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LGA submission to Ministry of Housing, Communities and Local Government: First Homes, 01 May 2020

Councils want to play a lead role in developing a locally responsive mix of tenures, which includes homes for sale, as well as social homes and other affordable homes for those who are not ready or do not want to buy.

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Key messages

  • The LGA fully supports the ambition to increase housing supply that is sustainable, meets demand and is matched by the required services and infrastructure. Local government has an important role to play in achieving this ambition, both as leaders of place through the planning system and as builders of homes in their own right.
  • Everyone has the right to live in a safe and secure home they can afford. However, not everyone will be able to, or aspires to own their own home. Councils want to play a lead role in developing a locally responsive mix of tenures, which includes homes for sale, as well as social homes and other affordable homes for those who are not ready or do not want to buy.
  • Affordability is more than just the price of a house and includes other housing‐related costs including rent or mortgage payments, heating and transport. Analysis undertaken on behalf of the LGA found that there are just four local authorities where the median income household could afford to buy the average new build home at a 30% discount with a 5% deposit. First Homes should therefore sit alongside other affordable home ownership and rental initiatives, as determined by the housing needs of local areas.
  • The LGA broadly supports the principle of First Homes, as a discounted home-ownership product, which could assist first-time buyers to purchase a home they can afford in their own communities. We also welcome the proposal to place an in-perpetuity discount on First Homes through restrictive covenants, which we advocated for during the Government’s Starter Homes consultation.
  • We are, however, concerned about the potential impact on the delivery of social and affordable rented homes if proposals for up to 80% of Section 106 (s106) units to be First Homes are taken forward. In 2018-19, just under 40% of s106 affordable housing units were for affordable home ownership (largely shared ownership). There is a risk that a nationally set First Homes requirement may displace other discounted-market products, particularly affordable and social homes for rent of which there is already an under supply in many local authority areas.
  • The requirement for developers to deliver First Homes on their sites may also result in the provision of a smaller range of housing tenures which could result in slowing down housing delivery because of market absorption rates.
  • We support proposals that take into account local housing need rather than those that would strengthen a national presumption in favour of First Homes. First Homes could make a valuable contribution to the mix of housing options, but local planning authorities must maintain the levers to deliver them alongside other housing products in a way that addresses need identified locally as part of the planning process.
  • Ensuring the right mix of tenures across the country will create balanced communities, and support first time buyers and those who prefer or need to rent, as well as the needs of different groups.
  • We do not support the proposal for a single national income cap for First Homes. Local authorities should be able to set their own eligibility criteria for First Homes determined with regard to local incomes and local house prices, so that they can genuinely be targeted at those who would otherwise to struggle to buy an appropriate home in their local areas.
  • Council house building and reform to Right to Buy are also both critical to boosting the supply of new homes. Allowing councils to retain 100% of sales receipts, set discounts locally, and be able to adjust the proportion of receipts used for replacement homes, will ensure they are able to reinvest in new supply.
  • Should First Homes become policy, there needs to be greater clarity regarding how they will be delivered, administered, monitored and enforced. Any policies for First Homes must also be properly resourced and allow local authorities the discretion needed to implement them to ensure they contribute to local housing needs.
  •  Going forward it will be important to consider the impact that Covid-19 pandemic may have on delivering housing, the risk to sales

Download the full submission