First Homes Policy (HTML version)
Approved: 8th July 2024
Contents:
1.Introduction
2. Definitions
3. Policy purpose and scope
4. Policy aims
5. About First Homes
-
Eligibility
- The Council’s position on First Homes
6. Policy statements
7. First Homes sales and resales
8. Enforcement action
9. Implementation, monitoring, and review
10. Complaints
11. Equality, diversity, and inclusion
12. Data privacy and confidentiality
13. Version control
1.Introduction
1.1 First Homes are a government-backed affordable housing scheme aimed at helping more people onto the property ladder. It is set to become an increasingly significant form of affordable housing in England and is part of the Government’s wider pledge to build 1 million new affordable and attractive homes.
1.2 Dover District Council (“the Council”) is committed to supporting a range of affordable housing options to meet the needs of district residents and will play a key role in delivering First Homes and in maximising the benefit of the scheme to local communities in the Dover District.
2. Definitions
2.1 For the purposes of this policy:
3. Policy purpose and scope
3.1 The purpose of this policy is to provide information regarding the role and responsibilities of the Council during the initial sale, resale, and lettings period of First Homes properties in the district.
3.2 This document has been written to take account of the Council’s the administrative and governance tasks. It does not override the individual covenants within Section 106 agreements and title deeds, which both developers and owners must abide by.
3.3 This Policy should be read alongside existing government guidance and documentation available online and published by the Department of Levelling-Up, Housing and Communities (DLUHC) and Homes England, the Government’s housing accelerator.
4. Policy aims
4.1 The aim of this Policy is to ensure that First Homes are sold in compliance with the National Planning Policy Framework guidance, and in accordance with individual Section 106 agreements. The Policy will:
5. About First Homes
What are First Homes?
5.1 First Homes are properties sold with a discount of at least 30% of the full market value, although this can be increased by up to 50% where a clear need is justified and evidenced.
5.2 The percentage discount is passed on to future purchasers in perpetuity. The discount is secured through a planning obligation, which is attached to the land, along with a title restriction preventing the transfer of the title without the express permission of the Council.
5.3 First Homes are sold at a maximum price at the initial sale. In the district, the maximum price a First Home should be sold at is £250,000.
5.4 First Homes can be houses or leasehold flats, but not should be sold as leasehold unless necessary.
5.5 First Homes must comply with any applicable planning policies, and / or building regulations that apply to the rest of the development, for example those relating to space, accessibility, energy efficiency or carbon emissions.
Eligibility
5.7 Purchasers of First Homes must meet the following national eligibility criteria to be considered for the scheme:
5.8 The following must also apply:
5.9 First Homes can be bought by a sole or joint application; however all applicants must meet the eligibility criteria as set out above and as stipulated in the Section 106 agreement for the development. For example, some First Homes may restrict purchasers to those who are key workers and / or meet a local connection test.
The Council’s position on First Homes
5.10 In November 2021, the Council published its First Homes Position Statement (“the Statement”), which sets out the Council’s official position on First Homes. The Statement stipulates that Developers should apply a 30% discount to properties that fall under the scheme and apply the national eligibility criteria as stated in paragraphs 5.7 and 5.8. This is based on a 2021 report ‘Modelling the demand for First Homes’.
5.11 The emerging Dover District Local Plan 2020-2040 sets out a policy (Policy SP5) for the district for all affordable housing requirements from new developments, including for First Homes. The total requirement is based upon the site size and location, but in summary requires 30% of a new housing scheme to be affordable housing, and of that 25% as First Homes (at 30% discount rate). Adoption of the Local Plan is anticipated in Autumn 2024. The Statement will remain a material consideration until that time.
5.12 Where local connection eligibility is set, whether this is set by the Council or by a Neighbourhood Planning Group, the criteria must be applied to the First Home properties during the marketing, initial sale, and resale stages.
6. Policy statements
Marketing of First Homes
6.1 Marketing of new build First Homes should only commence once the First Homes section of the Section 106 agreement is legally agreed, to avoid any doubt around buyer eligibility criteria, unless we have already made our local eligibility criteria explicit.
