The government has published a model section 106 agreement for its new First Homes policy, which came into full effect over the Christmas period. It has also updated its planning practice guidance (PPG) to include the requirements of the new model agreement.
First Homes is now the government’s preferred discounted market tenure and it is anticipated that this should account for at least 25% of all affordable housing units delivered by developers through planning obligations (section 106 agreement). The First Homes scheme is designed to provide houses for first-time buyers, by offering new builds with a discount of at least 30% compared to market prices.
Andy England, Associate Director at Chapman Lily Planning, comments that ‘the publication of the model agreement is a helpful step and provides some additional clarity as to the expectations of how First Homes should be delivered, and the tenure controlled. Clearly, the provision of additional affordable homes for first time buyers is a critical issue. The guidance contains some interesting details with, for example, local authorities having discretion to set higher discounts above the minimum 30% on properties on a site-by-site basis. We will therefore be monitoring the situation to see if any local authorities seek to pursue this and consult on raising the level of discounts required.’
The Government’s current guidance confirms that First Homes is a specific kind of discounted market sale housing and should be considered to meet the definition of ‘affordable housing’ for planning purposes. Specifically, First Homes are discounted market sale units which:
a) must be discounted by a minimum of 30% against the market value;
b) are sold to a person or persons meeting the First Homes eligibility criteria;
c) on their first sale, will have a restriction registered on the title at HM Land Registry to ensure this discount (as a percentage of current market value) and certain other restrictions are passed on at each subsequent title transfer; and,
d) after the discount has been applied, the first sale must be at a price no higher than £250,000 (or £420,000 in Greater London).
Please contact us if you are planning a residential development and would like more detailed advice on how the First Homes requirements should be addressed.