THe Starter Home
You may remember last year when the Government announced a new Starter Homes Initiative in England. Well here is the low down for those interested.
The Starter Homes scheme aims to help first-time buyers (between 23 and 40 years) purchase a home with a minimum 20% discount off the market price. The initiative aims to provide up to 200,000 affordable new-build homes to first-time buyers in England by 2020. Properties will be built on brownfield land and sold at a 20% discount compared to the market price in the area. So in effect you will only need to raise a mortgage of 80% on the true sale value of the home – minus whatever deposit is required by the lender.
What is a starter home?
Starter homes will be new homes or new conversions to be sold at a minimum discount of 20% below full market value. Each starter home will cost no more than £250,000 outside London (£450,000 in London) – with post-sale resale and letting restrictions for 15 years. Eligible first-time buyers will need a mortgage to buy a starter home (no cash purchases) and have a maximum household income of £80,000 (£90,000 in London).
Design is an important element of this policy. The Government published an initial set of design templates for starter homes in March 2015, after consulting with Government’s Design Advisory Panel. Starter homes are to be well designed as part of a general approach to improving the quality of housing design. The designs will cover a variety of homes, from flats to three-bedroom detached family homes.
All local authorities will be under a duty to promote the supply of starter homes under the Housing and Planning Act 2016.
Who is eligible?
To qualify to register for the Starter Homes Initiative you must be between 23 and 40 years old and never have owned a home before. You will need to show a combined household income of less than £80,000 (rising to £90,000 in London) and to be buying the home with a mortgage (cash buyers will not be eligible). It is not yet clear whether the initiative is open to multiple buyers when only one of them is under 40).
Starter homes will need to be mortgaged and have a maximum household income of £80,000 (£90,000 in London) as stated above..
How is the 20% discount funded?
House builders and developers typically make payments of £15,000 per house to local authorities as part of ‘planning obligations’ and the money is then used to fund affordable housing and local infrastructure in the area such as roads and public transport, education and health facilities.
These payments have now been waived for house builders that provide Starter Homes. And instead they will be required to pass on the savings to buyers.
When will the homes be available?
The first wave of Starter Home building ibegan in 2017. Developments will be on brownfield sites in 30 local authority areas across England.The scheme hasn’t started yet but planning is well underway. Aspiring homeowners can register their interest online now by following this link
Where will the homes be?
Starter Homes will be built on under-used or unviable commercial or industrial land which is not currently earmarked for housing.
Are there any restrictions?
Yes. If starter homes are sold within the first five years of purchase, you will need to repay some or all of the 20% discount available under the scheme.Tags: conveyancing, new builds, starter homes