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Lords intervenes on design of Starter Homes initiative

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  • 12/04/2016
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Lords intervenes on design of Starter Homes initiative
Members of the House of Lords have tabled an amendment to the government’s flagship Starter Homes Initiative in an attempt to ensure individuals on lower incomes do not miss out on the chance of home ownership.

The amendment proposed by Lord Best, former chief executive of the National Housing Federation, will introduce a sliding scale on the repayment of the 20% discount if homeowners sell the property within 20 years. This will see the repayment reduced by 1/20th for each year of occupation by the purchaser.

Under the government’s plans, the discount would take the form of a grant which the purchaser could keep when the property is sold after eight years.

A second amendment agreed by the House of Lords will allow councils to choose how many starter homes are built, rather than the government setting a target.

The scheme, which offers first-time buyers under the age of 40 a 20% discount off the price of a new-build home, is being funded by reclassifying affordable housing obligations so that developers are required to earmark a percentage of an overall site to build starter homes rather than affordable rental homes.

Critics of Starter Homes have said that by restricting the focus of housebuilding to first-time buyers, the intention to provide more homes could instead be reversed.

Lord Best explained that the amendment would ensure the 20% fund was returned “proportionately” when purchasers using the scheme sell up within 20 years.

“Since most first-time buyers move on after five to eight years, the amendment would recycle up to three-quarters of the initial support. The billions saved by this measure would make it possible for the starter homes initiative to be in good measure an addition to, not instead of, desperately needed new homes for less affluent households,” he said.

“Very few of us…want to see more homes for better-off potential buyers at the expense of significantly fewer homes for those on lower incomes who struggle to find rented housing that they can afford.”

First-time buyers using the scheme could see a discount of more than £60,000 off purchases outside of the capital, while those buying in London could get help to the tune of £112,000.

Lord Best also raised concerns that the purchase of a starter home combined with a Help to Buy loan could lead to inflationary consequences. He noted that homebuyers in London could cut the initial purchase price by 60% by using both schemes.

“I can hardly believe it is a serious proposition that a buyer of a property costing £500,000 in London would actually pay only £200,000, getting the other £300,000 from government schemes,” he added.

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