As the Housing and Planning Bill reached the first day of report stage in the House of Lords last week, the government lost votes on two significant amendments to the starter homes provisions.
An amendment to the definition of starter homes was passed, which would require the 20% discount received by first-time buyers to be paid back to the government on the first onward sale of the property on a tapered basis, with a reduction of 1/20th to the amount repayable for each year of occupation over a period of 20 years. It was argued that the 20% discount should not constitute a grant that first time buyers can pocket upon sale of their property for full market value (potentially leading to inflationary prices and unfairness for those not eligible for, or unable to afford, starter homes). The discount would instead be returned to the government so that it could continue to fund the provision of affordable housing.
The second amendment passed would give local authorities flexibility when setting the amount of starter homes required on development sites. As drafted, the Bill could force local authorities to require a set proportion of starter homes on development sites (DCLG had proposed a requirement of 20% on larger sites). The amendment would remove this specified requirement and instead provide that a local authority "may only grant planning permission for a residential development having had regard to the provision of starter homes based on its own assessment of local housing need and viability”.
The government agreed to the insertion of a lower-age limit in the eligibility criteria for starter homes, so that purchasers will need to be aged between 23 to 39 (inclusive) to qualify. It was also reported to the House that the government had accepted an amendment giving local authorities discretion to exclude rural exception sites from the need to provide starter homes.