First Homes
Introduction
Given everything else that has been going on in the world since the Government’s announcement in May 2021, First Homes have largely flown under the radar. Yet here we are almost a year on and, with all the key dates having been and gone, First Homes are very much upon us and need to be in the forefront of our minds.
By way of a reminder, First Homes is the new government initiative that provides for a minimum of 25% of all affordable housing to be delivered as First Homes, introduced into the planning system through the Planning Practice Guidance (PPG).
What is a First Home?
In a nutshell, First Homes:
- are newly built properties;
- that are to be sold to first-time buyers of any age whose combined income in the previous tax year must not have exceeded GBP80,000 (GBP90,000 in Greater London) or any lower local cap and who are using a mortgage for at least 50% of the purchase price;
- must be offered at a minimum discount of 30% against market value in perpetuity; and
- must not exceed the price cap of GBP250,000 (GBP420,000 in Greater London) or any lower local cap.
The discount on a First Home is secured by a planning obligation, which must ensure that the initial percentage discount is applied to all future sales. Model provisions are set out in the PPG.
Local planning authorities can set local geographic or key worker eligibility criteria, although if no qualifying purchaser can be found within three months these should fall away. Local criteria do not apply to members of the armed forces, some veterans and, in some circumstance, their spouses/civil partners are exempt from any local criteria.
So, what were the key dates that have gone under the radar?
The Written Ministerial Statement (WMS) of 24 May 2021 set out the following series of key dates:
28 June 2021 - plans submitted for examination before or having reached publication stage by 28 June 2021, and subsequently submitted for examination by 28 December 2021 do not have to reflect the First Homes policy requirement.
28 December 2021 – sites with full or outline planning permissions already in place or determined before 28 December 2021 were not subject to the First Homes requirement.
28 March 2022 – the First Homes requirement did not apply to applications for full or outline planning permission where there was significant pre-application engagement, and which were determined before 28 March 2022.
Ok, do we have to deliver First Homes on our site?
Good question–and we did cover this in some depth during our Outline webcast in March 2022—but ultimately the answer is… well, it’s all a question of weighing a new material consideration in the planning balance (at least until it becomes development plan policy).
The Secretary of State has previous form for making changes to planning policy through use of a WMS. A similar situation led to the West Berkshire1 case when the introduction of a policy exempting small sites from affordable housing were communicated by WMS and introduced into the PPG in the same way as they have been with First Homes.
In that case, the Court of Appeal upheld the WMS and was a material planning consideration to be considered in the planning balance when determining planning applications. Of course, it was for the decision maker to decide how much weight should be attached to the WMS when making a determination.
Section 38(6) of the Planning and Compulsory Purchase Act 2004 requires decisions planning applications to be determined in accordance with the development plan unless material considerations indicate otherwise.
So, there is no blanket obligation to deliver First Homes. The guidance will need to be considered and weighed in the planning balance on each occasion.
But how much weight? Isn’t the PPG only guidance?
The Court of Appeal did not distinguish between national planning policy and guidance in West Berkshire but the High Court did in the more recent Solo2 case:
“… As is well known the NPPG is not consulted upon, unlike the NPPF and Development Plan policies. It is subject to no external scrutiny, again unlike the NPPF, let alone a Development Plan. It can, and sometimes does, change without any forewarning. The NPPG is not drafted for or by lawyers, and there is no public system for checking for inconsistencies or tensions between paragraphs. It is intended, as its name suggests, to be guidance not policy and it must therefore be considered by the Courts in that light…”
The Solo case was followed in White Waltham Airfield3, which held the PPG was merely guidance, intended to support the policies in the NPPF.
Each local planning authority will have its own views on the desirability or otherwise of First Homes. As long as they take the policy into account in determining planning applications, and their decision is not so unreasonable that no reasonable planning authority could have reached the same conclusion, they can place such weight on it as they think appropriate on each occasion.
If an applicant for planning permission disagrees with the weight that a local planning authority is placing on First Homes then they can appeal. On appeal it will be for the Inspector (or Secretary of State) to decide what weight to apply. While it will be a matter of judgment on each appeal, it is not unusual for an Inspector or the Secretary of State to place more weight on national policy and guidance than a local planning authority.
What is clear is that the determination of planning applications still comes down to s.38(6) – for now, there is just another material consideration to consider in the determination of planning applications. That is, of course, until First Homes are included within the development plan.
Are we going to see a First Homes requirement in local development plans moving forwards?
In all likelihood, yes. The PPG provides that development plans (including local and neighbourhood plans) are now expected to take account of the new First Homes requirement.
Of course, for the reasons we have identified with the West Berkshire and Solo cases above, there is still scope for local authorities to resist the inclusion of First Homes policies in new local plans provided they can justify their position during the local plan examination. That is likely to be the exception rather than the rule however, and we should expect to start seeing First Homes policies coming through in new local plans.
Once First Homes are included in plans, the position shifts in the context of s.38(6) – the starting point being that determinations are be made in accordance with the plan (ie including First Homes) unless material considerations indicate otherwise.
Of course, if there are material considerations that justify a departure from the policy requirement to provide First Homes then it will still be in the hands of the decision maker to assess the weight to be given to those material considerations.
What about section 106 agreements? Will they now just follow the model drafting in the PPG for First Homes?
This is another topic we covered in our Outline webcast. In an ideal world, the model drafting will be followed – such an approach would certainly cut out a lot of the time and cost wastage that can be experienced with s106 agreement negotiations. We suspect, however, that it will not be that simple. As we have set out above, because the model drafting is introduced through the PPG there is scope for local authorities to deviate from it in favour of other criteria that is perhaps more favourable to them. Therefore, unless applicants are prepared to pursue an appeal over a s106 agreement, the reality is that the model provisions might not be worth the paper they are written on.
There is the further complication that s106 agreements are often delivering more than one type of affordable housing and so the First Homes drafting will need to be subsumed into the wider affordable housing provisions, at which point it is only natural that there is a deviation from the PPG drafting.
Accordingly, we expect to see s106 agreements negotiated in much the same way that they currently are.
1 R. (on the application of West Berkshire DC) v Secretary of State for Communities and Local Government [2016] EWCA Civ 441.
2 Solo Retail Ltd v Torridge DC [2019] EWHC 489 (Admin)
3 R. (on the application of White Waltham Airfield Ltd) v Windsor and Maidenhead RLBC [2021] EWHC 3408 (Admin)
