First Homes consultation paper: What does the government’s proposed spring sale mean for registered providers?18/02/20
Ahead of the impending budget, new plans have been unveiled by the government to offer first-time buyers new homes at a minimum 30% discount, as it looks to further its commitment to delivering affordable homes at scale.
The initiative is designed to lower deposit and mortgage requirements, making it easier for first time buyers to be able to own their own home.
Who is eligible?
The government’s aim is to enable first time buyers to purchase property in their communities, without relocating due to inflating house prices.
The definition of ‘local people’ will be left for the discretion of the local authority, and may be based on residency or work location. However, it is not yet clear how this will be determined.
It is important to note that this will be a right of first refusal to prioritise those with local connections and ‘key workers’ who include those working in the public sector services such as the NHS and education. Special allowances will also be made for armed forces veterans.
How will the discounts be applied?
The discount is discretionary and local authorities will determine the specific discount available for each property. Such discount will last in perpetuity and allow for future buyers to access the discount on resale, therefore providing a ‘long-term community benefit’.
This scheme will not be able to be used in conjunction with any other government affordable housing scheme such as Help to Buy and Shared Ownership.
It is still to be considered whether the government will issue a household income cap for homes within this scheme. Such a cap has been seen in other affordable housing schemes, such as shared ownership, which will ensure that genuine applicants in need of the scheme are able to benefit from it.
What does this mean for housing associations?
It is clear from the consultation paper that the government is keen for the local authorities to iron out the details of the scheme within their own area. Each local authority can assume the scheme themselves or can outsource to a housing association. By doing this, the housing associations will be able to offer a more extensive range of affordable housing than they already do.
There is little comment regarding the logistics of how the housing associations will implement this, but is clear that this scheme will provide a vast amount of financial growth for them due to the attractive discount for first time buyers.
The discount would be paid for through s.106 planning contributions from developers, which are usually used to fund affordable housing. Unfortunately the long term effects are yet to be determined.
What are the restrictions?
The government’s intention is that, on resale, the prospective purchaser will be able to obtain the same percentage (‘original percentage discount’) as their predecessor and suggest placing restrictive covenants on the title.
In addition, there is consideration of imposing a price cap on the full market value of the property depending on the local area. The government are looking to impose the same cap as the Help to Buy equity loan cap of £600,000 but nothing is yet confirmed.
Get in touch
If you would like more information about how these new plans will affect your organisation, please speak to Chimi Shakohoxha, Suzanne Smith or Jyoti Mehta.