House building is an important part of any government’s long term economic plan, and one of the key challenges is to help buyers buy, lenders lend, and builders build.
This week David Cameron has announced a new scheme to help first-time buyers step onto the property ladder and at the same time boost new house building.
The Starter Home initiative will offer 100,000 first-time buyers under the age of 40 the opportunity to purchase discounted, high-quality new properties. Aspiring home owners and “hardworking young people [who] want to plan for the future and enjoy the security of being able to own their own home” (David Cameron) will be able to register their interest in owning a Starter Home from January 2015.
At the core of the initiative is a reform to the planning system which unlocks brownfield sites not already identified for housing, to be exempt from Section 106 planning costs and Community Infrastructure Levy. In return, a minimum 20% discount below the current local market rate will be offered to young first-time buyers. House builders currently face an average cost of £15,000 per home in s106 affordable housing contributions and an estimated £6,000 in CIL.
To prevent Starter Homes being re-sold quickly and at a profit, the 100,000 new homeowners will be restricted from selling their Starter Home at market value for a fixed period to ensure savings are passed on to other first-time buyers; the government consultation currently suggests a period of between 5 and 15 years with a sliding scale of discount.
A new Design Advisory Panel will also be established to make sure the new Starter Homes are not only lower cost but also high quality and well-designed. The design panel, which will include representatives from the Royal Town Planning Institute and the Royal Institute of British Architects, will no doubt set the standard for housing design across the country.
The Starter Home Initiative could be another positive step in tackling a housing shortage and allowing people to realise their aspirations of home ownership. The government consultation continues and we can expect to see further details of the scheme by March 2015…watch this space.
Gail Bedford is a solicitor in the Real Estate team. For more information, please contact Gail on 01392 687 683 or email gail.bedford@michelmores.com
