Entry-level exception sites & Starter Homes

10th October 2018

Introduction

This briefing note, prepared by the Walker Morris Planning Environment Team, explores the opportunities presented in the new National Planning Policy Framework (“NPPF2“). Specifically, those surrounding new entry-level exception sites consisting of affordable housing for first-time buyers on previously unallocated land. The concept of entry-level exception sites is a new one which was previously missing from the 2012 NPPF (“NPPF1“).

This briefing note also examines the new provisions relating to Starter Homes as an identified affordable housing product.

NPPF2 – Entry-level exception sites (What’s new?)

The NPPF2 has introduced a wholly new policy at paragraph 71 which seeks to promote and release sites for first time buyers/renters.

This policy applies specifically to sites which should be on land not currently allocated for housing.

The policy introduces a number of new concepts for ‘entry-level exception sites’. These are explored below.

• Paragraph 71 provides detail on what entry level sites should be. As well as being on land not currently allocated for housing, these sites should “be adjacent to existing settlements”. This would appear to encompass sites on the edge of settlements and those outside existing settlement boundaries.
• Such sites should also be proportionate in size to the settlement they are adjacent to. This is clarified by footnote 33 which states; “sites should not be larger than one hectare in size or exceed 5% of the size of the existing settlement.” The wording of this aspect of the policy is somewhat open to interpretation and will in all likelihood be clarified through appeal decisions (or possibly through the courts). The language could be taken to mean the smaller of the two (5% but capped at 1ha) or the larger of the two (1ha but up to 5 % if this is more).
• There are specific restrictions, particularly on sites in the Green Belt, National Parks and Areas of Outstanding Natural Beauty and development should not compromise the protection given to habitat sites, SSSIs, Local Green Space, Heritage Coast, irreplaceable assets, heritage assets (including archaeology) and areas at risk of flooding or coastal change.
• It is a requirement for ‘entry-level exception sites’ that they should comprise entry level homes, that are suitable for first-time buyers/renters, that offer one or more types of affordable housing. There may be some flexibility in the overall type of housing which could be permitted on these sites to include an element of market housing.
• A final condition is that the need for entry level, first time buyer/renter properties should not have already been met in the authority’s area.

Affordable Housing Definition (Annex 2) – Starter Homes

The ‘entry-level exception sites’ policy is a tool to deliver housing schemes on non-allocated land on the edge of cities, towns and villages which is aimed at first-time buyers or first-time renters.

The types of ‘affordable housing’ which should be provided on entry level exception sites is defined in Annex 2.

Annex 2 and the definitions of affordable housing have undergone some significant changes between NPPF1 and NPPF2 to now include ‘Starter Homes’ as well as shared ownership, relevant equity loans, and rent to buy products.

Starter Homes were not previously defined as an affordable housing product in NPPF1, but have nevertheless been known to planners since around 2015. There is extant guidance on Starter Homes (27th March 2015) in the Planning Practice Guidance, introduced as an initiative by the Coalition Government to deliver 100,000 Starter Homes. Whilst some Starter Homes have been delivered under the auspices of the Planning Practice Guidance (March 2015), this guidance has been overtaken somewhat by the publication of the NPPF2.

In the NPPF2, a Starter Home is defined as:

• Starter Homes: is as specified in Sections 2 and 3 of the Housing and Planning Act 2016 and any secondary legislation made under these sections. The definition of a starter home should reflect the meaning set out in statute and any such secondary legislation at the time of plan-preparation or decision-making. Where secondary legislation has the effect of limiting a household’s eligibility to purchase a starter home to those with a particular maximum level of household income, those restrictions should be used.

The statutory framework for Starter Homes is found in the Housing and Planning Act 2016. Starter Homes and any accompanying legal agreement (Section 106 Agreement) would be based on the criteria in this Act. These developments would therefore need to meet all of the following tests in the Act:

• Is a new dwelling.
• It should be available to first time buyers only. First time buyers are at least 23 years old but have not yet reached the age of 40.
• Is to be sold at a discount of at least 20% of the market value.
• Is to be sold for less than the price cap (£250,000 cap outside Greater London).
• Is subject to any restrictions on sale or letting specified in regulations made by the Secretary of State.

The mechanism for the re-sale of Starter Homes will be set out in regulations, which are yet to come into force. One can nevertheless expect these to contain a restriction that the sale of a Starter Home will be at a discount to a qualifying person, or the seller will pay a specified amount in respect of the Starter Homes discount.

The regulations have undergone consultation and are due to be published shortly to follow the adoption of the NPPF2.

Considerations for clients

• The introduction of ‘entry-level exception sites’ at paragraph 71 and the Starter Homes definition go hand-in-hand. Both are aimed at delivering a voluble Government objective – new and affordable homes for first time buyers.
• The ‘entry-level exception sites’ policy could unlock sites, on the edge of existing settlements, where planning policies are currently restrictive of development. These sites would necessarily however be outside the Green Belt, National Parks and Areas of Outstanding Natural Beauty and development should not compromise the protection given to habitat sites, SSSIs, Local Green Space, Heritage Coast, irreplaceable assets, heritage assets (including archaeology) and areas at risk of flooding or coastal change.
• The inclusion of Starter Homes in the NPPF2 definition of affordable housing is an important step to formalising Starter Homes as an acceptable housing product for both entry-level housing sites and as part of a traditional affordable housing offer within an open market residential scheme. The imminent Starter Homes Regulations will provide clarity on how this affordable housing product can be secured and will sit alongside other affordable products in the definition of Affordable Housing.