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  • Overview

    Although the First Homes Scheme was initially introduced to the world last year, it wasn’t until the release of the model s106 agreement in December that we finally knew what the government were expecting from the scheme. We knew that the properties would be offered at a discount, that they would only be eligible for purchase by a certain type of buyer (the name is a bit of a giveaway), and that they would be classified as a type of ‘affordable housing’, the arrangements for which would inevitably be governed by a legal agreement between the parties.

    What we now know is that the government is suggesting a number of model provisions in the s106 that go somewhat outside what we would normally expect to see within a planning obligation. The usual discount level, cap on income criteria, mortgagee in possession release and pepper-potting are all included; but so are some elements relating to design, which is not normally addressed by the section 106 agreement.  These are usually matters which are set out in the proposal, discussed between the developer and the various planning officers, and occasionally put out to public consultation for opinions to be sought on design, style and ‘local vernacular’.

    Expertise is often sought on these elements and it is often a very subjective topic. There is also some debate as to whether the inclusion of design elements goes beyond what is permitted by the legislation. The CIL Regulations require that planning obligations (aka s106 provisions) must be (i) necessary (ii) directly related to the development; and (iii) fairly and reasonably related in scale and kind. By seeking to secure a certain level of design at outline stage of a larger development, this is surely going against the whole principle of outline permission.

    It is true that a s106 at outline stage does secure the finer details of developer contributions but they are drafted with flexibility that allows for contributions to be adjusted at reserved matters, taking account of unit numbers and house-types. Details such as design of individual houses and plots are (and can only be) reserved matters. Is the intention that there be a s106 for the outline permission and then a further, separate s106 for the reserved matters approval which secures the design? This isn’t particularly practical and would only serve to further burden the scant resources of local authorities.

    A further problem arises where discounted housing is required to be of the same design standard as the market housing, potentially creating issues of overall profitability for the site, risking inflated sales prices in a market which is already hard to reach for some.

    Whilst the scheme sounds good on paper, there is a bizarre logic in seeking to retain the properties as First Homes forever. Imagine the scene – a young eligible couple buy their First Home, a 1 bed flat, discounted by 30%; their family grows and needs more space; they aren’t eligible to buy a bigger “First Home” so they need to go to the open market; however, they can only sell their First Home if they do so with the discount of 30%. How can they climb even one rung of the property ladder if they are unable to use that discount elsewhere?  One option would be to move to a cheaper area, perhaps away from family or a support network. Is this what the government means by ‘levelling up’? Separating young families who can’t afford to live where they grew up?  I’m hoping that someone wiser than I will explain exactly how this is all going to work (successfully) in the long term.

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    Commercial Property & Development

    Our Commercial Property & Development team give commercially orientated advice and ensure a speedily concluded transaction whether you are purchasing, selling or leasing commercial property.

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Jargon Buster