Starter Homes will 'squeeze out' other affordable housing, MPs told

Planners have warned MPs that the government's Starter Homes policy risks lessening availability of other types of affordable housing and further inflating the property market.

Royal Town Planning Institute chief executive Trudi Elliott
Royal Town Planning Institute chief executive Trudi Elliott

Addressing a committee of MPs probing the Housing and Planning Bill on Tuesday, Royal Town Planning Institute chief executive Trudi Elliott said the government’s plans to deliver 200,000 new homes for sale to the under-40s at a market discount could have negative repercussions for the creation of new homes for social and affordable rent.

"From the way the Starter Home provisions in the bill look, they have the potential to squeeze out other forms of affordable housing," Elliott told the Commons communities and local government committee.

As yet  undefined regulations on how councils could be directed to deliver Starter Homes through section 106 agreements "could reduce the flexibility of local authorities and reduce finance", Elliott told the MPs.

She added: "We urge the sort of flexibility that enables local authorities and developers to generate mixed communities and ensure that as many schemes as possible are viable and have, both in the long term and short term, a mix of housing tenure."

Mike Kiely, chairman of the board at the Planning Officers Society, said the Starter Homes policy of selling properties to eligible applicants at a 20 per cent discount on market rates, with only a proviso that they cannot be resold for five years, is"short-sighted".

"That money will inflate house prices further because it is additional capital that will be at the disposal of people to buy homes," Kiely said. "The homes are not affordable to start with, and then they make housing in general less affordable because of the increase in capital going into the system."

Hugh Ellis, head of policy at the Town and Country Planning Association, argued that Starter Homes proposed for sale at up to £450,000 in London and £250,000 elsewhere would not be affordable.

Ellis said there is a "significant issue" with the bill's proposals to impose a duty to promote the delivery of starter homes, when they will still be out of reach of many would-be homeowners.

"In many areas, particularly rural areas, the affordability gap between 80 per cent pf market prices and lowest quartile median incomes is very stark," he said.

"We are creating a powerful new legal duty in planning — the first one on housing — that is very much focused on a particular tenure that is not affordable to many people on medium and low incomes."


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