11 February 2022

First Homes has its challenges - Head of Planning, Victoria Du Croz writes for Property Week

First Homes has been lined up as the replacement to the Help to Buy scheme, but unlike Help to Buy, First Homes will count towards a developer’s affordable housing provision as part of a planning application.

With at least 25% of affordable housing being First Homes, there will be a knock-on effect on the amount of affordable/social rented and shared ownership units being delivered, which could further exacerbate supply issues in local areas.

The government has set a minimum discount on First Homes of 30%, but local authorities can stipulate further reductions to 40% or even 50% of open-market value. Additional eligibility criteria – beyond the household income cap of £80,000 (£90,000 in London) and the requirement to be a first-time buyer – such as local connections and being a key worker can also be put in place by local authorities.

In the long term, Local Plans will include policies setting out First Homes eligibility requirements. However, there are transitional arrangements for local authorities mid-way through the Local Plan process and some may issue interim policy statements.

In the meantime, the inclusion of First Homes in the government’s planning guidance means it can be a material consideration when determining planning applications.

However, given the flexibility for local authorities to impose additional price reductions and eligibility criteria, in the absence of clear Local Plan policies it could be difficult for developers to be certain of the local requirements for First Homes. It may also make it harder to determine the viability of a site during the acquisition process.

The scheme puts considerable onus on local authorities at a time when they are already facing resource constraints. First Homes will have a restriction on the title deed to ensure that buyers meet the eligibility criteria, but it will be down to local authorities to carry out the required checks before the dwelling can be sold.

First Homes has the potential to plug a gap in the market and avoid creating price inflation (a criticism levied at Help to Buy), but it does not come without its challenges.

This article was first published in Property Week on 10 February 2022, and can be found here.

For further information on the First Homes Scheme, please contact Head of Planning, Victoria Du Croz.

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