Government starter homes will not be affordable

Mebyon Kernow – the Party for Cornwall has today formally responded to a consultation on the Government’s Housing and Planning Bill, which relates to changes to the National Planning Policy Framework.

One of the key proposals is for starter homes, sold at a 20% discount, but worth up to £250,000. Printed below is an extract from our response, which includes text you may recognise from previous blogs.

It is the view of Mebyon Kernow that the proposal for starter homes (as presently defined by the Government) would be a disaster for Cornwall and communities across the United Kingdom.

We consider the shift away from affordable homes for rent to be inappropriate and we would argue that social housing – not the Government’s preferred model of “affordable rent” – should be the priority in order to create balanced communities.

We note that at the Conservative Party Conference, David Cameron said: “For years, politicians have been talking about building what they call ‘affordable homes’ – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own.”

His speech which summed up the proposed changes was factually inaccurate.

Here in Cornwall, we have been providing “discounted homes for sale” for many years. Found on numerous developments, both large and small, these properties were controlled via “Section 106” agreements, which restricted the value of the property, in perpetuity, as a percentage of OMV (open market value), ensuring that the affordable home benefits future generations.

For the record, Cornwall Council recently updated this element of its affordable housing policy. It set out, for example, that the percentage discount for a two-bed house should achieve a figure of £87,000 while for a three-bed house it should equate to £104,500.

This is appropriate for Cornish communities and the wages levels of those families who would wish to access such properties.

It is an approach that has worked well, but it has been undermined by central government and the banking sector. Most banks and building societies are now refusing to grant mortgages for such properties, making it very difficult for local developers to identify purchasers.

We would formally request that the Government reform the banking sector to deal with this issue, rather than proceeding with its proposed “starter homes” (sold at a 20% discount) up to a value of £250,000 which would frankly not be affordable and very much against the spirit of affordable housing.

The Government has also made it clear that these “starter homes” would not be “affordable” in perpetuity, which we fundamentally object to. The proposal that the discount would be a “one-off,” benefiting just a single family – and after five years the property could be sold at its open market value – would do even more damage to the provision of affordable homes, reducing the percentage of such properties within the wider housing market.