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What are the outstanding issues with the First Homes scheme?

Time is running out for the government to resolve the issues surrounding First Homes, a new form of affordable housing that applies to the majority of new schemes from 28 December.

A form of discount market tenure, First Homes will account for approximately 25% of all affordable homes delivered, with the cost borne by developers as a planning obligation. The homes must be sold with a minimum discount of 30% against the market value.

Despite initial enthusiasm, the momentum behind First Homes appears to be flagging. Perhaps most notably, July’s revised NPPF made no mention of First Homes; in fact, it conflicts with the recently published Planning Practice Guidance, causing uncertainty for local authorities (LAs), developers and RSLs.

Provision will require some adjustment. LAs will need to update their affordable housing requirements and determine whether additional eligibility criteria should be applied. Developers will need to consider the viability of new sites in light of the 30% discount and make plans for marketing and selling the properties.

In its Planning Practice Guidance, the government undertook to provide template planning obligations for LAs to use when preparing S106 agreements. It was anticipated that this would be made available substantially in advance of First Homes being implemented, but it 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 S106 agreements put in place from 28 December and no scope for LAs to update standard drafting.

There are also questions surrounding strategic planning, specifically for local plans that are submitted for examination around the cut-off date for the remaining transitional arrangements, and in cases in which a neighbourhood plan qualifies for an exemption, but the local planning authority in which it is located does not.

It is too early to predict whether the First Homes initiative will successfully address the housing crisis or, like its predecessor Starter Homes, fail to have any discernible impact. But one certainty is that these outstanding issues must be addressed within the next month.

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