A council claims near £10m starter home scheme has been ‘timed out’ by the government.
Dudley Council has scrapped the scheme for affordable housing on the sites of former council buildings saying required legislation had still to be passed.
Sixty-two starter homes were going to be made available as part of a scheme with first-time buyers between 24 to 39 saving 20% on the value of a house.
The council was given £625,000 from the then Homes and Communities Agency (HCA) – which launched the starter homes initiative – to demolish the buildings and build the homes.
The homes will still be built, with 25% affordable to comply with planning conditions.
A total of 59 homes will be sold at market value and 20 affordable properties made available for rent.
A report on the scheme said: “The government has not yet passed the required legislation with the detailed regulations for the starter homes scheme, and pressures on the legislative timetable indicate that it is unlikely that the legislation will be put before Parliament, so the starter homes programme and, hence, our starter homes scheme, will not progress.”
It was 2015 when the then HCA – now Homes England – launched the New Starter Homes Initiative.
In March last year, Dudley council’s cabinet approved a scheme to develop 62 starter homes and 17 homes for sale at market prices.
The estimated construction cost was £9.8m, with estimated sales revenue of £11.6m, generating a one-off capital return on development for the council of £1.8m – compared to an estimated capital receipt of around £1.3m if the sites were sold as a package for development by the private sector.
Homes England advice has been to replace starter homes with alternative schemes that comply with local planning conditions.
In Dudley, this means including 25% affordable homes with no indication from Homes England of any clawback of grant for such schemes.
The council, then, is proposing to replace the planned Starter Homes with 59 homes for sale at market rates and 20 affordable homes for rent through the Housing Revenue Account (HRA) on four sites.
This achieves the local requirement for 25% affordable homes and will result in the same number and types of new homes as originally planned and still deliver the £1.8m estimated overall development return.
The council says it will benefit from council tax income and also New Homes Bonus which will help achieve targets already set within the medium term financial strategy – with the HRA also benefitting from fee income earned from delivering this project alongside its council home new build programme.
The affordable HRA homes for rent will provide additional new council housing stock and will contribute towards the Right to Buy replacement target.
As all four identified sites are currently held within the general fund, the council acknowledges it will be necessary to appropriate the relevant proportion of each site to the HRA.
Brownfield Land Grant awarded of £1.2m will address abnormal ground conditions, of which £0.9m will support the general fund build and £0.3m the HRA build.
A revised budget for the homes for sale is £9.7m funded from £0.9m Brownfield Land Grant and prudential borrowing of £8.8m pending receipt of income from the sales of the completed properties.
Should the sale proceeds be insufficient to repay the borrowing, the council says any shortfall may need to be met immediately from revenue resources.
The 20 affordable homes for rent will be funded through existing resources already approved within the HRA Public Sector Housing Capital Programme.