We need a clear roadmap to end the cycle of failed housing policies
5 years later, not one starter home has been built. The policy has been a complete failure, writes Olivia Blake MP. | PA Images
The total failure of the Starter Homes scheme and weaknesses in the plans for 'First Homes' shows we need far better clarity and transparency in planning to deliver much needed affordable housing.
Overcrowding, unaffordable rents, young people living at home, and a disturbing rise in homelessness are all products of Britain’s – now well-documented – housing crisis.
To bridge the housing gap the government has announced a raft of building targets. In 2015, they promised a million new homes by 2020, then half a million more by 2022. By the middle of the decade, they plan to build 300,000 per year.
One of the many policies for meeting those targets involved building 200,000 starter homes – new builds which would be sold at a 20% discount to first time buyers under 40. In 2015, the Ministry for Housing Community and Local Government (MCHLG) budgeted £2.3bn for the first 60,000, with 85,000 prospective homeowners registering for the scheme.
5 years later, not one starter home has been built. The policy has been a complete failure.
In a recent Public Accounts Committee evidence session, we questioned MCHLG officials on what happened. Our report finds that of the £2.3bn set aside for starter homes, £173m was spent on preparing land for development before the policy was shelved. The land was subsequently sold on to developers but – given that the initial spend was earmarked for affordable housing – the department certainly has questions to answer about why only 36% was used to build accommodation priced at below market rates.
85,000 people waited five years only to receive a letter from Housing England telling them their new home would never be built
To make matters worse, after signing up in 2015, the scheme participants were informed just this year that it had been dropped. That’s 85,000 people who waited five years only to receive a letter from Housing England telling them their new home would never be built.
The department told us that the row-back on starter homes was the result of a policy change after the transition from David Cameron to Theresa May’s administrations. Certainly, the carousel of politicians at the MCHLG hasn’t helped policy continuity – in five years, the department has seen 7 Housing Ministers. The de-prioritisation of starter homes meant the government never passed the secondary legislation needed to begin construction.
The government’s new policy, ‘First Homes’, will instead see local first-time buyers offered a 30% discount on their new home but, rather than a budget for the building work, costs will be covered by developer contributions negotiated between developers and local authorities.
It’s a poor way to fund a “boom” in affordable housing for first time buyers. Developer contributions are complex and there’s often a lack of transparency over how much they really are contributing. If s106 agreements are used to pay for ‘First Homes’, it could result in taking less from developers to fund local infrastructure and other forms of below market-rate housing need, such as rented accommodation.
More broadly, the MCHGL has resisted setting out how it will achieve its latest target of building 300,000 homes per year, citing the turbulence created by the covid-19 outbreak, and has no clear definition of affordable housing. This lack of clarity and transparency in planning for future development makes it hard to see how the government will meet its objectives, especially given the total failure of the starter homes scheme and the weaknesses in the plans for First Homes. If officials are reluctant to give timescales or even indicate the price of new houses, then the targets look increasingly undeliverable
But it’s imperative the government does deliver. Millions of people are calling out for affordable homes. To build them, we need a clear roadmap for meeting targets, a workable definition of ‘affordable’, and a plan to ensure that the funding arrangements for delivery can rise to the scale of need. Without that, 300,000 is just a number.
Olivia Blake is the Labour MP for Sheffield Hallam and member of the Public Accounts Committee.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.