NAO releases investigation into Starter homes

An investigation into the government’s starter homes strategy by the National Audit Office, has found that no Starter Homes have been built under the policy.

The National Audit Office (NAO) reports that despite the government announcing in 2015 that it intended to create 200,000 Starter Homes, no Starter Homes have been built to date as the necessary legislation is not in place. Between 2015-16 and 2017-18, the Ministry of Housing, Communities & Local Government (MHCLG) spent almost £174M on acquiring and preparing sites originally intended for building Starter Homes. These sites are now being used for housing more generally, some of which is affordable housing.

Starter Homes were intended to be houses built exclusively for first-time buyers under the age of 40 and sold at a 20% discount. The November 2015 Spending Review provided £2.3Bn to support the creation of 60,000 Starter Homes.

The Housing and Planning Act (2016) set out the legislative framework for Starter Homes. However, without additional secondary legislation, even houses that conform to the intended Starter Home specifications cannot be marketed as Starter Homes. MHCLG expected to introduce the secondary legislation and planning guidance required for Starter Homes in 2019 but it has not yet presented the regulations to Parliament. It no longer has a budget dedicated to the delivery of Starter Homes.

Meg Hillier MP, Chair of the Committee of Public Accounts, said: “Despite setting aside over £2Bn to build 60,000 new starter homes, none were built.

“Since 2010 many housing programmes announced with much fanfare have fallen away with money then recycled into the next announcement.

“The Department needs to focus on delivery and not raise, and then dash, people’s expectations.”

The investigation found that Starter Homes legislative provisions are not yet in force. The statutory framework for Starter Homes, the Housing and Planning Act (2016), received Royal Assent on 12 May 2016, although the relevant sections of the Act have not yet come into force. The Ministry of Housing, Communities & Local Government (the Department) expected to introduce the secondary legislation and planning guidance required for Starter Homes in 2019 but it is yet to lay the regulations in Parliament. Developers can, and do, market discounted properties as ‘starter homes’ as part of their contribution to affordable housing, but such properties do not necessarily conform to all the intended requirements of Starter Homes as defined in the Housing and Planning Act (2016) (paragraphs 1.2 and 1.3).

The NAO also found that in 2016-17 and 2017-18, the Department spent £151M under the SHLF, but the spending has not supported the building of Starter Homes.

The full report can be read here: Investigation into starter homes report.pdf

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