6.2 The developer can start to promote First Homes properties as early as 6 months prior to practical completion.
6.3 If after 6 months of practical completion of the First Home the developer is unable to find an eligible buyer, the property can be sold on the open market, however all efforts must be made by the developer sell the property to an eligible buyer. The same marketing cascade and rules apply to estate agents during the resale process. In these situations, developers, owners, and estate agents:
- are required to inform the Council that they have been unable to sell to an eligible buyer; and
- must evidence that they have made all reasonable attempts to sell the property under the relevant eligibility criteria.
Requests to sell on the open market, along with evidence to support the above must be sent to newhomes@dover.go.uk.
6.4 There may be situations when marketing will need to continue for longer than 6 months, this is because marketing should not expire before practical completion of the First Home in accordance with national eligibility criteria. This requirement is stipulated in the Section 106 agreement.
6.5 Developers and estate agents can only sell the property on the open market if they have our written permission to do so. Marketing the property on the open market without our permission would be in breach of the Section 106 agreement and the restriction of title, and therefore, subject to enforcement action.
6.6 Developers, and owners are reminded that if their property is sold on the open market at the open market price, the discounted portion of the sales, otherwise known as the Additional First Homes Contribution, is returned to the Council minus any tax liability created on part of the buyer or vendor, such as stamp duty.
6.7 To ensure that the Council and the developer proceed with marketing the First Homes properties compliantly, we may in collaboration with the developer, implement a marketing strategy at the time of the Section 106 negotiation or a time thereafter, so that all parties are clear on the agreed approach. As part of this agreement:
Developers and estate agents will be required to supply property viewing information on a weekly basis to demonstrate that they are actively marketing the properties to eligible buyers.
The Council will regularly check marketing and promotional material online to ensure that the marketing instructions are being adhered to.
6.8 As part of the agreed strategy, the Council may help developers and estate agents to market First Homes properties to district residents, however we are not obliged to do this. This may include:
- Setting up a dedicated webpage to market the properties.
- Sending out adverts and posts using our social media platforms.
- Issuing a ‘Keep Me Posted’ e-bulletin to residents signed-up to our ‘affordable housing’ topic.
6.9 At resale, owners will be provided with marketing instructions which they must pass on to their chosen estate agent. The agent must follow these instructions and market the property at the discounted amount as stated on the valuation, and not the full market value (please see para.7.30 – 7.34). Marketing of the property must be clear so that potential buyers are aware of the restrictions and the discount.
Determining eligibility
6.10 Applicants must meet the eligibility criteria for First Homes (see 5.7-5.9). The Council determines and certifies whether an applicant(s) is eligible for the scheme by the issuing of the Eligibility Certificate.
6.11 Developers and estate agents should only progress applicants who meet the set eligibility requirements for the First Home, whether this is the national or local criteria. Developers and estate agents cannot certify an applicant’s eligibility to purchase a First Home.
First Homes record
6.12 The Council will keep and maintain a First Homes Record (“the Record”) of all First Homes sales, resales, and lettings in accordance with advice stated by the Department of Levelling-Up, Housing and Communities (DLUHC) in the Local Authority Guidance Notes. This is to ensure that the sales progression of First Homes is monitored at each stage and that compliance with the Section 106 agreement and applicable scheme regulations are adhered to.
6.13 The Record will only be accessible by Officers directly involved with the sales, resales, or lettings process. No applicant or owner personal information will be stored on this document. Applications on this record will be anonymised with a unique reference number to protect the identity of applicants.
Repairs and maintenance
6.14 Repairs and maintenance for the property is the sole responsibility of the owner. The Council is in no way responsible for any repairs or maintenance to First Homes properties.
6.15 New build properties will usually have a Warranty, for example NHBC or LABC. This means that any structural damage or faults caused by the developer that requires remedial action may be covered under the warranty, at no expense to the owner. However, any damage did not list the warranty provider is likely not to be covered. Warranties usually last between 10-12 years. More information can be found on the warranty provider websites.
