First Homes: what’s the big idea?Posted: June 9, 2021
Originally published as a column for insidehousing.co.uk
It is of course complete coincidence that the First Homes scheme was launched in the constituency that perhaps most symbolises the Conservative election victory in 2019.
It’s not just that Bolsover had been Labour since it was created in 1950, it’s also that it had been represented by Dennis Skinner since 1970, making it a reverse ‘Portillo moment’ for the Tories.
A more generous interpretation might be that the government had more sway over this particular site, which looks like it was developed by Keepmoat Homes in partnership with Homes England.
Either way, this is the launchpad for housing secretary Robert Jenrick’s big idea, homes for sale at a discount of at least 30 per cent market value to first-time buyers. Discounts of up to 50 per cent may be available in some localities.
This is Starter Homes 2.0 with one significant advantage over the original scheme: the discount will remain in perpetuity rather than disappearing into the pocket of the first buyer.
The disadvantages remain the same. The scheme will be delivered initially with grant and then via the planning system. Either way it will squeeze out other forms of affordable housing funded via Section 106, with 25 per cent of developer contributions reserved for First Homes. The government claims it will ringfence homes for social rent so the main impact could fall on share ownership and affordable rent.
Then there is uncertainty about the pricing and the potential implications for mortgageability. Who decides the original valuation and therefore the discounted price?
Even if that problem can be resolved, house prices in the East Midlands have risen 12.4 per cent in the last year in a housing market frenzy driven by cuts in stamp duty and interest rates and a race for space.
Add a new build premium of around 15 per cent and the 30 per cent discount could already have disappeared.
In the case of the Meadow View development in Shirebrook – First Homes are available at prices starting from £110,600 for a three-bed home.
The price looks attractive to key workers, provided they don’t mind a third bedroom measuring 6’9” by 6’0”, and well within the maximum discounted price for the scheme of £250,000.
But that will be much more of a problem in more expensive parts of the country, despite a higher cap of £420,000 for London.
The other piece of good news is that the government is only aiming to fund 1,500 First Homes through the Affordable Homes Programme by the end of 2021 followed by 10,000 a year through the planning system.
That should mean less potential for damage than the 200,000 Starter Homes promised in the 2015 Conservative manifesto – even if precisely none were ever delivered.
But it also makes the scheme look largely irrelevant to the profound problems with affordability and homelessness facing the country as a whole.
If the Conservatives want a more ambitious housing policy, Joe Shalam of the Centre for Social Justice has an idea for a Boris Build scheme that combines social housing and right to buy.
If they want to help key workers, why not offer them loans that could be written off for long service or maybe even give them more than a 1 per cent pay rise?
And if they want to help first-time buyers, why not address the plight of all those trapped with escalating bills for fire safety in new build flats?