The Housing and Planning Bill received Royal Assent on the 12th May 2016. There were a number of defeats in the House of Lords but most of these were rejected in the Commons. Much of the detail is as yet unpublished and terms such as ‘higher value’ and ‘high income’ are yet to be defined.
The definition of affordable housing now includes starter homes. These are for first time buyers over 23 and under 40 and at up to 80% of market price up to a maximum of £450,000 in London. A consultation proposed to include joint buyers if one is under 40.
Originally the 20% discount would not need to have been repaid until after 5 years. A Government consultation suggested increasing this to a maximum of 8 years. The Government made a concession around a power to require repayments of discounts on resale (subject to tapering), with details to be included in regulations. These will also prohibit the person selling the dwelling within a specified period, unless it is sold to a first time buyer at a discount. The regulations will also set who this payment goes to e.g the Secretary of State, local planning authority etc.
Planning authorities will need to ensure a set proportion of starter homes on all ‘reasonably sized’ new developments. The Government’s consultation document proposes a single national minimum requirement of 20% of all homes on residential developments over 10 units (with some exemptions such as specialist housing schemes and / or possibly regeneration schemes).
The impacts include the likelihood of starter homes replacing other forms of affordable housing on new developments affecting genuinely affordable housing delivered beyond 2018. Although it may help households on slightly higher incomes to buy, it will probably result in fewer social rented housing units being build in the future through S106 agreements. Also, it is anticipated the housing market will become more polarised with fewer intermediate projects delivered.
‘Pay to Stay’ – High income social tenants
High income local authority tenants will have to pay a higher rent from 2017-2018. For housing associations this will not be mandatory, but encouraged.
Thresholds: The high household income threshold will be set at £40K in London and £30K nationally, increased annually by CPI.
Rents: The rent increase will be tapered at 15p for every pound of income over the threshold, resulting in frequently changing individually tailored rents.
Defining income: ‘Household’ means the tenant or joint tenants named on the tenancy agreement, and any tenant’s spouse, civil partner or partner where they reside in the rental accommodation. the income of adults living with parents will not be included. Those on housing benefit and universal credit will be exempted. Only taxable income will be included in the income assessment so benefits like DLA will not be included. The defined period of income has not yet been agreed.
Income declarations: Tenants will be charged the higher rent until income details are provided. Landlords will have access to HMRC data to verity details.
One issue that has yet to be clarified is what happens in the event of a change of a tenant’s circumstances.
Impact 1: There will be a significant admin cost to the council. They will be able to retain an admin fee, however obtaining and checking the incomes of tenants and issuing rent adjustments could be very costly.
Impact 2: There could potentially be increased arrears and increased homelessness.
Impact 3: It is thought there could be increases in takeup of Right To Buy as tenants seek to avoid higher rents.
End of Lifetime Tenancies – for new lettings
Lifetime tenancies will be replaced with fixed term secure tenancies for new lettings. These will be mainly set at five years, but could be extended to 10 years in certain circumstances (yet to be published) such as those with disabilities or cases of domestic violence. Councils may also offer fixed terms up to the time a youngest child will finish school (aged 19).
The change will be mandatory for councils and encouraged for housing associations. Regulations will limit when a lifetime tenancy can be issued e.g. voluntary downsizing, forced moves etc. Only spouses / partners will be able to inherit lifetime tenancies, otherwise a fixed term succession will apply.
Impact 1: Less security for new tenants and possible increased turnover of housing stock.
Impact 2: Extra admin burden for the council having to carry out five year reviews plus associated costs.
Permission in Principle
The Act introduces a new type of planning permission called ‘planning permission in principle’ (PPIP). PPIP can be granted through site allocations in the borough’s development plan and on application. The borough will need to maintain a register of brownfield sites suitable for development. There is an expectation that 90% of sites on the brownfield register should ‘benefit’ from a PPIP by 2020.
The PPIP will grant planning permission for the key ‘principle’ matters concerning an application, including development capacity (minimum and maximum amount of houses) and bedroom size mix. The next stage will be technical details consent (TDC) before the granting of full planning permission. Technical matters include affordable housing provision but ‘principle’ matters cannot be revisited at the TDC stage.
Particular areas of concern for leaseholders:
1. There will be a consultation in the Autumn of 2016 as to what constitutes a brownfield site. It could be that councils are obliged to consider all council estates are brownfield sites, or that it will be discretionary. If the former, ALL leasehold properties will be instantly devalued as there is the danger any estate could be imminently knocked down to provide new housing.
2. With in increased turnover of tenants given the new five year tenancies and ‘pay to stay’ it is likely that TRAs and other resident groups will disappear as residents have less investment in their communities. Estates will lose a collective voice to the council, vital in Major Works consultations and other aspects of estate management.