The Planning and Housing Bill is now reaching the later stages of its passage through the House of Lords. Affordable housing measures, including Starter Homes, continue to dominate the headlines.

The definition of Starter Homes is set out in clause 2 of the Planning and Housing Bill and comprises the following:

  • A new dwelling (a new build that has not been previously occupied or part of a building adapted for use as a single dwelling which has not been occupied since its adaption)
  • Available to purchase by qualifying first time buyers (a person who has not previously purchased freehold or leasehold (over 21 years) residential property in the UK, or its equivalent elsewhere in the world) under the age of 40
  • Sold at a discount of at least 20% of the market value
  • Price capped at £250,000 outside of London and £450,000 in London (net of reduction)
  • Subject to any restrictions on sale or letting as specified in Regulations made by the Secretary of State – at present a purchaser will be unable to sell on the dwelling at market value for a period of 5 years – any resale in the 5 year period following purchase must be at the reduced price.

English planning authorities will have a duty to promote Starter Homes in England and will be required to have regard to any guidance given by the Secretary of State when carrying out that duty. The Bill states that Regulations under clause 4 of the Bill may, for example, provide that a planning authority may only grant planning permission for residential development if a planning obligation has been entered into to provide a certain number of Starter Homes or to pay a contribution to be used to provide Starter Homes.

A lot of the detail for how Starter Homes will work in practice has been left to Regulations. However, amendments to the Bill tabled by the House of Lords so far seek to flesh out some of the detail of the Bill now, rather than leaving this to Regulations. Their Lordships are seeking that the discount applied to Starter Homes should apply to future sales of each dwelling in perpetuity – rather than for just 5 years, for local connection criteria to be applied to purchasers of Starter Homes and to require that Local Authorities have a duty to promote all forms of affordable housing, rather than just Starter Homes.

The Bill is presently at Committee Stage in the House of Lords with the next session timetabled for 1 March 2016. Report stage, where voting on amendments takes place, is due later in March.

Points to consider:

What impact will Starter Homes have on other affordable housing tenures? Might Starter Homes be favoured over other affordable tenures such as social rented housing or shared ownership?

Will a 10% deposit be required in order to secure the purchase of a Starter Home? This may still leave Starter Homes out of the reach of many first time purchasers.

Will the ability to sell on a Starter Home at full market value after a period of 5 years remain in the final drafting? Commentators are concerned that this short term restriction may mean that purchasers could benefit from a windfall on a resale after a relatively short period of time and that such Starter Homes could then be ‘lost’ to the open market.

There are lots of questions, such as the above, which are worthy of further consideration. The discussions taking place within the House of Lords will be watched with interest by many.