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First Homes model drafting published

“First Homes” have been part of the Governments housing agenda for some time. On 23 December 2021, the Government finally published its long-promised model wording to secure First Homes; thus, demonstrating that, unlike many of the Government’s proposed changes to the planning system, securing the delivery of First Homes is high on the Government’s agenda.

First Homes are a form of discounted market sale housing and, as such, are a form of Affordable Housing which is sold directly from a developer to the end user without involvement from a social housing provider.

First Homes must be discounted by a minimum of 30% against the market value in perpetuity. At first sale, the price of the property cannot exceed £250,000 (or £420,000 in Greater London). Given this is more than twice the level of mortgage that a person earning the average income could borrow, it will be immediately obvious that this tenure is aimed at the upper end of the income bracket of the group that could reasonably be considered to be “in housing need”.

The tenure is only available for first time buyers who have a combined annual household income of no more than £80,000 (or £90,000 in Greater London). At least 50% of the purchase price should be funded by a mortgage.

National Planning Guidance requires 25% of all affordable housing units delivered by developers through planning obligations to be First Homes.

Unsurprisingly, First Homes are not generally popular with local authorities, the majority of whom prefer to rely on their local plan policy requirements for more traditional forms of affordable housing (e.g., social rent, affordable rent and shared ownership). Therefore, whilst the national policy requirement was introduced in May 2021, we have seen little evidence of this guidance being applied at a local level by planning authorities.

However, with the publication of the Government’s model wording for First Homes, it appears that the Government continues to be committed to ensuring the delivery of First Homes.

Therefore, despite the unpopularity of the tenure with local authorities, we expect to see more Local Planning Authorities applying the 25% policy requirement, particularly as more appeal decisions are published (which apply the national policy requirement) and as more local plans are reviewed.

Waiting for Gove – Planning update (or lack thereof)

The Development sector is experiencing a prolonged period of uncertainty while we await the Government’s long-awaited response to the two consultation papers published on 6 August 2020: “Changes to the current planning system” and “Planning for the future”.

A number of the proposals in those papers are of considerable importance for the social housing sector. The Government’s continued silence on its direction of travel is hampering the ability to plan in the long-term with any level of certainty.

Of particular interest will be the Government’s approach regarding the proposals to abolish the current planning obligation regime (e.g., s.106 Agreements) and replace it with the payment of an infrastructure levy. The assumption being that Local Planning Authorities would use the money to deliver the required affordable housing together with other infrastructure. Given the state of local authority finances, at least some doubt must be cast on the likelihood of this outcome ever being achieved.

We will have to continue to wait to see whether the Government continues to pursue its proposed changes or whether these are abandoned.

For more information, please contact Caroline Waller.


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