Housing and Planning Bill Committee hears concerns about impact of starter homes

Experts told the committee that the government's starter homes initiative, through which first-time buyers will be offered homes at a discount of at least 20% from market value, could have an impact on the provision of affordable housing and the delivery of infrastructure.

The Bill as drafted will place a duty on councils to promote the delivery of starter homes and will allow the communities secretary to make regulations preventing councils from granting planning permission for residential developments unless a "starter homes requirement" is met.

Hackney Council's cabinet member for housing Phil Glanville said he feared that "starter homes will be seen as the first port of call when it comes to the delivery of affordable housing" and that "social housing and truly affordable housing" would be "squeeze[d] out". Glanville's fears were echoed by Campbell Robb and Jon Sparkes, chief executives of homelessness charities Shelter and Crisis, respectively and David Orr of the National Housing Federation. Sparkes was particularly concerned about "people at the very low end of income, for whom the starter home is a mile away".

The Greater London Authority's deputy mayor for housing, land and property, Richard Blakeway, said the average price for a first-time home in London was £290,000. He said he expected starter homes to be "in a similar price bracket" rather than being priced near the limit in the Bill of £450,000 in London and it was "really important that starter homes complement existing products rather than substitute for them".

Chief executive of the Federation of Master Builders Brian Berry told the committee that it would be more profitable for builders to build starter homes than other forms of affordable housing because they would receive up to 80% of their market value. Home Builders Federation planning director Andrew Whitaker said the starter homes initiative would lead to a more balanced mix of tenures.

However, Ian Fletcher, director of policy for the British Property Federation, warned that requiring starter homes on all residential developments could "kill off" the fledgling build-to-rent sector. He said investors in large build-to-rent schemes preferred to keep control of sites for several decades but starter homes might be sold as buy-to-let properties within five years of their initial purchase. However, Fletcher said this would be less of an issue if starter homes were not required to be delivered on site, or could be delivered on a separate area of a large strategic site.

Developers of starter homes will be exempt from infrastructure contributions that would usually be required to make development acceptable. Whitaker and Fletcher both said sites with a high proportion of starter homes might not fully meet infrastructure needs, with Fletcher suggesting support for social infrastructure may "need to come from other sources".

The Bill will extend the right for tenants to buy their homes to include tenants of some housing associations and will require councils to sell off high-value council homes when they become vacant, with the funds being used to finance the right to buy. Several speakers raised concerns about how "high-value" and "vacant" would be defined and whether receipts from the sale of council homes would be retained in the immediate area.

There was general support among speakers for proposals to streamline the local planning process, but a consensus that a lack of experienced staff and resources in council planning departments threatened the delivery of housing and local plans.

Whitaker, Berry and Fletcher agreed that the introduction of planning permission in principle on certain brownfield sites would help increase housing supply and would particularly appeal to small and medium sized housebuilders. They said council brownfield registers would provide certainty of support for the development of certain sites, but Whitaker warned that councils would need to consider whether individual sites were truly viable before adding them to their registers.

Planning expert Matthew Fox of Pinsent Masons, the law firm behind Out-Law.com, said: "This debate demonstrates that behind the headlines, many problems arise out of the Housing and Planning Bill as government, councils and developers grapple with what delivering ‘affordable’ housing actually means from a practical, legal and policy perspective."

"Now that private renting has overtaken social housing as the second most common form of tenure, it will be vital that this bill does not negatively impact the PRS and BTR sector, as this forms a key crux of ‘affordable’ tenures within many developments," said Fox. "This, coupled with the lack of clarity currently found within the proposals for the extension of ‘right to buy’ to housing associations, means that the devil will continue to be in the details. Given the strength of feeling of evidence to date, it might be expected that the Bill will be in a significantly different shape once it comes out of committee."