Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The Department’s reliance on developer contributions to fund First Homes is a complex mechanism lacking...
Conclusion
The Department’s reliance on developer contributions to fund First Homes is a complex mechanism lacking transparency and risks less money being available to local authorities for housing and infrastructure. First Homes differ from Starter Homes as they will be sold at a higher discount, only to local first-time buyers, and with a discount that will be passed on to future buyers when First Homes are resold. First Homes will also be delivered through the existing planning system so are not dependent on new legislation. The discount will be funded through developer contributions. Local authorities will be expected to ensure 25% of affordable homes built by developers contribute to the First Homes initiative. We have previously criticised the system of developer contributions for its complexity, and lack of transparency over how much developers actually contribute. The Department does not have a timetable or target for delivering First Homes but is planning a pilot to build 1,500 First Homes ‘within the next couple of years’, which it wants to learn from before further planning of the new scheme. However, the Department could not say when First Homes would become more widely available and blamed its lack of clear timetable or targets on the uncertainty of the housing market. Recommendation: As part of the First Homes pilot, the Department should model the effect of funding First Homes from developer contributions on local authorities’ ability to fund local infrastructure and other housing needs, such as social housing, and what the opportunity cost is of using developer contributions in this way. It should also set out clearly how the secondary resale market will work. 6 Starter Homes
Government Response
Not Addressed
HM Government
Not Addressed
2. PAC conclusion: The Department’s reliance on developer contributions to fund First Homes is a complex mechanism lacking transparency and risks less money being available to local authorities for housing and infrastructure. 2: PAC recommendation: As part of the First Homes pilot, the Department should model the effect of funding First Homes from developer contributions on local authorities’ ability to fund local i nfrastructure and other housing needs, such as social housing, and what the opportunity cost i s of using developer contributions in this way. It should also set out clearly how the secon dary resale market will work. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 Under the new First Homes policy, developments will be expected to capture the same amount of value for affordable housing as they do now. The First Homes requirement will not be in addition to current value capture for affordable housing but will change the mix of affordable housing which is delivered. As such the government does not expect First Homes to have any effect on the level of funding available to local authorities to fund other priorities such as infrastructure. 2.3 The department published a detailed Equalities Impact Assessment for the First Homes programme as described in the response to the ‘Consultation on the design and delivery of First Homes’, which includes modelling on the effect of the policy on the number of homes expected to be delivered through developer contributions, broken down by tenure. The department notes that there has been a further consultation, which considers aspects of the policy that will affect the mix of affordable housing delivered through developer contributions and will update an impact assessment accordingly when these decisions are made. 2.4 The department has worked with HM Land Registry to develop a legal framework to ensure the discounts and restrictions are passed on to future purchasers and has already started testing this process with parts of the industry and will set this out clearly and publicly in due course. The department will continue to work with local authorities, conveyancers, estate agents, consumers and others to ensure the secondary market works smoothly and purchasers are fully aware of their requirements and restrictions.