Source · Select Committees · Public Accounts Committee
Recommendation 9
9
The Department explained that the First Homes discount will be funded through contributions from developers.24...
Conclusion
The Department explained that the First Homes discount will be funded through contributions from developers.24 Local authorities will be expected to ensure 25% of affordable homes built by developers contribute to the First Homes initiative.25 However, we have previously criticised approaches which rely on developer contributions—the Community Infrastructure Levy and section 106 agreements—for their complexity and lack of transparency over how much developers actually contribute.26 In our 2019 report Planning and the broken housing market, we were concerned that this approach too often favoured developers at the expense of local communities. We found that local authorities can lack the skills needed to negotiate contributions from developers through section 106 agreements. While they can also use the Community Infrastructure Levy to get contributions, implementing this is complex, time consuming and yields small returns in areas of low value. Only 47% of local authorities had implemented the Community Infrastructure Levy by 2019. We recommended that the Department should monitor whether its reforms to the Community Infrastructure Levy and section 106 were having the impact that was needed and adjust or adapt accordingly.27 21 Qq 81, 85, 90 22 Qq 83–85, 90 23 Qq 84, 90 24 Qq 83, 86 25 Q 83 26 Committee of Public Accounts Report, Planning and the broken housing market, One Hundred and Third Report of Session 2017–19, HC 1744, 26 June 2019 27 PAC’s Report, para 4 Starter Homes 11 2 Building more homes to meet housing need Target for new homes
Government Response
Not Addressed
HM Government
Not Addressed
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.