Council to increase discounts on new affordable ‘First Homes’ for first-time buyers

A housing development being constructed in Gedling.
By Andrew Topping, Local Democracy Reporter

Gedling Borough Council plans to make it easier for people in the borough to afford their first home by lowering the threshold and increasing discounts on the Government’s First Homes scheme.

First Homes is a Whitehall-backed scheme to offer affordable housing to first-time buyers at a reduced rate.

Discounts of at least 30 per cent on market value are offered to prospective buyers permitting their joint household income is no more than £80,000.

Homes must also be sold for no more than £250,000 once the discount has been applied.

National planning policies require that First Homes should account for at least 25 per cent of all affordable homes built on new developments – or 10 per cent of the total housing, depending on whichever is greater.

But now Gedling Borough Council has approved plans to take this further by writing new policies to offer greater discounts for first-time buyers.

Local authorities are able to increase the discount above the 30 per cent minimum and vary the price and income caps to suit local needs.

The council plans to offer a discount greater than 30 per cent on First Homes to ensure the price cap for the property is no higher than £173,000 once the discount is applied.

However, this would only be offered to households with a joint income not exceeding £38,830, while new buyers must also meet eligibility criteria providing they have a “local connection” to the borough.

The policy was approved by members of the Labour-run authority’s cabinet on Thursday (October 6).

Presenting the plans, Mike Avery, head of development and place, told councillors: “We’ve commissioned new evidence about the First Homes policy in our local housing market area. 

“The study makes a number of recommendations. Firstly, there’s strong evidence to support an increase in the 30 per cent discount for First Homes.

“Secondly, there’s strong justification to support capping the price for the first sale at £173,000, and thirdly a household income cap should be £38,830 and also a local connection test is recommended.

“This reflects local house prices for affordable housing … and the local [income] situation.”

However, he added that the emphasis for the remainder of affordable housing on new developments will be given to affordable homes to rent.

This comes in response to an identified need for more affordable rent homes in Gedling.

Both moves were welcomed by cabinet members who said it will help people on lower incomes to be able to get onto the property ladder, afford deposits or have cheaper rent fees.

Councillor David Ellis (Lab), portfolio holder for community pride and engagement, said: “We know from planning meetings that the committee is concerned about the number of affordable homes in the borough.

“I am slightly sceptical about the First Homes scheme, the successor to the Government’s Starter Homes scheme, which was criticised for spending £174m and not delivering a single home.

“But I think this is a sensible implementation of the policy. It clearly doesn’t help social tenants who tend to have lower incomes and have great difficulty in getting a deposit.

“I would echo comments that the emphasis elsewhere in the area needs to be on affordable homes for rental and I support that.”

The policies will be written into the authority’s planning guidelines for when new developments are submitted.