26/5/21 – New First Homes policy announced by Government

Earlier this week the Government announced, via a Ministerial Statement and amendments to Planning Practice Guidance, a new First Homes policy which will take effect from 28 June 2021; replacing the existing ‘entry level’ policy as set out in paragraph 71 of the NPPF which has under-performed as originally envisioned. The Government consider this change in policy is necessary to encourage First Homes-led developments on land that is not currently allocated for housing.

First Homes are essentially a new form of discounted market housing for first-time buyers to be delivered through the planning system via two routes – developer contributions and through ‘exception sites’, which are sites not allocated in local plans usually dedicated to affordable housing.

Local authorities should therefore support the development of these First Homes exception sites, suitable for first-time buyers, unless the need for such homes is already being met within the local authority’s area. Local connection criteria may be set where these can be supported by evidence of necessity and will not compromise site viability. First Homes exception sites should be on land which is not already allocated for housing and should:

  • comprise First Homes (as defined in this Written Ministerial Statement).
  • be adjacent to existing settlements, proportionate in size to them, not compromise the protection given to areas or assets of particular importance in the National Planning Policy Framework, and comply with any local design policies and standards.

A small proportion of market homes may be allowed on the site at the local authority’s discretion, for example, where essential to enable the delivery of First Homes without grant funding. Also, a small proportion of other affordable homes may be allowed on the sites where there is significant identified local need.

The minimum discount for First Homes should be 30% from market value, which will be set by an independent registered valuer. After the discount has been applied, the first sale of the home must be at a price no higher than £250,000 (or £420,000 in Greater London). Where evidence justifies it (either in the local or neighborhood plan, an emerging policy, or, where appropriate, a Supplementary Planning Document), the minimum discount in an area can be increased to 40% or 50%.

Where discounts of more than 30% are applied to First Homes, the requirement for a minimum of 25% of the affordable housing units secured through developer contributions to be First Homes will remain in place. The approach to delivering the remaining 75% of affordable housing is set out above.

First Homes must be prioritised for first-time buyers and not be sold to any household with a combined annual income in excess of £80,000 (or £90,000 in Greater London). Local authorities will be able to apply additional criteria at a local level. Key workers and members of the Armed Forces are exempt from any local connection testing restrictions, in recognition of their circumstances.

In designated rural areas, which include some of the more constrained and expensive regions of the country such as National Parks and Areas of Outstanding Natural Beauty, rural exception sites will remain as the sole exception site which can come forward. Elsewhere, First Homes exception sites and rural exception sites can both come forward.

For further details on this First Homes Policy please contact our office on 01604 880163 or alternatively via email at planning@argroup.co.uk.