03 June 2021
The government has confirmed operational details for the new model of shared ownership and First Homes programme.
The changes to planning policy are quite substantial and deal with various issues, including:
This webpage summarises key information on First Homes and the new model of shared ownership, with a focus on these changes to planning policy. The Written Ministerial Statement (WMS) should be read alongside our summary for each policy area.
First Homes are the government’s new preferred discount market tenure, and planning policy has been amended so that from 28 June 2021 they should be delivered at 25% of on-site developer contributions for affordable homes.
Government guidance confirms that a First Home must be discounted by a minimum of 30% against the market value, and, after the discount has been applied, the first sale of the home must be at a price no higher than £250,000 (£420,000 in Greater London). Local authorities can set a larger discount where high house prices demand it.
The discount remains with the property in perpetuity, and when it is first sold, a restriction is registered with HM Land Registry to ensure that it is passed on every time the property is sold.
Properties will only be able to be marketed as First Homes if the discount is applied and sold to those that meet a certain criteria for eligibility – first-time buyers, with a combined income not exceeding £80,000 (£90,000 in Greater London), and with a mortgage or home purchase plan to fund at least 50% of the purchase price. You can read the eligibility criteria in full on the government’s website.
The government recognise the role that shared ownership has to play in supporting people onto the housing ladder. After consultation they announced that a new model will extend the benefits of the product and will help potential homeowners overcome some of the financial barriers to getting on the ladder.
All new shared ownership properties delivered via developer contributions through Section 106 will be required to be based on the new model, as will homes delivered via the Affordable Homes Programme. This expectation will come into effect on 28 June 2021.
Policy details from the technical consultation on the new shared ownership model, which ran at the end of 2020, will also take effect from 28 June 2021. The new model allows people to buy an initial stake in a shared ownership property at 10% rather than the existing minimum of 25%, and these new shared owners will also benefit from a 15-year period when they can staircase at 1% increments per year with reduced fees.
Owners wishing to staircase in higher tranches will be able to do so with the minimum additional share purchase reduced to 5%. However, doing so will incur the same range of fees as currently, such as legal and mortgage costs and valuation fees as appropriate.
New shared ownership properties will now come with a 10-year repairs and maintenance period during which landlords will assist owners with the costs up to £500 a year, rolled over for one year. Only after 10 years will the shared owner take on full responsibility for any repairs and maintenance costs.
Shared ownership properties delivered under the new model will also have 990-year leases as standard.