A new scheme to help first-time buyers could reduce the supply of other affordable and social homes for rent.
Earlier this year, the Government proposed its First Homes policy, which is designed to deliver homes at a discounted rate for local first-time buyers in an effort to get them on the housing ladder.
The Government has pledged to roll this out as soon as possible and, in the meantime, has sought views from the sector, including local authorities.
In our submission to the Ministry of Housing, Communities and Local Government’s (MHCLG’s) consultation, the LGA said that councils want to play a leading role in developing a locally responsive mix of tenures, which includes homes for sale, as well as social and other affordable homes for rent.
Councils are ambitious to increase housing supply that is sustainable, meets demand, and is matched by the required services and infrastructure.
“First Homes could make a valuable contribution to the mix of housing options”
Local government has an important role to play in achieving this ambition, both as leaders of place through the planning system and as builders of homes in their own right.
The LGA broadly supports the principle of First Homes as a discounted home-ownership product, which could assist first-time buyers to purchase a home they can afford in their own communities.
The proposal to place an in-perpetuity discount on First Homes, so that first-time buyers who move up the property ladder make way for others to benefit from the scheme, is also welcome. This is something the LGA called for during the Government’s Starter Homes consultation.
The LGA’s response also makes clear that, while First Homes could make a valuable contribution to the mix of housing options, local planning authorities need to maintain the levers to deliver them alongside other housing tenures in a way that takes into account local housing needs.
To illustrate why this is important, analysis undertaken on behalf of the LGA found that there are just four local authorities where the median-income household could afford to buy the average new-build home at a 30 per cent discount (the discount applied to First Homes) with a 5 per cent deposit.
The LGA is also concerned about the potential impact on the delivery of social and affordable rented homes if proposals for up to 80 per cent of Section 106 units to be First Homes are taken forward.
There is a risk that a nationally set First Homes requirement may displace other discounted homes, particularly affordable and social homes for rent, of which there is already an under-supply in some areas.
The LGA is also calling for local authorities to be able to set their own eligibility criteria for First Homes, determined with regard to local incomes and house prices.
Above all, council house building and reform to Right to Buy are critical to boosting the supply of new homes to meet the needs of local communities. Allowing councils to retain 100 per cent of sales receipts and set discounts locally will ensure that they are able to reinvest in new supply.