Labour peer calls for answers on Starter Homes
A senior Labour peer has called on the government to explain what is happening with Starter Homes, following an Inside Housing exclusive about lender concerns.
The Housing and Planning Bill, which introduces the government’s flagship homeownership policy, is currently making its way through parliament. Under the policy, first-time buyers under 40 years of age can buy a property with a 20% discount.
As Inside Housing revealed last week, major lenders are concerned that buyers would be able to sell their Starter Homes at full market value after five years and make a profit. Major lenders are concerned this would distort the market and incentivise people to overpay, and have warned the government that they will not support the scheme as it stands.
Most major lenders want the 20% discount to be held in perpetuity or for the period where the discount applies to a resale to be extended.
Lord Jeremy Beecham, shadow housing spokesperson, described Inside Housing’s report that government officials are in discussions with lenders as an “extraordinary revelation”.
He said he “cannot believe” the junior Department for Communities and Local Government (DCLG) minister Baroness Susan Williams was a party to the discussions with lenders as she did not mention them when peers were discussing Starter Homes in depth last Thursday.
He said: “Are the government considering changes to the discount period or not? Will they be in a position to clarify the position by the time we get to report [stage]?
“What options, if any, are they considering?
“What answer do the government make to the critical concern of lenders that the scheme, as presently drafted, could distort market values and incentivise people to overpay? Would this not also impact upon the rest of the housing market and drive sale prices on the existing stock?”
Baroness Williams did not address the Starter Homes question when she next spoke in the debate. The bulk of the questions in the session were about other aspects of the bill, including the Right to Buy.
Lords have tabled various amendments to Starter Homes to tackle the concerns around market distortion, which were discussed last Thursday. Peers will decide specifically on which amendments to push to a vote when the bill enters report stage in the spring.
A DCLG spokesperson said: “Introducing restrictions on discounts beyond the five years would reduce a homeowner’s ability to move as their needs change, but we are always willing to listen to the sector and will be consulting shortly.”
UPDATE: At 2.29pm, 09.03.16
This article has been updated to include a statement from the DCLG.