01 December, 2015
One topic which has been turning heads since the Conservative Party Conference in October 2015 is the government's Housing and Planning Bill which plans to scrap the planning rules requiring affordable homes. The change would mean that developers would not need to provide the affordable homes usually required under Section 106 Agreements as developers can get around the requirements by providing Starter Homes at a 20% discount of the open market value.
These Starter Homes can be provided directly by developers and therefore there would be no need for the involvement of housing associations. This will cause a significant impact on how housing associations provide affordable housing as last year around 40% of the new homes provided by housing associations came as a result of the Section 106 requirements. Housing associations will have to reassess how their homes will be provided in the future and many will have to take on a developer role, a role which will have many challenges; or even provide starter homes themesleves. One of those challenges will be the need to compete with other housing associations for the most desirable development sites.
The plans have also received criticism over how affordable these new Starter Homes will be, particularly for those families on lower incomes who will not be able to afford the homes even with the 20% discount. Many of the units acquired under Section 106 by housing associations provided shared ownership, which allows families to purchase as little as 25% of the open market value. There are those families who just cannot afford to buy with the rising house prices and larger deposits required. The Starter Homes are only available to buy and therefore does not provide a solution for those who can only rent. With the reduction of affordable homes for rent many families will be left turning to private landlords.
With the government's pledge to build 200,000 Starter Homes the overhaul on planning laws would appear to be the answer to tackle the housing crisis and increase home ownership. That said, there continues to be unease as the consensus is that the Starter Home scheme would leave other tenures to suffer. Even Lord Bob Kerslake, who was the permanent secretary for the Department for Communities and Local Government (DCLH) when the plans were put forward, commented that 'Starter Homes are seen as being instead of, rather than additional to, affordable housing'.
Boris Johnson, the Mayor of London, has also pleaded with ministers as he has concerns over the affect the Starter Homes will have on shared ownership targets within London. Johnson had pledged to have 250,000 Londoners into shared ownership within ten year. Starter Homes are not as affordable as shared ownership and therefore Johnson has asked that the policy to work harmoniously with shared ownership.