Have First Homes already been forgotten?
In May, Michael Gove’s predecessor, Robert Jenrick, issued a Written Ministerial Statement (WMS) updating the Planning Practice Guidance to legislate for the introduction of First Homes.
First Homes are a form of affordable housing which is targeted at first time buyers and must be sold with a minimum discount of 30% against the market value. This discount is secured in perpetuity and as such must be applied to all future sales of the property. A form of Discount Market tenure, First Homes are expected to account for at least 25% of all affordable homes delivered, with the cost of the discount borne by developers as a planning obligation.
In his statement at the time, the Housing Minister reiterated the Government’s commitment to ‘supporting people to own their home and make home ownership a reality for households and families’. He introduced First Homes as part of, ‘The most ambitious reforms to our planning system since the Second World War’.
The initiative appeared to have considerable momentum, unlike the previous Starter Homes campaign, which was ultimately abandoned. In contrast, to support the First Homes initiative, the Community Infrastructure Levy (CIL) Regulations were amended to include First Homes as a form of affordable housing and therefore, provide CIL exemption. Additionally, the First Homes transitional arrangements set out a clear programme for the new requirement to be applied to all relevant schemes after 28 December 2021 (unless significant pre-application engagement has taken place). However, since then we have seen numerous changes in planning, including a new NPPF; the appointment of Michael Gove as Secretary of State, and the newly formed department of Levelling Up, Housing and Communities - but the momentum behind First Homes appears to be lagging.
Perhaps most notably, the revised NPPF, published in July, made no mention of First Homes. Indeed, the revised NPPF created a clear conflict with the recently published Guidance, when it failed to amend Paragraph 72 to incorporate First Homes exception sites, despite these being explicitly set out in the new Planning Practice Guidance. In fact, Paragraph 72 continues to refer to entry-level exception sites, despite the WMS explicitly stating that these were being replaced.
A further update to the NPPF is expected, but in the meantime the conflict of First Homes being referred to in Planning Practice Guidance but not within the NPPF and the lack of reference to First Homes exception sites creates considerable uncertainty for local authorities, developers and RSLs.
Requiring that a minimum of 25% of all new affordable homes are delivered as First Homes necessitates a considerable adjustment by all parties. Local authorities will need to update their affordable housing requirements and determine whether additional eligibility criteria should be applied. For Registered Providers there is likely to be a downturn in the quantum of Shared Ownership being delivered and a need to determine whether they wish to engage with First Homes; and for developers, new sites will need to be assessed to account for the 30% discount as well as how this new product will be marketed and sold.
With less than two months (a period which is shortened further by the Christmas period) until the end of the majority of the transitional arrangements there is little time remaining for implementing such changes. And yet, there is still much to do.
In the Planning Practice Guidance the Government undertook to provide template planning obligations for local authorities to use when preparing Section 106 Agreements. It was anticipated that this would be made available substantially in advance of First Homes being implemented. However, this remains outstanding. A model title restriction for the purposes of the Land Registry has been published, but until the template becomes available, there is little to inform Section 106 Agreements put in place from 28 December and no scope for local authorities to update standard drafting.
In some areas, provision will be further complicated by Local Plan timetables. For example, Bracknell Forest’s Local Plan reached publication stage in May, prior to the First Homes policy being announced. Its Examination is imminent. If the Council submits the Plan for Examination by 28 December, it will benefit from transitional arrangements and there will be no statutory requirement for First Homes to be delivered until a new Local Plan review is undertaken; but if Submission takes place after 28 December, then the transitional arrangements will not apply and the minimum 25% requirement for all new affordable housing to be delivered as First Homes will apply. As a result, developers within the Bracknell Forest area are facing considerable uncertainty, with some even opting for sites outside the Borough – and consequently perpetuating the lack of housing, both affordable and otherwise.
Many will also question whether it reasonable that those local authorities which have had drawn out Local Plan Examinations (some taking several years) and who currently have out of date policies as a result, will remain exempt from First Homes requirements under the transitional arrangements, whereas those which have successfully progressed the adoption of a Local Plan will be forced to grapple with this additional challenge. The transitional arrangements will remain in place until such time as a new Local Plan update is undertaken, potentially delaying the introduction of First Homes in these areas for a further five years.
A further complication exists in those areas which have emerging Neighbourhood Plans, as transitional arrangements also apply here. Accordingly, those areas with emerging Neighbourhood Plans which meet the transitional arrangement criteria would be exempt from being required to deliver First Homes. As a result, in some areas we may see local authorities where the requirement to deliver First Homes varies across the authority area depending on the Local Plan and Neighbourhood Plan progress. This will create further complication and confusion in the planning system.
In view of the changes we’ve seen in the last six months, with a new Secretary of State and rebranded Government department, there is no absence of top-level change in planning. So much of the recent focus in planning has related to the Planning Bill and the Government’s previous commitment to ‘radical reform’ in order to deliver ‘a whole new planning system for England’, a position which now appears to be under review following backlash from Conservative backbenchers. We understand that the Government is now undertaking a review of the planning reforms – and as such the planning reforms now appear to be on the backburner. As a consequence, the necessary mechanisms to support and underpin the First Homes policy are missing.
Where action is urgently needed - on the specifics of making a bold policy a reality - the necessary change is outstanding. It remains to be seen whether the First Homes initiative will successfully address affordable housing shortages or, like its predecessor Starter Homes, will ultimately be abandoned.