First Homes: Bringing You Up To Date
The Government’s thinking on First Homes edges forward. Following a number of consultations, the Government has now updated its proposals. Claire Fallows explains the current position.
What are First Homes?
By way of reminder, First Homes are intended to be available to buy at a minimum discount of 30% below market value, with the discount remaining in perpetuity (subject to exclusions including for mortgagees). After the discount is applied, the initial sale price cannot exceed £250,000 or £420,000 in Greater London.
They will be sold to eligible purchasers, generally first time buyers with a household income not exceeding £80,000 or £90,000 in Greater London. Authorities and neighbourhood planning groups will be able to prioritise local need for First Homes and require higher discounts (40%, 50% or higher) and lower price caps if appropriate through planning policy documents.
How will First Homes be delivered?
The Government intends that 25% of all homes delivered through section 106 obligations should be sold as First Homes. It is also committed to introducing First Homes exception site policies (replacing entry site exception sites), allowing unallocated sites to be developed for First Homes with a small proportion of market homes or other types of affordable housing to support viability. The Government will work on guidance on what proportion is appropriate. There will not be a site size threshold (again guidance will be produced to ensure that this policy is not abused), but First Homes exception sites will not apply in designated rural areas.
These commitments will require changes to national planning policy guidance. The Government intends to achieve these through a Written Ministerial Statement in due course, which will set an implementation date. The statement will set out the policy framework, including the process of setting developer contributions for First Homes, the types of developments to be exempt, transitional arrangements for plan making and policy for exception sites.
Changes to the community infrastructure levy to exempt First Homes from the levy have already taken effect.
What is the impact on other affordable housing tenures?
As a minimum of 25% of affordable housing secured through section 106 obligations will be First Homes, that leaves 75% to be allocated across other tenures. The Government intends that where development plans secure a requirement for social rented units, those should be prioritised (such that where the local plan allocates up to 75% of units as social rent, all those units should be provided). Other tenure types should be secured in the relative proportions set out in the development plan. The Government recognises that this may reduce the availability of shared ownership units and intends to monitor the impact of this on registered providers.
Obviously in many high value areas, the policy requirement for affordable housing is expressly subject to viability testing and review mechanisms. The precise tenure package is a matter of negotiation and the priority to be given to First Homes will impact upon those negotiations.
What exemptions are proposed?
Exempted sites will comprise those already exempted from the requirement to deliver affordable housing under the NPPF ie build to rent schemes, specialist accommodation such as student or housing for older persons, self-build and affordable housing schemes and entry level and rural exception sites.
Do transitional arrangements apply?
Local or neighbourhood plans submitted for examination before implementation of the policy or that have reached publication stage before implementation and are submitted for examination within 6 months of implementation will not need to reflect the First Homes requirement.
The 25% requirement will not apply to sites with full or outline planning permissions in place or determined (or where a right to appeal has arisen) within 6 months of implementation (or 9 months if there has been significant pre-application engagement). Developers should however be allowed to introduce First Homes if they want to do so. There may be disputes therefore as to the circumstances in which the requirement applies and whether First Homes can and should be introduced into negotiations.
For more information, please contact Claire Fallows or your usual Charles Russell Speechlys contact in our Real Estate Planning team.
Sponsor Licence Compliance: Key considerations & how to be audit ready
Join us for the third in our series of mini webinars on post Brexit immigration about sponsor licence compliance.
The Future of Property Careers
Join to our panel discussion and Q&A with industry leaders on the range of opportunities within the property and construction sector.
Q&A on adverse possession
A successful application for title by adverse possession will result in the squatter acquiring possessory title to land.
New tax on property developers - consultation paper published
The government published a consultation paper on the design of the new residential property developers tax.
Oliver Park writes for LexisPSL Property Disputes on liability for costs of repair
Oliver considers the implications of the decision in City of London v Leaseholders of Great Arthur House.
Procuring modular housing: Is MMC becoming mainstream?
Is Modern Methods of Construction becoming mainstream? Read what it means for Development and Procurement here.
Dual class share structures: how do they work and what are the pros and cons?
Dual class share structures allow a shareholder, for example the founder, to retain voting control over a company.
Q&A: Talking the telecoms talk
Georgina Muskett and Jonathan Wills answer queries on Electronic Communications Code agreement.
Property Patter: Navigating the complexities of Pharmacy Property
Pharmacy property is a specialist area which contains many traps for the unwary.
COVID-19 Vaccination – can an employer make it compulsory for employees?
We review what legal issues to take into account when considering to make vaccination compulsory as an employer.
Linking ESG and Executive Pay
How does a business go about embedding a focus on strong ESG performance into the structures and culture of its organisation?
National Security and Investment Act granted Royal Assent
The Act establishes a new regime for the review of mergers, acquisitions and other transactions that could threaten national security.
Recent Trends In Firewall Legislation: BVI, Bermuda And Gibraltar
Charles Russell Speechlys advises Waverton on acquisition of Cornerstone Asset Management
Established in July 2010 and with offices in Edinburgh and Glasgow, Cornerstone offers wealth management and financial planning advice.
What do the new Debt Respite Scheme Regulations mean for Landlords and Tenants?
This will provide legal protection from creditors in the form of either a breathing space or a mental health crisis moratorium.
Charles Russell Speechlys promotes five to Partner
The promotions are effective 1 May 2021 and are accompanied by one Legal Director and 15 Senior Associate promotions.
Risk allocation in commercial leases: the High Court considers rent suspension, insurance and frustration arguments
Read our summary of the full judgement on the latest Covid arrears case.
Charles Russell Speechlys boosts private wealth offering with the hire of an international tax team
Robert Reymond will be joined at the firm by Leigh Nicoll, Emma Tyrrell and Oliver Cooper.
Proposed Takeover Code Amendments – Key Changes
The Consultation Paper has now been followed by a corresponding response paper which made certain modifications to the initial proposals.
Building Back Better: Future Gazing
What’s next for the hospitality industry post-pandemic?