Update on the First Homes consultation

We are continuing our work to build a response to the government’s consultation on First Homes. Please note that the deadline has been extended to 1 May.

The main points outlined in our First Homes briefing have so far found widespread support among our members and stakeholders.

In our conversations so far, we’ve heard that the currently proposed funding mechanism – that the First Homes discount is funded by the value that would otherwise be captured by Section 106 agreements – would cause widespread difficulty.

We’ve heard that, in many cases, each First Home would not just displace one of existing affordable tenures, but may also have a ‘negative multiplier’ effect due to:

• The deeper discount required for First Homes compared with most shared ownership homes, meaning a disproportionate reduction in the viability of non-First Homes.
• The loss of cross subsidy from shared ownership homes for other affordable tenures and housing association investments.
• The potential impact on housing associations’ own development – with less demand for shared ownership homes, coupled with a likely desire to focus on protecting the most affordable rented tenures, meaning greater levels of internal or external subsidy required for each new home.

The new Affordable Homes Programme might be expected to offset any affordable housing lost to First Homes – but it unclear that it will be sufficient, especially in high-value areas where Section 106 is particularly important. First Homes would also be least affordable in such places, with fewer lower and median income households able to meet deposit or mortgage requirements.

We continue to work with our members on a sector-wide response to the First Homes proposals. We are seeking members’ insights on the impacts they foresee in their own areas. For more information on our emerging response, or to share your insights, please contact Duncan Neish.