Proportions of starter homes to be negotiated between councils and developers, minister says

The Housing and Planning Bill, currently making its way through the House of Commons, includes a provision requiring local planning authorities to promote the delivery of starter homes for purchase by first time buyers at a 20% discount from market value.

At a meeting of the communities and local government select committee earlier this month, Lewis said that while the draft legislation required "priority" to be given to the provision of starter homes, how the homes were delivered "will continue to be a negotiation between the developer and the local authority".

Lewis said the government's considered the definition of "affordable homes" to include homes at "80% of market value, whether it is for rent or purchase". When asked whether the National Planning Policy Framework (NPPF) would be changed to remove the exclusion of 'low cost market' housing from being 'considered as affordable housing', Lewis said: "we are not keen to change the NPPF where we do not have to, but we are determined to make sure that, when we talk about affordable homes and the definition of affordable homes, as outlined in the NPPF, it reflects ownership as well as rental."

The minister said starter homes would be required "on reasonably sized sites", although he did not confirm what was meant be "reasonably sized". He confirmed that buyers of discounted starter homes would have to keep them for five years before they could sell them and that he expected the homes to be delivered "right across the price band", rather than being sold near the proposed price caps of £250,000 outside London and £450,000 within London.

Lewis told the committee that local authorities selling homes to council tenants under the government's right to buy scheme would have three years to replace those homes with new affordable housing. "If after three years they have not built them, then the income from those homes comes back to us and the Homes and Communities Agency will build those homes," Lewis said.

Lewis said the introduction of the right for some housing association tenants to buy their homes would be phased in "in a very controlled way". The minister said the government was consulting local authorities on whether money raised through the sale of high-value council homes to fund the replacement of homes sold under the right-to-buy would be ringfenced for use in the immediate area and over what will considered a "high value" in different areas.

Planning expert Jamie Lockerbie of Pinsent Masons, the law firm behind Out-Law.com, said: "One has to question to what extent councils will be bound by the requirement to prioritise the delivery of starter homes. When considering what proportion of affordable housing should be starter homes councils are likely to consider to what extent those starter homes will genuinely make a dent in the demand for affordable housing."

"This is particularly problematic in London where it is widely recognised that a discount of 20% of market value does not make such homes affordable for the majority of the populace," said Lockerbie. "Some councils may feel unable to prioritise the delivery of starter homes if they know that they are not a genuinely affordable product. If it transpires that the delivery of starter homes is not being prioritised will the government change course and set binding targets? That is not clear."