6.16 New build properties will also benefit from a defect’s liability period, which lasts for 1 year and starts from the date of the property’s practical completion. Any defects reported to the developer during this time must be repaired by the developer at no cost to the owner.
Home improvements
6.17 Home improvements to First Home properties are permitted, subject to planning regulations and permissions, mortgage agreements and where applicable, lease agreements where the property is a flat.
6.18 Owners are reminded that irrespective of any improvements they make to their property that may increase or decrease its value, the restriction on the title means it can only ever be sold at the market value minus the discount applied in accordance with the covenants within the Section 106 agreement.
Building insurance
6.19 While First Homes properties are purchased at a discounted rate, owners are responsible for obtaining adequate and appropriate building insurance for the entire property. Therefore, we strongly encourage that all owners have sufficient buildings insurance in place at the time of exchange to meet their legal obligations.
Residential logbooks
6.20 Local authorities can request developers use and provide a residential logbook for each First Home. If this is applicable to the site, developers will be made aware of this during Section 106 negotiations.
Lodgers
6.21 A lodger is someone who rents a room in their landlord’s home and shares living space with them. A lodger is usually a “licensee”, which means they can only stay as long as the landlord allows. A lodger is different from a tenant, who has a tenancy agreement with their landlord and more rights.
6.22 Owners are allowed to take in lodgers, and do not require permission from the Council, provided that the home remains the owner’s only or main residence. If the owner moves out from the property they must inform us. The duration of the lodging period will count towards the 2-year aggregate (please see clauses 6.24-6.32).
6.23 We advise that Owners should consult their mortgage agreement and speak with their mortgage lender before agreeing to any arrangement.
Letting First Homes
6.24 First Homes should not be seen or used as an investment opportunity. However, the scheme does allow owners to let out their homes for an aggregate of up to 2 years to offer them the flexibility to respond to changes in their circumstances, such as unexpected life events.
6.25 Owners wishing to let their property for up to 2 years do not need our permission to do so, but must notify us that this is their intention, and must inform us of the start and end dates of the letting period. This is so that an owner does not exceed their 2 years aggregate, and that this can be accurately recorded on the First Homes Record.
6.26 It is possible for owners to let their property for more than 2 years; however, they must obtain our written permission before agreeing to any commitment. We will not unreasonably withhold our permission, but requests must be considered as exceptional, for example, where the owner:
This is not an exhaustive list, and we will review requests to let the property for 2 years or more on a case-by-case basis.
6.27 Owners will need to complete a ‘First Homes Request to Let’ form and submit this to newhomes@dover.gov.uk. We aim to assess the request within 5-7 days from the date it is received.
6.28 Before letting the property for any length of time, the owner will be subject to the terms of their mortgage agreement. We advise that owners speak to their mortgage lender when their intention is to let out their property since it may be prohibited.
6.29 Our permission to allow the owner to let out their property for a set period does not have any bearing on the restrictions within their mortgage agreement, or the decision made by their mortgage lender. We will not involve ourselves with any dispute or disagreement between an owner and their mortgage lender regarding sub-letting.
6.30 Owners are reminded that if they let their property, they will become a landlord, and therefore, will be required to comply with all relevant Landlord and Tenant legislation. Owners should also ensure that any insurance they have for their property is appropriate for the change of use of the property.
6.31 Owners who do not adhere to the letting’s restrictions, or to the stipulation that the property is their only or main residence, will face enforcement action. We will act as we would in any other breach of a Section 106 agreement. This may involve issuing a formal warning, and if this is not heeded, an injunction. More detail on enforcement action can be found in Section 8.
6.32 Staff and owners should follow the First Homes Letting Process when requesting and processing requests to let a First Homes property.
