Starter Homes - Q&A
The questions and answers below have been written by the Home Builders Federation following correspondence received via the website starter-home.co.uk.
Am I eligible to purchase a Starter Home?
Only first-time buyers aged between 23 and 40 are eligible to purchase a starter home. They will also need a mortgage and have a maximum household income of £80,000 (£90,000 in London).
Do I have to be registered on the starter-home.co.uk website in order to buy a Starter Home?
No, starter homes will be marketed in the usual ways when they become available. By registering an interest in the scheme through the starter-home.co.uk website you are ensuring that you receive updates on the initiative and will be alerted when homes become available in your area. You can also choose to receive information on other new homes built locally and different forms of support for first-time buyers, including the government-backed Help to Buy scheme.
When will Starter Homes be available to buy?
Homes that are designated as starter homes will be made available as they are planned for and built. This will be done in the same way as other forms of housing are developed. The exception site national planning policy through which starter homes can be developed is now in place for potential developments to come forward. The Government’s recent Housing White Paper: Fixing Our Broken Housing Market proposes a change to the National Planning Policy Framework to bring starter homes within the definition of affordable housing and confirms that it will allow more brownfield land to be released for developments with a higher proportion of starter homes. All local authorities will be under a duty to promote the supply of starter homes under the Housing and Planning Act 2016.
People who have signed up for more information through the starter-home.co.uk website will receive updates as the initiative develops and also receive information on starter homes being built in the area they selected on the website. The Government has a £1.2 billion starter homes land fund to promote the development of starter homes and we expect the first starter homes to start being built later in 2017.
How is a ‘Starter Home’ defined for this initiative?
Starter homes will be new homes or new conversions to be sold at a minimum discount of 20% below full market value. Each starter home will cost no more than £250,000 outside London (£450,000 in London) – with post-sale resale and letting restrictions for 15 years. Eligible first-time buyers will need a mortgage to buy a starter home and have a maximum household income of £80,000 (£90,000 in London).
The Government’s Housing White Paper: Fixing Our Broken Housing Market proposes to change the National Planning Policy Framework to bring starter homes within the definition of affordable housing, and confirms that it will allow more brownfield land to be released for developments with a higher proportion of starter homes. All local authorities will be under a duty to promote the supply of starter homes under the Housing and Planning Act 2016.
Design is an important element of this policy. The Government published an initial set of design exemplars for starter homes in March 2015, with the endorsement of the Government’s Design Advisory Panel, to inspire well-designed starter homes which meet the needs of young first time buyers. We will continue to ensure that starter homes are well designed as part of our general approach to improving the quality of housing design.
Where will these homes be?
Future starter homes developments would be in England only. Developments will come forward in the usual way through identification by developers and local authorities of the necessary opportunities presented by suitable sites.
The Government’s Housing White Paper: Fixing Our Broken Housing Market proposes we will change the National Planning Policy Framework to bring starter homes within the definition of affordable housing and confirms that it will allow more brownfield land to be released for developments with a higher proportion of starter homes. All local authorities will be under a duty to promote the supply of starter homes under the Housing and Planning Act 2016.
In addition, the Government has committed £1.2 billion to a starter home Land Fund to ensure delivery of starter homes on brownfield sites that might not otherwise be developed. The first wave of 30 local authority partnerships has been announced (see https://www.gov.uk/government/news/green-light-for-construction-of-thousands-of-new-starter-homes ). These partnerships were selected on the basis of their potential for early delivery. The Government expects the first starter homes to start being built later in 2017.
How can I find a Starter Home?
By registering your details at www.starter-home.co.uk you can sign up for more information on the scheme and be contacted with details of starter homes in your area.
How much will Starter Homes cost?
Starter homes will be sold at a minimum 20% discount on the market value of the home.
New homes are part of the wider housing market. The value of them will thus be set by independent valuers within that local market. Purchasers will need to secure a mortgage – minus the deposit required by the mortgage lender – for the 80% sale value of the home.
The discounted price should be no more than £250,000 outside London and £450,000 in London.
How long do I have to live in the Starter Home?
There will be resale and letting restrictions on starter homes for a period of fifteen years after the initial sale.
How is the 20% discount funded?
House builders usually make significant payments to local authorities as part of the ‘planning obligations’ that are required to obtain planning permission on new developments. This is typically used to provide affordable housing and also to fund local infrastructure such as roads and public transport, education and health facilities and open spaces.
In order to help developers deliver the minimum 20% reduction in price, the Government will bring forward regulations to ensure that all starter homes are exempt from the Community Infrastructure Levy similar to other types of affordable housing.
I’m in the process of buying a home with a Help to Buy mortgage. Should I postpone my purchase to take advantage of Starter Home?
That’s a decision for individuals to make based on their own circumstances. The location, timing and how many starter homes that are built will be determined by the availability of suitable and eligible land that can be developed by house builders for sale at a minimum 20% discount taking into account the reduced planning obligations.
I’m a first-time buyer and have found a new build home to buy. Can I get a 20% discount?
Homes that were granted planning permission before March 2015 will not have been officially designated as starter homes because the necessary ‘exception site policy’ came into effect in March 2015.
We expect the first starter homes to start being built later in 2017, but the majority of new build homes can be bought using Help to Buy. You can search for new homes in your area at the www.new-homes.co.uk website. More information on the 20% equity loans (up to 40% in London) which are available through the Help to Buy scheme can be found here.
Why don’t over-40s qualify for the initiative? What can I do if I am older than 40?
The initiative has been introduced by Government specifically to assist young first time buyers to buy a home. They have set the age restriction of 23-40 years of age for Starter Homes to advance equality of opportunity, and to help prospective homeowners who are in the age group which has been disproportionately affected by rising house prices over the last 20 years.
The Starter Home scheme is a government initiative. While the HBF has agreed to run a website through which prospective buyers can register an interest so that as and when homes do become available they receive information, we have had no direct role in designing the scheme.
This age-restricted approach has been scrutinised by Parliament, who considered it justified, and the age cap is now enshrined in primary legislation through the Housing and Planning Act 2016.
Help to Buy Equity Loans are available when purchasing any new build home up to the value of £600,000 from a participating house builder. It’s a government-backed scheme that provides buyers with an equity loan of up to 20% of the value of the home (up to 40% in London). The loan is interest-free for five years and there are no age restrictions and previous and current homeowners are also eligible. You can search for new homes available in your area at www.new-homes.co.uk .
Is there an end date for the initiative?
The Starter Home initiative involves changes to national planning policy, and legislation so while there is no formal end date for the initiative it could be reversed or altered by this government or a future one.
What is the Home Builders Federation’s role in the Starter Homes initative?
Starter homes is a government initiative. While the HBF has agreed to run a website through which prospective buyers can register an interest so that as and when homes do become available they receive information the HBF has had no direct role in designing the initiative.