12 Apr 2021

Guest post by our Planning Expert Colin Smith

Another game changer for your development strategy….

Councils must support unplanned sites to deliver homes for first-time buyers, says government on 6 April 2021 according to Ellie Kahn and Richard Garlick.

Councils will have to support the development of unplanned exception sites with no fixed size limits, and which can include market housing, in order to drive delivery of discounted First Homes for first-time buyers, the government confirmed last week.

The Ministry of Housing, Communities and Local Government (MHCLG) last week responded to feedback it had received on the First Homes proposals in its August consultation document Changes to the current planning system.

The response said that:

  • A quarter of the homes that each housing scheme, with certain exceptions, provide through section 106 development contributions will need to be First Homes
  • councils will be required to support development of exception sites, not allocated in the local plan, that provide for First Home-led development, sometimes complemented by “a small proportion” of market or other affordable housing
  • these First Home exception sites will be exempt from the restriction that limits existing entry-level exception sites to one hectare in size, or five per cent of the size of the existing settlement
  • the proportion of section 106 units provided by a scheme that are social homes should be in line with the local plan requirement, unless the local plan requires more than 75 per cent of section 106 units to be socially rented

No date has yet been set for implementation of the measures, with the government saying that it will issue a written ministerial statement in “due course” and develop guidance on the requirements in the interim

The government has set a minimum discount of 30 per cent for First Homes, with local planning authorities or neighbourhood planning groups able to demand higher minimum discounts of 40 or 50 per cent, provided they are able to demonstrate a local need. The government has said that these homes will retain their discount in perpetuity – having to be sold on to other eligible purchasers at a discounted price.

Ministers have said that First Homes would “replace as a priority other affordable home-ownership products” and be delivered in two ways: through section 106 developer contributions, with 25 per cent of the units on a scheme generated through s106 to be First Homes; and through amending the policy on so-called “entry-level exception sites”, brought forward outside the local plan to deliver affordable housing for first-time buyers or renters.

Commentators had previously raised concerns that the mandated 25 per cent First Homes proportion of section 106 units would “inevitably displace” other affordable tenures, as well as potentially negatively impact on development viability if they replace social housing units that developers would normally sell upfront.

But in its response last week, the government said that the proportion of section 106 homes provided by a scheme that are socially rented should be in line with the local plan requirement, unless the local plan allocated more than 75 per cent of section 106 units to social rent. In the latter case, the response said, “the 25 per cent First Homes requirement will remain”.

“Where other affordable housing units can be secured,” it added, “these tenure types should be secured in the relative proportions set out in the development plan”.

First Homes exception sites

Under existing policy, local authorities are required to support the development of “entry-level exception sites”, suitable for first time buyers or renters. The government response makes clear that it intends to replace these sites with “First Homes exceptions sites”, providing for “First Homes-led development” on land not currently allocated for housing, possibly complemented by “a small proportion of market homes and/or other forms of affordable housing to support viability”.

Respondents had raised concerns about the government’s failure to specify what a “small proportion” meant. But the government response says that “local authorities are best placed to determine the appropriate proportion based on local evidence and circumstances, taking into account national policy”.

The National Planning Policy Framework says that entry-level exception sites “should not be larger than one hectare in size or exceed five per cent of the size of the existing settlement”. The government response says that this restriction will be dropped for First Homes exception sites, although they will need to be “proportionate in size to existing settlements”. It adds: “The government strongly believes that local authorities are best placed to determine what is proportionate”.

First Homes exception sites will not apply in designated rural areas, the response says, which include national parks, Areas of Outstanding Natural Beauty and areas designated as ‘rural’ under Section 157 of the Housing Act 1985.

Exemptions

The response also said that exemption from the need to provide First Homes would apply to the same types of development that are currently exempt from the requirements to deliver affordable home ownership units.

Among others, these include developments that provide solely for Build to Rent homes or affordable housing, developments that provide specialist accommodation for a group with specific needs such as the elderly, and developments by people who wish to build their own homes.

Transitional arrangements

The response also sets out transitional arrangements that will apply when the new measures are introduced. The government said that local or neighbourhood plans submitted for examination before the implementation of the policy, or that have reached the publication stage and are submitted for examination within six months of the implementation of the policy, will not need to reflect the First Homes requirements.

Sites with full or outline planning permissions already in place or determined, or with a right to appeal against non-determination within six months of implementation of the policy, would also be exempt.

Implementation

The government said that it intends to implement the proposals by making changes to national planning policy through a written ministerial statement “in due course”. The response adds that “in the interim” the government will “work towards producing” planning practice guidance on how to implement these new requirements.

On the subject of the dropping of the site size criteria for First Homes exception sites, the response promises that the government will work “to produce guidance to ensure that the exception sites policy is not abused and that the removal of the size threshold does not adversely affect local environments”.

Other proposals

The government response also revealed that the MHCLG has reversed its proposal to temporarily increase the sizes of sites under which developers would not be required to provide affordable housing and “will assess” whether plans to expand the permission in principle regime will go ahead.

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