Government confirms 2017 start date for construction of 'starter homes'

Out-Law News | 04 Jan 2017 | 5:09 pm | 3 min. read

Construction of the first 'starter homes' for first-time buyers in England will begin on brownfield sites across the country this year, housing minister Gavin Barwell has announced.

The government has also confirmed the first 30 local authority partnerships which will receive financial support under its £1.2 billion Starter Home Land Fund, which was set up to provide funding to enable local authorities to acquire brownfield land and prepare it for development. These sites, which include some town centres, were selected on the basis of their potential to deliver new homes quickly, Barwell said.

The 30 new Starter Home Land Fund partnerships include Blackpool Council, Bristol City Council, Ebbsfleet Development Corporation, Liverpool City Council and the Greater Manchester Combined Authority. Some 71 sites across the country have already received investments under the Starter Home Land Fund, which was established in April 2016.

Starter homes will be made available exclusively to first-time buyers aged between 23 and 40 years old, at a discount of at least 20% below market value. The Conservative Party's 2015 general election manifesto included a pledge to deliver 200,000 such homes by 2020; while the 2016 Housing and Planning Act gave the communities secretary the power to prevent councils from granting planning permission if they were not meeting starter homes requirements to be set by regulations.

"This New Year announcement has been made by Barwell alongside confirmation of the government's support and naming of the first garden villages and additional garden towns," said planning law expert Lucy Close of Pinsent Masons, the law firm behind Out-Law.com.

"These announcements indicate that housing provision continues to be a key priority for the government this year, and that the government is taking active steps to promote delivery. We would expect that these announcements will be further bolstered by the Housing White Paper, anticipated to be issued later this month," she said.

However, although the government was clearly "attempting to promote a positive approach to housing delivery" with its announcement, a number of questions and criticisms which have been debated since the starter homes policy was first announced in 2014 remained, she said.

"One of the main criticisms raised by Labour and local authorities is whether starter homes are actually affordable," she said. "The policy has evolved since the change in government last summer and there had been suggestions that the starter home product may include some rented properties alongside those for sale – however, the announcement appears to only relate to starter homes for sale."

"This raises questions as to whether this will actually be affordable for the general young population, as a deposit is still required for a starter home and young people often struggle to have funds available for deposits when they are bearing the cost of high rents pending moving into home ownership. Therefore it is not clear whether this policy and announcement, if carried through, will have a significant impact on the lives of the young people which it seeks to target," she said.

It was also concerning that many of the necessary regulations and policies around the delivery of starter homes were not yet in place, Close said.

"This is really a 'cart before the horse' situation as early delivery of starter homes will be in a vacuum," she said.

"There is currently no clarity on a range of matters relating to starter homes such as the time period after which the first time buyer can sell and retain 100% of the discount. To bring forward new schemes in such a vacuum could lead to inconsistency of approach as between sites, and with any new regulations and policy when brought into force," she said.

"One point to note in relation to this announcement is that there is no commitment as to how many starter homes will be built this year. There is no reference to the government's previously-stated target of 200,000 being built by 2020. As we now move into 2017, we will see if this target will be amended or met as it is appearing increasingly over-ambitious unless additional measures are introduced to increase housing delivery and when starter homes will actually be a live product supported by regulation and policy. However, it may be that we receive further detail on this in the White Paper," she said.

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