Prime minister announces changes to planning obligations to incentivise affordable homes to buy rather than to rent

Cameron conference

Prime minister David Cameron has promised a “national crusade to get homes built” and a further shake-up of planning laws in his closing speech to the Conservative party conference.

In changes Cameron said are designed to move the UK from “generation rent” to “generation buy”, the government will overhaul section 106 planning obligations placed on developers to incentivise them to build affordable homes to buy rather than to rent.

Under the changes the definition of affordable homes under section 106 will be widened to include affordable homes for sale, including starter homes, in addition to rental properties, a spokesperson for the department for communities and local government (DCLG) confirmed. DCLG will consult on these plans “shortly”.

The Conservatives pledged in their election manifesto to build 200,000 discounted starter homes for first time buyers over the course of this parliament.

Starter homes must be sold at 20% below the market rate and capped at £450,000 inside London and £250,000 outside of the capital.

Responding to the pledge, Melanie Leech, chief executive of the British Property Federation, commented: “Politicians talk about Generation Rent as if it is something to be ashamed of, when this should not be the case. Countries such as Germany and the USA have thriving rental markets, where people happily live in institutionally-backed, purpose-built, high quality rented accommodation for many years.

“While we are not against owner occupation, and see Starter Homes as a welcome initiative, we are aware that such a policy is stoking demand for home ownership, rather than focusing on meeting supply.

“Build to rent has enormous potential to deliver additional homes to the UK, and government must not overlook this in blind pursuit of making us a nation of homeowners.”

Andrew Jones, Aecom practice leader for design, planning and economics in EMEAI, said: “Shifting the ‘Affordable’ definition to include Starter Homes for first-time buyers could exacerbate rather than solve the problems of affordability and access to the housing market.

“Without a blended, multi-tenure approach there is a risk of increased land values rather than increased supply, particularly in London and the South East. And shared ownership schemes - one of the most successful stepping stones to affordable home ownership - could be severely challenged as a result of today’s move.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “We know that millions of young people desperate to take their first step on the housing ladder are unable to do so because of the cost of buying a home, so it’s positive that the government is looking at ways to help first-time buyersthrough starter homes.

“But what about people on lower incomes who can’t afford to buy, even with a 20% discount? More affordable housing to rent is critical if we are going to solve the housing crisis, but this policy could result in a significant reduction.”

John Cridland, CBI director general, said: “Reforming the planning system to allow Starter Homes on new developments is a step in the right direction to boosting home ownership. The Government must work closely with the business community to make sure the scheme works effectively for house-builders and prospective buyers alike.

“A healthy and vibrant housing market requires a mix of housing - private rental, homes to buy and social and affordable homes. And we need to go further if we are to deliver the 240,000 new homes a year required to meet demand, including building ten new garden cities.”

Cameron’s comments on housing in full

“When a generation of hardworking men and women in their 20s and 30s are waking up each morning in their childhood bedrooms - that should be a wakeup call for us.

We need a national crusade to get homes built.

That means banks lending, government releasing land, and yes - planning being reformed.

Increasing home ownership means something else.

For years, politicians have been talking about building what they call “affordable homes” - but the phrase was deceptive.

It basically meant homes that were only available to rent. What people want are homes they can actually own.

After all, the officials who prepare the plans for the new homes, the developers who build them, the politicians who talk about them…

…most of these people own the homes they live in.

Don’t they realise other people want what they’ve got - a home of their own?

So today, I can announce a dramatic shift in housing policy in our country.

Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent…

…we’re replacing them with new rules…

…you can build here, and those affordable homes can be available to buy.

Yes, from Generation Rent to Generation Buy…

…our party, the Conservative party…

…the party of home ownership in Britain today.”