25% of affordable homes contributed by developers will need to be discounted market homes, government proposes

A minimum of 25 per cent of affordable housing secured through developer contributions will be expected to be discounted market housing for first-time buyers, according to a government consultation published today.

Image: Flickr / Sludge G
Image: Flickr / Sludge G

First Homes will be offered to first-time buyers with local connections at a minimum discount of 30 per cent compared to market prices. The government first consulted on the proposed scheme in February this year.

Under detailed proposals published today as part of a wide-ranging package of proposed changes to the planning system, any affordable housing contribution secured through developer contributions would have to include a 25 per cent proportion of First Homes units. 

The policy would apply to both on-site provision of affordable housing and in cases where developers make cash contributions.

The government is consulting on two possible approaches to calculating the tenure mix of the remaining 75 per cent of affordable housing contributions.

Under the first option, First Homes would replace other affordable home-ownership tenures, such as shared ownership, prioritising the replacement of tenures which secure the smallest discount from market prices.

In cases where all home ownership products are replaced by First Homes, any rental products would then be delivered in the same ratio as set out in local plan policy. 

The consultation states: “For instance, if a local plan policy requires an affordable housing mix of 20 per cent shared ownership units, 40 per cent affordable rent units and 40 per cent social rent units, a compliant application would deliver an affordable housing tenure mix of 25 per cent First Homes; 37.5 per cent affordable rent and 37.5 per cent social rent.”

Under the second option, the local authority and developer would negotiate the tenure mix for the remaining 75 oer cent of affordable units after First Homes have been provided. 

The government said it prefers the first option, which would provide “more early clarity for developers”. Option two would “give local authorities more flexibility but would increase delay”, it said.

The Royal Town Planning Institute warned earlier this year that the proposed First Homes initiative could affect councils’ ability "to meet all types of housing need through the planning system" and "undermines the local plan-led approach".

The consultation runs until 1 October.

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