First Homes = the new Affordable Housing!

By Ellen Nicholson

On 24 May 2021, the Ministry of Housing, Communities and Local Government (MHCLG) published new guidance in relation to First Homes. In a written statement, housing minister Christopher Pincher MP said that from 28 June 2021, a home meeting the criteria of a First Home will be considered to meet the definition of ‘affordable housing’ for planning purposes. The First Homes Criteria means:

  1. a First Home must be discounted by a minimum of 30% against the market value; and,
  2. 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); and
  3. the home is sold to a person who meets the First Homes eligibility criteria.

Local authorities will be able to set a deeper minimum discount at either 40% or 50% and impose lower price caps if they can demonstrate a need for this through evidence. The agreed discount must continue to apply to the homes each time they are sold in perpetuity (subject to certain specific exclusions), so that communities continue to benefit from the homes for years to come. The discount in perpetuity should be secured through a planning obligation.

First Homes should comply with any other applicable planning policies and building regulations, for example those relating to amenity space, accessibility or energy efficiency. They should also avoid the sale of homes as leasehold where this is not necessary.

First Homes must be prioritised for first-time buyers with a combined annual household income of no greater than £80,000 (or £90,000 in Greater London). Local Authorities will be able to apply additional local criteria for example to prioritise key workers (who also meet the criteria of a first time buyer) or set a lower income cap.

MHCLG is developing model Section 106 obligations that can be used to secure First Homes at the planning stage in order to support developers and local authorities in providing First Homes. The guidance states that a minimum of 25% of all affordable housing units secured through developer contributions should be First Homes, and this threshold should be applied across England. In accordance with paragraph 62 of the National Planning Policy Framework, affordable housing is expected to be delivered on-site unless off-site provision or an appropriate financial contribution in lieu can be robustly justified; and the agreed approach contributes to the objective of creating mixed and balanced communities. In addition to delivering affordable housing as per existing policy, where on-site affordable housing is required, a policy compliant application will have a minimum of 25% of affordable housing units on-site as First Homes.

Emerging local and neighbourhood plans are not required to reflect the First Homes policy requirements if they have been submitted for examination before 28 December.

The full statement can be read here on the UK Parliament website. 

The update PPG can be read here on the UK Government website.

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