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University accommodation could be included in government ‘starter homes’ scheme, says expert

FOCUS: Higher education bodies are strongly advised to make submissions to a consultation on government proposal on starter homes.06 Apr 2016

The UK government is currently consulting on the details of its 'starter homes' proposals, and the statutory framework needed. The programme aims to provide 200,000 homes for first time buyers, to be sold at a minimum of 20% below the open market value. Doing so will involve requiring that developers include starter homes in their development plans for many sites, and the consultation proposes ways that this could be done.

One question raised in the consultation is whether purpose-built student housing should be included in the starter homes requirement, or whether it should be exempt as it is designed and built for a very specific purpose.

Certainly it seems clear that on-site provision of starter homes should not be taken forward: it would not be appropriate for non-students to be buying and living within a purpose-built student block - they are designed and managed specifically for students and many are on campuses. Financially, proposals for on-site starter homes could also impact the way in which student accommodation proposals are treated for VAT.

The government is also considering whether student accommodation could, instead, provide a financial contribution to the delivery of starter homes in the area. That could clearly impact on the viability of higher education bodies' development proposals.

The government's current proposal is that the starter homes requirement will apply to sites of ten units or more, or to sites of 0.5 hectares or larger. Those thresholds would catch all significant student accommodation proposals, if those were included within the starter homes legislation.  The consultation is looking into whether it is viable for a blanket national 20% starter homes requirement to apply.

The proposal also includes a potential 'general viability' exemption where a developer can show that the starter homes requirement would render the site unviable. The consultation is considering whether this exemption should be taken forward and if so how prescriptive it should be.

Under current proposals, the requirements would apply to all planning applications submitted after the anticipated regulations come into force, so any current applications would not be affected. Imposition of a starter homes requirement could, though, have a significant impact on future development, so higher education bodies are strongly advised to make their own submissions to the government's consultation, which closes on 18 May.

Nick McDonald is a development expert with Pinsent Masons, the law firm behind Out-Law.com.