Starter Homes: giving with one hand…

Published: by Pete Jefferys

Update 04/02/2015:

Inside Housing are reporting that Starter Homes will count as “affordable housing” and can therefore directly replace social housing or shared ownership homes on planned developments. This is extremely concerning if true.

New ‘Starter Homes’ will cost up to £450,000 in London and £250,000 outside, which is 11.5 times the average full-time London salary and 9 times the average full-time English salary. While there is clearly a need for more homes at all prices – and for priced out first time buyers – these should not be cannibalising genuinely affordable housing.

This change will be a major blow to genuine affordable house building, as a large proportion of affordable homes built (62% in 2010/11) are secured through planning agreements with private developers. At a time when new genuinely affordable housing is desperately needed, Starter Homes should be additional to affordable housing supply, not instead of it.


Under successive governments, we’ve had endless house-building initiatives, endless repetitions that “we need to build more homes”, but we haven’t yet seen a credible, long term plan from a government to actually build the homes we need. Politicians of all parties need to put together a bold plan to build 250,000 homes per year in England, or families will continue to be priced out.

Today’s initiative is from the Conservatives, who are pledging to double their Starter Homes scheme for first time buyers, from 100,000 new homes in the next parliament to 200,000. They’ve also announced that the homes will be sold at prices capped at £250,000 outside of London and £450,000 in the capital.

Is this new scheme going to break the decades-long deadlock on house building?

Our main concern from today’s announcement is whether these Starter Homes will be built in addition to existing plans, or whether they will actually cannibalise planned affordable housing. The BBC are reporting that developers will be able to swap affordable housing for Starter Homes on their existing and future plans. Not only would this mean that many Starter Homes won’t be additional (they’ll just be instead of homes that would have been built anyway), but it also swaps a low rent or shared ownership home for a home costing up to £450,000 in London. That’s more than 10 times the average salary in London and even outside, it’s more than average house prices in almost every region.

This would be a massive shift. Instead of councils being able to negotiate genuinely affordable, low rent homes from developers – they would be able to build homes for sale, albeit ones with a discount.

In the most recent year with data (2010/11), the majority (62%) of affordable housing built was from these sorts of planning agreements with developers. If this new proposal simply swaps these low rent and shared ownership homes for much more expensive Starter Homes then people struggling with their housing costs will be worse off, not better.

Fundamentally, you can’t solve a housing affordability crisis by attacking affordable housing.

We need clarification from the government that Starter Homes cannot be swapped for low rent or shared ownership homes on mixed sites. They should be additional to affordable housing delivery, not instead of it.

There are other major concerns with today’s proposal. As well as stripping out payments for genuinely affordable housing this strips away funding for local infrastructure, like road improvements, healthcare or community facilities.

We’ve found consistently that the biggest barrier with the public accepting new homes near them is if they think that the homes won’t come with decent local infrastructure. People are rightly worried that the schemes will add pressure to their services rather than relieve them.

As well as it being wrong to house people in places without decent local infrastructure, there’s a risk that these Starter Homes will become associated with bad development in the public’s mind – leading to even more opposition in planning committees.

Rather than endless gimmicks, we need a comprehensive approach of reform and investment.

Parties need to put their money where their mouth is and invest in affordable housing and infrastructure, but also make long term reforms to get the private industry, councils and housing associations turning out many more high quality and affordable homes than they can now. Otherwise, the housing shortage will be on the political agenda for years – or even decades – to come.