Government to include First Homes pilot in £12bn Affordable Homes Programme

News30 Jun 2020Sarah Williams

The government’s £12bn Affordable Homes Programme (AHP) will now include a pilot of the First Homes scheme, it has been announced.

Boris Johnson, UK prime minister, delivers his “new deal” speech

Sharelines

The £12bn Affordable Homes Programme will now include a pilot of the First Homes schemes, government has announced #ukhousing #socialhousingfinance

The Ministry of Housing, Communities and Local Government (MHCLG) told Social Housing in March that the proposed scheme “will not be delivered through the AHP”.

First proposed in February, the new First Homes tenure is designed to make homes for ownership available to first-time buyers at a 30 per cent discount.

The new pilot, announced today, will see 1,500 units delivered at the discount “in perpetuity”, the government said.

Social Housing has asked MHCLG how much funding will be allocated to the pilot.

Sector commentators have previously expressed fears that the policy, on which government had been consulting until 1 May, will lead to fewer affordable homes delivered.

Last week, at a virtual event chaired by Social Housing, Tom Copley, deputy mayor for housing and residential development at the Greater London Authority (GLA), said that the policy “should be scrapped”.

Analysis by the GLA has suggested that in the capital, only two per cent of households would have the required income and savings to afford a First Home.

Analysis by Savills last month suggested that, in three-quarters of local authorities, First Homes could help between 10 and 20 per cent of households to access homeownership. But it said that discounts “far greater than one-third would be needed to make First Homes affordable to the median-income household in most locations”.

AHP: eight years or five?

MHCLG also confirmed to Social Housing today that the bulk of the £12bn funding in the AHP – which has not been increased or decreased in today’s announcements – will still cover the five-year period, despite a government press statement earlier today which said that the programme will cover eight years.

In its pre-pandemic March Budget, the government set out its £12.2bn “multi-year settlement” for the next AHP, covering the period 2021/22 to 2025/26.

MHCLG had told Social Housing that of that amount, £9.5bn was additional AHP funding, while £2bn was from previously announced long-term strategic partnerships announced in September 2018, and an additional £700m was being allocated as part of the current 2016 to 2022 AHP.

Today, as prime minister Boris Johnson promised in a speech to “build, build, build” to fuel the UK’s recovery from the pandemic, the government said the £12bn programme will see 180,000 new affordable homes delivered over eight years.

“A £12bn affordable homes programme that will support up to 180,000 new affordable homes for ownership and rent over the next [eight years], confirmed today,” the statement accompanying the speech said.

MHCLG has clarified to Social Housing that the eight-year period refers only to the £2bn strategic partnerships funding, first announced by former prime minister Theresa May in September 2018, which was intended to stretch through as far as 2028/29.

The additional £9.5bn programme announced in March will still cover the five years to 2025/26, it said.

Setting out what he referred to as his “new deal” for the country in the West Midlands today, the prime minster promised to bring forward the most “radical reforms of our planning system since the end of the Second World War”. The government would do this, he said, while insisting on “beautiful, low-carbon homes”.

Mr Johnson questioned why the UK was slower at delivering new build homes than its European peers.

He said: “Why are we so slow at building homes by comparison with other European countries?

“In 2018 we built 2.25 homes per 1,000 people; Germany managed 3.6, the Netherlands 3.8, France 6.8.

“I tell you why – because time is money, and the newt-counting delays in our system are a massive drag on the productivity and the prosperity of this country. And so we will build better and build greener but we will also build faster.”

Mr Johnson said that a new Project Speed, set up by him and chancellor Rishi Sunak, would “scythe through red tape and get things done”.

The changes, which are planned to come into effect by September, include:

More types of commercial premises having flexibility to be repurposed through reform of the Use Classes Order
A wider range of commercial buildings will be allowed to change to residential use without the need for a planning application
Builders no longer needing a “normal planning application” to demolish and rebuild vacant and redundant residential and commercial buildings if they are rebuilt as homes
Property owners will be able to build additional space above their properties via a fast-track approval process, subject to neighbour consultation

The government also said today that ahead of the Spending Review, a cross-government strategy will consider how public sector land can be managed and released for better use.

“This would include homebuilding, improving the environment, contributing to net zero goals and injecting growth opportunities into communities across the country,” it stated.

Mr Johnson said that a £5bn investment in infrastructure projects fuelling jobs and economic recovery would see new schools and hospitals built, as well as improvements to roads and “shovel-ready” local growth projects.

He said it would also support the British state to end its “chronic failure” on building enough homes, emphasising that homeownership would play a key role in its plans.

“We will build fantastic new homes on brownfield sites and other areas that with better transport and other infrastructure could, frankly, be suitable and right for development and we will address that intergenerational injustice and help young people get on the housing ladder in the way that their parents and grandparents could.”

Mr Johnson added that the chancellor would next week set out an immediate plan to “support the economy through the first phase of the recovery.”

He said this would include plans to “double down” on its agenda to “level up” the country.