Local authorities across the South East are among the first 30 councils chosen to take part in a partnership scheme aimed at delivering much-needed starter homes.
Chichester, Ebbsfleet, Fareham, Mid-Sussex, Rushmoor and Worthing are among the successful councils which will now be tasked with identifying likely building opportunities on Brownfield sites within their area.
Aimed exclusively at first-time buyers between the ages of 23-40, the new homes will be sold at least 20 per cent below market value with support from the Government’s £1.2 billion Starter Homes Land Fund.
Construction is due to begin on the first schemes later this year. Steve Pozerskis from Bruton Knowles’ Guildford office said while the intention was sound – but there could be pitfalls ahead.
“The cash on offer to these councils will enable brownfield sites that may not have previously been developed to be built out - adding to the supply of housing and reducing the pressure on the market, especially in the South East.
"Increasing supply - especially with a discount - can be no bad thing. However these units will be significantly more expensive here than in some of the council areas selected elsewhere in the country.”
He said one immediate sticking point could be over the levels of return developers can expect from these schemes.
“Currently developers can expect 17.5-20 per cent profit from an open market scheme, whilst they would expect somewhere around six per cent from the affordable element.
“However, the affordable element relies upon a housing association buying in bulk, meaning there is less risk for the developer and therefore they can take a lower return. These Starter Homes are to be sold on the open market but at a discounted rate thus there is a potential problem here.
“The properties must be less than 80 per cent of market value with a maximum value of £250,000 (outside of London). Given that a large proportion of the UK cannot buy these units because people are over 40 or already own a property - does this mean that Market Value is different to a standard home?”
The HCA received 79 expressions of interest from 120 local authorities across the country.