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Starter Homes Initiative – £7billion to build on brownfield land

The government has announced a clear New Year’s resolution to unlock £7billion to expand its government’s affordable housing programme.

Housing providers can now apply for a share of the fund, which was allocated an additional £1.4billion at the Autumn Statement to deliver more than 40,000 new affordable houses starts across the country.

The majority of the new homes will be built on underused or unviable brownfield land, which the government will release to developers free from planning costs. Brownfield land tends to be vacant space that has previously been used for industrial or commercial purposes.

The extent to which they will be viewed as “affordable” has drawn criticism from commentators, including Shelter, with a ceiling of £250,000 outside London – but £450,000 in the capital.

That said, the commitment to make land available, free from restriction and therefore more attractive to developers, is clearly there.

Starter home exception sites are to be given special freedom from normal planning restrictions, in order to encourage the release of land for starter homes. Under the new planning policy, starter homes exception sites will not be required to make section 106 affordable housing or tariff-style contributions.

Section 106 agreements (sometimes known as “affordable housing levies”) are agreements made between a developer and the Local Planning Authority (LPA) designed to meet the concerns an LPA may have about meeting the cost of providing new infrastructure for an area or about the impact on the local area.

These agreements might require, for example, a developer to build a number of affordable homes for an area, or to make a financial payment, in order to secure planning permission for a development. In return for the exemption from section 106 contributions, developers would be obliged to offer starter homes on the site at a minimum 20% discount exclusively to younger first-time buyers.

The government also wants to expand the variety of tenures available, including Affordable Rent, Shared Ownership and Rent to Buy.

The Homes and Communities Agency received 79 expressions of interest from 120 local authorities across the country outside London, many involving joint submissions, in response to the Starter Homes: unlocking the land fund prospectus.

Some 71 sites across the country have already received investments, including land at: Plymouth, Bury, Basildon, Stockport, Bridgwater, Cinderford, Minehead, Bristol, Trafford, Isle of Wight, South Ribble and Swindon.

Providers will receive a share of £1.28billion funding through the Shared Ownership and Affordable Homes Programme 2016 to 2021, to support the building of 46,534 new affordable homes across 1,920 schemes.

The first 30 local authorities had been selected because they had the potential to build the homes quickly.

But the houses to be built this year will be made available exclusively to first-time buyers aged between 23 and 40, at a discount of at least 20 per cent below market value. The properties are expected to go on sale in 2018.

Developers and land agents working with participating local authorities will need to undertake detailed due diligence on the proposed brownfield sites. While the government will provide funding support to authorities for remediation, it is important to understand past use, the potential nature of any contamination and whether this will affect the degree of remediation and therefore viability of the site.

Our EnviroSmart range of contaminated land reports, site walkovers and geotechnical assessments provides an early overview to help developers engage effectively as part of their engagement on participating sites. For more information call us on 01743 298 100 or email info@geosmartinfo.co.uk.