7. First Homes sales and resales
General
7.1 The sales and resales processes will be overseen and managed by the New Homes Officer and the Council’s Legal team.
7.2 First Homes sales should not be treated as an open market sale. At each stage of the sale and resale, stakeholders must wait to be issued confirmation from the Council that the sale can proceed. Sales of First Homes that proceed without confirmation from us will be in breach of the Section 106 agreement, and current government guidance, meaning they will be subject to formal action.
7.3 We aim to provide an efficient service to all stakeholders and will aim to respond to correspondence and issue official documents within the timescales as set out by the government. We will inform each stakeholder if we will be unable to meet these timescales.
7.4 Applications should be made from all the adult members of a household who wish to occupy the First Home. However, if the property is being purchased by a couple (i.e., married, civil partners, or in cohabiting relationships), it is permissible for only one applicant to apply for the mortgage, for example because one of the applicants has a poor credit rating and cannot get a mortgage, however all members of the household must be first-time buyers as defined as defined in Paragraph 6 of schedule 6ZA of the Finance Act 2003.
7.5 Buyers must be eligible for the scheme at the point of exchange. If buyers become ineligible before this, they cannot buy the First Home property. However, if the buyer’s situation changes after exchange but before completion, such as not meeting the eligibility criteria, the purchase can proceed.
Sales
Applications
7.6 The following documents must be completed and submitted to the Council before the sale can proceed:
7.7 This is referred to as the ‘application pack’ and must be sent to communityhousing@dover.gov.uk. We will provide copies of the application form and declaration to the developer when they begin to market the properties.
7.8 The developer is responsible for completing the application form with the applicant, the applicant’s mortgage broker and solicitor, and submitting this along with the relevant supporting documentation. The developer must only submit one application at a time per First Home property.
7.9 We will assess the application pack to ensure that the applicant(s) meets the eligibility criteria, that the application form has been completed with no errors and the declaration has been signed by the applicant(s). First Homes operates on a ‘first come, first served’ basis, therefore, we will only progress completed eligible applications.
7.10 Any applications that are incomplete, ineligible or both will be rejected. We will notify the developer of the outcome. We will not chase incomplete applications for remedial action.
Authority to proceed
7.11 Sales of First Homes must not progress unless an Authority to Proceed (AtP) document has been issued by our Legal team. This document serves as our approval for the sale to proceed, and the commencement of the sale’s conveyancing to start.
7.12 The AtP along with the Conveyancer Pack will be issued to the applicant, the developer, the applicant’s mortgage broker and solicitor. Upon receipt of the AtP, the applicant can submit their mortgage application.
7.13 Applicants should not submit a full mortgage application until they have received this document as they may incur costs associated with mortgage submissions (i.e., mortgage broker fees, administrative fees).
7.14 Where an applicant has submitted a mortgage application before an AtP has been issued, the Council will not be held liable for any costs incurred by the applicant or any party as a result our decision to reject an application, nor will we refund such costs.
7.15 We aim to have issued the AtP within 5-7 working days upon receipt of the application form, provided there are no complicating factors. We will inform the developer if we will be unable to respond within this timescale.
7.16 The sale has 3 months from the issue date of the AtP to exchange contracts. This will be clearly communicated in the Conveyancer Pack.
Authority to exchange
7.17 A First Homes sale can only proceed to exchange and completion once our Legal team have issued the Authority to Exchange. This document certifies that the sale is compliant and can progress to exchange and completion. The developer and the applicants’ solicitor must not exchange contracts or agree a completion date until an Authority to Proceed has been issued by the Council’s Legal team.
7.18 It is the applicants’ solicitors’ sole responsibility to:
7.19 It is expected at this stage that:
7.20 Once the tasks outlined above have been completed, the applicant’s solicitor can submit their signed legal undertakings to the Council and request approval to exchange contracts. The undertakings confirms that the sale meets the requirements of the First Homes scheme, including any additional requirements or eligibility criteria included by the Council.
