If we ever get the Regulations for them...*
I could use this blog to carry on my rant from Part 2. I could have
- followed up my comments on the rhetoric with which these Regulations were launched to suggest a "novel idea." If we are to regulate ourselves having left the EU** let’s look at how infrastructure can be best provided. Developers are usually best placed to build; and that includes infrastructure; especially when they are already on site. What they are not best placed to do is stay on site maintaining that infrastructure. That’s a job for a local authority who should be given the means to economically adopt the infrastructure once provided; thus providing maintained public facilities. Let's see developers and Councils working together - which the governments rhetoric is a million miles away from promoting. or
- carried on about Monitoring Fees. Pointing out that what is really needed is fee's regulations given the most LPAs haven't listened to the Courts in the Oxfordshire case and have carried on charging ever-increasing fees which bare little resemblance to the trust cost of monitoring (regardless of a now legal obligation that the charge reflects the cost). The Oxfordshire case left it open for LPAs to charge a monitoring fee where it was justified by something particular to the case and reference to Regulation 122. I can hopefully claim some of the credit having requested it in our consultation response back in January that we do now have some way in to knowing what those fee’s may be – the cost of monitoring must now be reported in the Annual Infrastructure Funding Statement; so if the fee requested is not proportionate to that then it is not inline with the legal justification. Running alongside this is the ever increasing legal costs of local authority's on planning obligations having recently seen a Council seek to pass on an hourly rate charge identical to my own commercial hourly rate*!"
But I want to use this Part to look not at what the new Regulations seek to do, but by removing the proposed Starter Homes exemption (and promising it in the forthcoming Starter Homes Regulations); what we can see about the Starter Homes product as it begins to take shape in the minds of the policy writers.
Para's 80 - 81 in the Consultation document: -
For a home to be sold as a starter home it must be sold to a qualifying first-time buyer – as defined in the Act and the forthcoming regulations. The Government intends to commission a network of agents to ensure that potential buyers meet the necessary criteria. In the meantime, the Government will continue to work with the industry to ensure the system works as the starter homes scheme is developed. The Government intends to develop guidance to support local authorities in implementing starter homes and the application of the Levy. This will include model section 106 clauses and charge documents, which local authorities will be able to modify to suit their circumstances, as well as general Planning Practice Guidance.
Setting income caps in the legislation also does not, in itself, prevent local authorities from setting lower income caps through planning obligations (subject to the statutory tests) if this meets local need. In the case of starter homes, as will be made clear in the forthcoming regulations, they are only sold as a starter home the first time they are bought by a qualifying first time buyer. Subsequent sales will be made at full market value with no restrictions (although the seller will need to pay some money back, depending on how long they have lived in the property).
Now apologies if this is old news to you but having spent some time recently trying to negotiate with LPA's brave enough to consider providing Starter Homes before the detail comes out in the Regulations these paragraphs acted as an epiphany for me. Most of those brave LPA's are producing a product which is sold at an discount and then the resale is secured to be sold as a discount potentially in forever. And I've looked at these and struggled to really spot the difference between that and Discounted Market Sale products which have been popular for while now. However Starter Homes are not Discounted Market Sale homes; as such what they seem to be taking shape as is a product that looks like this: -
- A one time only developer commitment to sell at the statutory discount.
- 20% discount. Price after discount is less than £250k outside of London (£450k inside London). Sold to a qualifying first time buyer (age restriction at present but proposal to include military veterans regardless of age). Regulated not by the LPA's themselves but by a network of agents.
- Once the first purchaser is in, they own the house and there will be no further requirement to sell again at a discount. It is now an ordinary market house. (This in itself is a massive departure from the core market products available at the moment which are regarded as Affordable in most Local Plans).
- As and when the home-owner wishes to move on they do so via a standard market sale at market price.
- The “planning gain” is protected by a legal charge in favour of the Council?*** who if the sale took place within the first 5 years would be entitled to recoup some or all of the uplift depending on when the sale takes place.
It’s not perfect but this is a lot cleaner than the 20 year or unlimited s.106 restrictions and requirements to sell on at a discount currently being sought by those LPA’s brave enough to try to promote Starter Homes before the detail is known. The issue with those restrictions is finding another eligible first time buyer - i.e. those you can market to has substantially shrunk.
What remains unclear in this (whilst I am a lot clearer about how a Starter Home is sold on) is what happens if you live in a Starter Home initially but move out and turn it into a rental property. If you then sell it on and your move out date was in the first 5 years (even if the sale date was not) you will likely owe some money under the charge but at present there does not seem to be a mechanism for this to be "clawed back" until the point of sale. This is practical for those simply renting for a short period to enable a relocation but will the government close this loophole for this cynically moving to buy to let properties and will it be closed too far for those relocating in good faith.*&^
* Para 7 promises these later this year... Another Planning Lawyer Xmas present?
*!" You may argue so what but if you do you're missing the point. A Council is supposed to be recouping the cost of the provision of a service. A private practice law firm is supposed to be making a profit.
** This blog is by no means to be read as for or against Brexit. Better clues are on my twitter - @planninglawbrum as to my personal views on this subject.
*** we think. Unclear who the "payment back" is made to but the LPA seems the most likely recipient of social housing funds.
*&^ Let's not forget that the SDLT reclaim has been shortened from a practical 18 months to a very tight 9 months.
In the case of starter homes, they are only sold as a starter home the first time they are bought by a qualifying first time buyer. Subsequent sales will be made at full market value with no restrictions (although the seller will need to pay some money back, depending on how long they have lived in the property).