed through Parliament. A broad range of organisations have expressed concerns about starter homes. Issues that have been raised include: the importance of supplying a mix of housing tenures to provide for people on lower incomes; the need for flexibility to reflect housing needs in different areas; the potential reduction in the delivery of other types of affordable housing; the extent to which starter homes will be genuinely affordable; and the impact of starter homes on local housing markets.
The 2015 Conservative Government published its Housing White Paper on 7 February 2017, together with its response to the consultation on the Starter Homes Regulations. The White Paper marked a shift in the Government’s housing policy from a strong focus on starter homes, to delivering a wider range of affordable housing.
The Government has emphasised that it expects starter homes to be delivered alongside shared ownership, rent-to-buy, and other innovative affordable housing products. Reflecting this policy, it expects to help over 200,000 people become homeowners through a range of Government programmes by 2020.
The White Paper announced that the Government:
Commentators have welcomed the Housing White Paper’s new focus on a wider range of housing tenures, and the decision not to implement a minimum statutory starter homes requirement on residential developments. The Government consulted on the proposals in the White Paper between 7 February and 2 May 2017, and is currently analysing feedback.
In order to further support the delivery of starter homes, the Government proposes to reform national planning policy and has introduced a £1.2 billion Starter Homes Land Fund.
The Housing Minister, then Gavin Barwell, announced the first wave of 30 local authority partnerships to benefit from the Starter Homes Land Fund on 3 January 2017. As at the end of February 2017, the Homes and Communities Agency had invested £61 million in 27 sites across the country. These sites have the capacity to deliver over 1,600 starter homes and other affordable home ownership units. Building of the first starter homes, supported through the Fund, is expected to commence in 2017.
Commons Briefing papers CBP-7643
Authors: Hannah Cromarty; Cassie Barton; Louise Smith