7.21 Once our Legal team have completed their assessment of the solicitor’s legal undertakings, and they are found to comply with the instructions and completed correctly, we will issue the following documents to the developer, the applicant, their mortgage broker, and solicitor:
7.22 By submitting the legal undertakings, solicitors must also commit to ensuring that the Council is:
7.23 Conveyancer Packs which are incomplete or missing information will be rejected and sent back to the solicitor for remedial action. It is the responsibility of the solicitor to ensure that when they submit their undertakings, that they have completed all sections and supplied all relevant information. We will not chase solicitors for document resubmissions.
7.24 Any queries we may have about the legal undertakings must be answered satisfactorily by the solicitor prior to us issuing the documents as listed in 7.21.
7.25 First Homes transactions that do not meet the valuation requirements cannot proceed and should not be submitted by the solicitor. Any request for us to intervene in a valuation dispute will be rejected.
7.26 Exchange of contracts should take place within three months of the receipt of the Authority to Proceed (AtP). Therefore, applicants and their solicitors must aim to exchange within this timeframe. We will take a pragmatic approach to sales where the AtP has expired, but an exchange date is expected shortly, and allow for an extension. However, we expect solicitors to inform us as soon as possible if a sale is unlikely to exchange by the AtP deadline.
7.27 A decision by us to extend an exchange deadline, will be communicated with the developer, applicant, and their solicitor in writing.
Resales
Notification of sale
7.28 If an owner wishes to sell their property, they must first notify us of their intention before initiating any marketing of the property. The notification must be sent to us in writing via newhomes@dover.gov.uk. Once we have received this, we will issue to the owner the following:
7.29 Once in receipt of these documents the owner can proceed to market their property. Owners must pass on these documents to the estate agent they instruct to sell the property.
Valuations
7.30 Owners are responsible for arranging and paying for a Royal Institute of Chartered Surveyors (RICS) valuation of the property. The surveyor will value the property’s full market value before the First Home discount percentage is applied.
7.31 The valuation must be submitted as part of the application pack from the potential buyer.
7.32 Valuations must be carried out and completed by a RICS qualified surveyor to be accepted. The Principal Valuer for the Council will review the valuation. Non-RICS valuations will be rejected.
7.33 Owners are permitted to carry out more than one RICS valuation if this is needed, for example, if the sales process is taking longer than expected and the market conditions have changed. In any case, only one RICS valuation must be submitted with an application.
7.34 The price of the First Home cannot be negotiated upwards from the discounted value confirmed by the RICS valuation, regardless of if there are multiple eligible buyers bidding on the property. However, owners can sell their property lower than the value, if for example they need to make a quick sale.
New buyers
7.35 When a potential buyer is found, the estate agent is responsible for:
checking that they meet all the eligibility criteria.
completing the application pack (please see para. 7.6 – 7.10).
supply evidence that the marketing periods have been adhered to.
7.36 Potential buyers put forward by an estate agent must be, in their professional opinion, the most proceedable purchaser. We will only accept one application at a time per First Home property.
7.37 No reservation fee should be charged for First Homes resales.
Assessment
7.38 Estate agents must submit the completed application pack, valuation report, and any relevant supporting documentation to us via newhomes@dover.gov.uk. We will confirm receipt of the application pack once received.
7.39 As part of our assessment we will:
7.40 If compliant, we will issue the Authority to Proceed, Eligibility Certificate and Conveyancer’s Pack to the buyer, the estate agent, and the buyer’s mortgage broker and solicitor. The process will then follow as identified in Appendix 2 and paragraphs 7.1 – 7.32 of this Policy.
7.41 Applications where information is missing or where the applicant is ineligible will be rejected. Our determinations will be provided in writing. In such cases, we will not chase estate agents for remedial actions.
8. Enforcement action
8.1 First Homes discounts are secured in perpetuity through agreements under the powers of Section 106 of the Town and Country Planning Act 1990 (“the Act 1990”).
8.2 If a Section 106 agreement is not complied with it is enforceable by injunction against the developer or person that entered into the obligations and any subsequent landowner. The decisions, and how, to enforce a planning obligation will be conducted in accordance with the Council’s planning policies.
