Painting the Houses Blue
A promise of 200,000 homes for first time buyers.
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In the run up to the election the Conservative party doubled the number of first time buyer homes they’re promising to deliver through their ‘Starter Homes’ initiative. The scheme was introduced in March this year, aiming to see 100,000 new homes built, exclusively available to first time buyers under the age of 40. The homes will be available at a 20 per cent discount to the ‘market price’.
The plan is for house builders to build these homes either on commercial or industrial land not currently allocated for housing, adding a boost of supply into the housing market. Usually when building new homes developers are expected to provide a certain number of affordable homes, but to fund the 20 per cent discount no affordable housing will be required on these particular sites. Prices are limited to the average price paid by a typical first time buyer, which means £250,000 outside of London and £450,000 in the capital. Buyers using the scheme will not be able to sell at full market value, or even let out their homes for the first five years, although this may be difficult to enforce in practice.
The homes built as part of the Starter Homes scheme are meant to be in addition to what’s already in the pipeline, so local authorities can’t use the homes to contribute towards their existing five year land supply plan. They will likely be able to count them in their housing targets after the initial five year restriction is up and they form part of the normal market though.
Tying help for first time buyers directly to new build supply is a welcome departure from schemes that simply boost demand. Changing planning guidance to encourage sites specifically for the scheme should mean we do see more land come into the new homes market, at least in the short term. But the scheme’s success in getting homes built hinges on the appetite with which developers and house builders pick it up. Given many house builders are reporting that they’re currently delivering near capacity, struggling against a skills gap and rising build costs, the outlook isn’t clear, it certainly makes doubling the number of homes promised seem ambitious.
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