Chapter 1 of the Bill is clear as to its intentions:
“The purpose of this Chapter is to promote the supply of starter homes in England.”
A starter home is “a building or part of a building that:
- is a new dwelling,
- is available for purchase by qualifying first-time buyers only,
- is to be sold at a discount of at least 20% of the market value,
- is to be sold for less than the price cap, and
- is subject to any restrictions on sale or letting specified in regulations made by the Secretary of State.
A qualifying first-time buyer means “an individual who:
- is a first-time buyer,
- is under the age of 40, and
- has any other characteristics specified in regulations made by the Secretary of State (for example, relating to nationality or minimum age).”
A first-time buyer is, loosely, a person who has not previous purchased a dwelling (including one outside the UK). This would also include those who have purchased under shared ownership or shared equity schemes.
The price cap is £450,000 in Greater London and £250,000 elsewhere. The Secretary of State may make regulations to vary the price cap and the meaning of “first-time buyer”.
The 20% discount may be combined with the assistance provided by Government through the Help to Buy ISA which becoming available in December of this year. So each first time purchaser may benefit to the tune of £65,500 if the entirety of the 20% discount and the maximum ISA bonus of £3,000 are secured.
Local planning authorities in England will be placed under a duty to carry out its relevant planning functions with a view to promoting the supply of starter homes in England. In so doing they will be obliged to have regard to any guidance issued by the Secretary of State.
This is all designed to meet the government’s political commitment to have 200,000 such homes built by 2020. The planning policy implications are covered in Article 3. The cost burden of providing the discounts are likely to be borne either by a reduced level of affordable housing provision or in reduced land prices paid by developers.
In the meantime local authorities will have to enforce the restrictions on sale or letting specified by the Secretary of State without any commensurate reward. How it will be able to monitor this (especially unlawful lettings) and what the sanctions might be for those who may breach the restrictions is also not clear.
As with many aspects of this legislation a lot of the detail is left to future regulation on the part of the Secretary of State.