As many commentators had predicted, a concerted lobbying campaign by many local authorities and members of parliament has led to the first signs of a softening of the government’s wider reform of the planning system. It seems that ministers are firmly in listening mode, as they are starting with a review of perhaps one of the most controversial aspects of the reforms – the revised housing targets for each individual planning authority.
The “housing algorithm issue” has tended to dominate the broader debate about the proposals, but it is only one of a wider series of concerns that ministers need to consider when assessing what further amendments they need to make.
Our greatest policy concern is the issue of First Homes and the potential effect that focusing on homes created by this policy would have on the delivery of other affordable housing. In high-value areas, such as inner London, even at discounts approaching 50%, they will remain out of reach for most of those for whom they are intended. Furthermore, prioritising them over other forms of affordable tenure will result in a loss of social rented and other genuinely affordable homes, which are required to meet London’s housing need.
Our response is not one of outright opposition to the policy, as it offers a viable way to expand homeownership opportunities in many parts of the country. However, the policy is unworkable in very high-value areas due to affordability, so we suggest a potential exemption from the policy in these areas.
That exemption should be based on an “affordability lock” – First Homes should be affordable to local median earners. This would effectively mean that they would not be the default affordable housing delivered unless, say, they were affordable to 80% of local household incomes and where it can therefore be shown that they meet local housing need.
If First Homes do not meet these criteria, the locality should be exempt from having to deliver them and should instead deliver other forms of tenure that are affordable to local median earners. This would cover the entirety of the inner London market, given the underlying high residential values.
In high-value areas such as inner London, shared ownership is already unaffordable and First Homes will have the same issue, while traditional social housing is in short supply and available only to those in acute housing need. In such locations, intermediate market rent should be the principal affordable housing tenure delivered to support median earners. These intermediate homes can provide a steppingstone into homeownership, low-cost or otherwise.
So, while it is clear that for the government the issues relating to their proposals are all about the numbers, we have to be equally clear that it is also about the type and tenure of the homes provided, not just how many and where.