Government offers 20% discount on first home
15 December 2014
James Pargeter, head of residential projects at Deloitte Real Estate, comments on the Prime Minister’s announcement on Starter Homes:
“The Prime Minister’s announcement today on Starter Homes marks the launch of an eight-week consultation, intended to give further assistance to first-time buyers under a range of conditions. It aims to add to the housing supply by allowing developers to build well-designed starter homes on brownfield land which is currently unidentified for housing. Homes will be sold at a minimum 20% discount to market value in return for waivers on s106* affordable housing obligations and other tariffs such as Community Infrastructure Levy (CIL).
“Whilst the drive for additional housing supply is welcome, the consultation should be useful in identifying the potential demand for this idea from developers, landowners, lenders and potential purchasers. Challenges will include the identification of appropriate sites and the valuation methodology for establishing market value. For example, the 80% value for initial and onward future sales of these homes. The stated intention of ensuring high quality design is worthy, but there is currently no indication of the benchmarks against which this will be judged in practice, and how developers might respond to such a challenge.
“Finally, it should be recognised that this initiative solely targets the homeownership market. It should therefore play its part within a wide range of measures designed to address the housing supply shortage across all tenure types.”
Note to editors
*s106 agreement is the legal agreement that sits alongside planning permissions, and sets out obligations that developers and councils have to fulfil for developments to go ahead e.g. financial contributions to local improvements, jobs for local people, etc.
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