Starter Homes and the Right to Buy: The Housing and Planning Bill 2015

28 October, 2015
by: Cripps Pemberton Greenish

The recently published Housing and Planning Bill introduces several measures which are likely to have a dramatic impact on how affordable housing is provided.


Two of the most significant are the Government’s starter homes proposals and the introduction of a voluntary right to buy. How will these measures impact development?


Many developers seem initially, at least, keen to take advantage of the proposal to redefine affordable housing to include starter homes. Developers will hope to realise a larger return on their sites by building, as the affordable element, only starter homes for sale or a mixture of starter homes and shared ownership homes. Set against that, they will not be able to develop knowing that all the “affordable” homes will be purchased en bloc by a housing association.


For some time developers have sought to negotiate variations to s.106 agreements to allow them to develop a scheme without any social rented homes. It may be that by redefining affordable housing to include starter homes, there will be even less social rented housing constructed which is the only option for many people. It remains to be seen if local authorities will be able to insist on an element of affordable rented accommodation and exactly how starter homes will be introduced. Clarity is urgently required.


Regarding the new (probably voluntary) right to buy, there is concern that any such voluntarily purchased units may not be excluded from s.106 obligations. A standard clause in most s.106 agreements is that occupiers of affordable homes who have purchased their dwelling under a statutory right to buy or acquire and those who have staircased out to 100% ownership under a shared equity scheme, are excluded from s.106 obligations, including any requirement to retain such a unit for use as affordable housing only.


A s.106 exclusion clause worded in this way seems not to cover a purchaser of a home who has exercised a voluntary right to buy. The Bill may need amending to deal with this. Otherwise, voluntary purchasers will need comfort from councils that they will not be pursued for contributions under a s.106 agreement or for breaches of other terms in it. It is not clear that councils will be able to give such comfort. In future, s106 agreements may need to make clear that purchasers under a voluntary right to buy will be released from relevant s.106 obligations.