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How the government's starter home vision imploded

5 Nov 19 A report from the National Audit Office (NAO) today lays bare the fiasco of the government’s failed starter homes initiative.

In 2015 the new Conservative government promised 200,000 starter homes, be sold at a 20% discount exclusively to first-time buyers under the age of 40. But not a single one has ever been built.

The funding originally intended for starter homes has instead been spent on acquiring and preparing brownfield sites for housing more generally, some of which is affordable housing.

Between April 2015 and March 2018, 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.

Between that 2015 commitment and 2018, government policy towards starter homes shifted.

The November 2015 spending review allocated £2.3bn to support the delivery of the first 60,000 starter homes. The Housing & Planning Act (2016) set out the legislative framework for starter homes and MHCLG ran a consultation on the regulations between March and June 2016.

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 necessary secondary legislation and planning guidance required for starter homes in 2019 but it has not yet presented the regulations to Parliament.

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It no longer has a budget dedicated to the delivery of starter homes. 

Commenting on the NAO report, Meg Hillier MP, chair of the House of Commons public accounts committee, 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 Ministry of Housing has suffered as much as any government department from a lack of stability and continuity. Since 2015 there have been six different housing minsters with Brandon Lewis, Gavin Barwell, Alok Sharma, Domic Raab, Kit Malthouse and current incumbent Esther McVey all passing through for a quick go at the job.

House-builders reacted with dismay and frustration to the news that the government's policy on starter homes had so spectacularly crashed and burned.

Rico Wojtulewicz, head of housing and planning policy at the House Builders Association, said: “Only last week we tried to make contact with Homes England about starter homes and we now know why we didn’t get a response. The government has failed to deliver on a key promise that industry had planned for. They must either deliver or kill this policy – or they risk further damaging small and medium sized builders.”

Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “We worked hard with the government to make them understand how important this policy was to small builders and communities. They’ve not only pulled the rug from under small builders, including many hard-working NFB members, but also from under thousands of homebuyers who would have benefited from this policy.”

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