8.3 The Council can take enforcement action against a developer or an Owner of a First Home where there is evidence that there has been a breach in the terms and conditions of the First Homes scheme. Such breaches of the First Homes scheme include, but is not limited to:
8.4 Buyers are advised to review and have understood the restrictions and limitations attached to a First homes property when purchasing through the scheme, during their purchase. In the first instance, buyers should speak with their solicitor about any queries they have about the restrictions and limitations.
9. Implementation, monitoring, and review
9.1 Staff involved with the progression of sales resales and lettings will be provided with set processes. Staff are expected to follow these procedures to ensure that they:
9.2 This Policy will be regularly monitored to ensure that it is reflective of current operational practices, current government guidance on the First Homes scheme and is working effectively to support the progression of First Homes sales.
9.3 A formal review of the Policy will take place every 3 years, or in response to relevant changes in legislation, regulation, changes to organisational structure or processes and / or good practice.
9.4 Any minor amendments to the Policy will be made through delegated approval. Any significant changes made because of changes to our operational processes, Council strategy or Government legislation or regulation will be made through the standard governance process and approved by Cabinet. Any significant changes will be consulted on with relevant teams and departments before a decision is taken to implement them.
10. Complaints
10.1 Applicants who have a complaint about the developer, estate agent or any other stakeholder involved in the process that is not the Council, must follow the complaints processes set out by that organisation. The Council will only deal with complaints made about a staff member or service it has delivered in relation to the First Homes scheme.
10.2 The Council’s definition of a complaint is:
“An expression of dissatisfaction, however made, about the standard of service, actions or lack of action by the organisation, its own staff, or those acting on its behalf, affecting an individual resident or a group of residents.”
10.3 The Council takes complaints made about any service it provides, officers who work for the Council or contractors who provide our services, seriously. If a resident wishes to make a complaint about the service they have received, a Council officer they can be made:
10.4 All complaints received will be dealt with in accordance with the Council’s Complaints Policy and Procedure. More information about how to make a complaint can be found on our website: If you are unhappy (dover.gov.uk).
11. Equality, diversity, and inclusion
11.1 The Council is committed to promoting equality of opportunity and to eliminating unlawful discrimination on grounds of race, age, disability, gender, sexual orientation, religion or belief, financial statues and any other differences that can lead to discrimination or unfair treatment considering the principles of the Equality Act 2010. Please see our Equality Policy for more details.
11.2 A full Equality Impact Assessment (EIA) was conducted for this policy in accordance with our Public Sector Equality Duty (PSED) when carrying out our public duties (s149 of the Equality Act 2010). The EIA has identified potential negative impacts to individuals with protected characteristics as a result of the eligibility criteria, whether national or local, that may mean that applicants could be rejected. Mitigations have been put into place where negative implications have been identified in the assessment.
11.3 The EIA will be reviewed and updated if any changes are made to the First Homes scheme by DLUHC, or the Council implements local eligibility criteria for the scheme.
12. Data privacy and confidentiality
12.1 The Council will only process personal information of the applicant and buyer in accordance with the Data Protection Act 2018 and the General Data Protection Regulations (GDPR) in order to process and administer applications for a First Home property to check for eligibility.
12.2 To be able to oversee the administration of the scheme effectively and in compliance with the Local Authority Guidance Notes, the Council will keep a First Homes Record (please see paras. 6.10-6.11) which will record information pertaining to the property, such as the plot reference and the address. The Record will not document any personal information but will use a unique reference number.
12.3 We are responsible for protecting any public funds we administer and so may use the information the applicant or owner has provided on the application form to prevent and detect fraudulent activity. Under schedule 2 of the Data Protection Act 2019 this information may be disclosed for purposes relating to crime prevention and detection.
12.4 All information captured and recorded relating to the First Homes scheme and our role in the sales and resales processes, and post-sales duties, are contained within our First Homes Privacy Notice. More information about our responsibilities as Data Controller can be found on our website.
13. Version control
Approval date: 8 July 2024
Approved by: Cabinet
Policy owner: Housing Services
Scheduled review: 8 July 2027