Housing Secretary Robert Jenrick is consulting on plans for ‘First Homes’: new homes for sale to first time buyers with £100,000 discounts, targeted at ‘key workers’ such as nurses, police officers and veterans of the armed forces.
On the face of it, this is just another scheme targeted at first time buyers. But what is especially concerning is that it is proposed that the homes be paid for not through any additional funding but through Section 106 planning contributions from developers – money that is currently used to build ‘affordable’ housing, with some of that for social rent.
As part of planning agreements for new developments, developers pay Section 106 contributions to cash-strapped local councils to fund supporting infrastructure and new affordable housing. With the terms of the government’s Affordable Homes Programme focused increasingly on home ownership schemes, Section 106 has been until now a remaining source of extra funding for those local authorities that are committed to funding new homes for social rent.
We fear this would become yet another case of first time buyer schemes coming at the expense of new homes for social rent.
And ‘First Homes’ could have especially unhelpful consequences in London, where the identified backlog of need for social rented homes has snowballed in recent years, at the same time as the need for intermediate housing has been cut by 90%. According to the Mayor’s 2017 Strategic Housing Market Assessment, unmet need for social rented housing is at 163,000 homes not built (up from 60,893 in the 2013 SHMA) while that for intermediate housing has fallen from 45,705 to 4,046.
Essentially, it could mean a waste of resources that are desperately needed for new social rented housing.
And we aren’t the only organisation to be saying this. Shelter have warned that it could put new social rented housing at risk and the Local Government Association have warned that it could come at the expense of “truly affordable homes for rent”.
Meanwhile Helen Evans, Chief Executive at Network Homes has stated that “This new product will only help people with very high incomes in areas like London, where the greatest need is for social rent”. Indeed, social rented housing, where it is available, is often the only affordable option for many of London’s ‘key workers’.
And not only is this a scheme that looks set to fail on its own terms, but it’s based on a policy which was scrapped less than three years ago. As Nathaniel Barker reported in Inside Housing, “The First Homes scheme appears to be modelled on former prime minister David Cameron’s Starter Homes policy – which was ditched in 2017 under Theresa May with £174m spent and not a single home built.”
CORRECTION 5th March 2020: In the original article we cited a figure for the percentage of social rented homes built under the Affordable Homes Programme. This figure did not include the statistics for London and has been removed.