MHCLG proposes fixed quota of discounted homes for sale on new housing schemes

The government is considering requiring that a fixed proportion of units in new schemes on "suitable sites" would have to be discounted homes for first-time buyers, as an alternative to delivering such housing via section 106 developer contributions, a new consultation reveals today.

Housing secretary Robert Jenrick. Pic: Getty Images
Housing secretary Robert Jenrick. Pic: Getty Images

The Ministry of Housing, Communities and Local Government (MHCLG) today published proposals for its new "First Homes" scheme, to fulfil a manifesto commitment to provide 30 per cent discounts on new homes for first time buyers.

The consultation document proposes that "local people" should get first refusal on First Homes and councils should also consider whether they should use the scheme to prioritise allocations to key workers.

The MHCLG said it is seeking views on whether changes to planning policy alone would be enough to implement the new policy, or whether it needs to change the law.

The document states: "We are conscious that planning policy alone does not always guarantee delivery of homes. 

"Local planning authorities must balance all material considerations when considering planning applications, and national policy is only one of these – other factors such as local plans and site viability can mean that national policy requirements for affordable homes are not met. 

"We are clear that we want significant numbers of First Homes to be delivered and are considering legislative options to ensure that this policy cannot be sidestepped."

The government’s Help to Buy scheme is set to wind down in 2023, and the new First Homes policy is set to shift the burden of providing discounted homes for sale to first-time buyers onto developer contributions through the planning system.

The consultation document reveals that the government is considering two broad options to ensure that a larger proportion of discounted homes for sale are delivered through developer contributions.

The first would stipulate that a percentage of affordable homes to be delivered through section 106 obligations should be designated as First Homes for discounted sale.  

However, the consultation said that "in some cases, local authorities may not use section 106 contributions to deliver affordable housing, including First Homes, and there is no legal obligation for them to do so". 

"This may have an impact on the number of First Homes delivered overall and in different regions," it adds.

The second option would be to impose on every site of more than ten units a requirement that a set percentage of units to be provided as First Homes.

The consultation said this would provide greater assurance of delivery, but "has a risk of impacting on the viability of specific sites (at least in the short term) which could have negative consequences for other developer contributions and/or lead to developments on these sites being delayed". 

In addition, the consultation proposes amending the National Planning Policy Framework on all entry level exception sites, which provide entry-level homes suitable for first-time buyers or the equivalent for those looking to rent. Under the proposals, such sites would have to predominantly deliver First Homes, supported by a small proportion of market homes on sites where they are "essential to ensure the development will be deliverable".

However, the government is not proposing to extend this requirement to rural exception sites, which are small sites used for affordable housing in perpetuity in places where sites would not normally be used for housing.

The consultation says the government is "supportive of empowering local decision-makers" and "conscious of reducing discretion to respond to local circumstances". 

The government further said it is minded to exempt First Homes from the Community Infrastructure Levy (CIL) to increase their delivery.

It will also consider amendments to CIL regulations "to ensure that CIL rates in England are not set at a level that would prevent current levels of affordable housing delivered through section 106 obligations from being secured in future".

Addressing fears that the First Homes policy could lead to a reduction in other forms of affordable housing, the consultation said: "We are mindful of the trade-off between the level of ambition for First Homes, funded through developer contributions, and the supply of other affordable housing tenures."

Launching the policy, housing secretary Robert Jenrick said: "First Homes will be genuinely life-changing for people all over the country looking to buy their first home.

"I know that many who are seeking to buy their own home in their local areas have been forced out due to rising prices. 

"A proportion of new homes will be made available at a 30 per cent market discount rate – turning the dial on the dream of home ownership."

Last year, an MHCLG discussion paper said the government was also considering "a new national model for shared ownership to help aspiring first-time buyers".

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