Will you have to deliver First Homes?
On 24 May 2021, the Government published a Written Ministerial Statement and updated the Planning Practice Guidance to introduce First Homes.
What is First Homes?
First Homes are an affordable housing product which will address what the Government considers is the greatest barrier to home ownership – affordability. First Homes will achieve this by new homes being sold with a minimum discount of 30% below their full market value.
How will First Homes work?
First Homes will retain their discount in perpetuity meaning they have to be sold on to other future eligible purchasers with the same percentage discount against the current market value. The requirement to deliver First Homes begins on 28 June 2021 (subject to transitional arrangements) and there will be a requirement for a minimum of 25% of all new affordable homes to be delivered as First Homes. As for the remaining 75% of affordable homes Social Rent provision has been protected with the remaining tenures (including Affordable Rent and Shared Ownership) to be secured through the remaining proportions.
A Working Example of First Homes Impact on Planning Policies
If an existing Local Plan Policy requires an affordable mix of: 40% Social Rent; 40% Affordable Rent and 20% Shared Ownership, then following the introduction of First Homes the new Local Plan Policy requirement would be: 25% First Homes; 40% Social Rent; 23% Affordable Rent; and 12% Shared Ownership. As shown in the example above the proportion of Social Rent to be delivered should be in accordance with existing Local Plan Policies (up to a maximum of 75%) once First Homes have been provided. The remaining tenures should reflect the ratios in the Local Plan, which in this example was 40% Affordable Rent and 20% Shared Ownership or 2:1. After 25% First Homes and 40% Social Rent provision, this results in the 2:1 ratio being applied to the remaining 35% provision resulting in a 23% Affordable Rent and 12% Shared Ownership provision.
If you have any questions, or would like to know more, please do not hesitate to contact Michelle Quan.