Tuesday 12 April 2016 9:19 am

House of Lords defeat government on plans for starter homes

The government has suffered a setback after the House of Lords defeated it on two starter homes policies.

A coalition of Labour, Liberal Democrat and crossbench peers voted to moderate the government's plans to offer "affordable" homes to first-time buyers at a discount.

The flagship policy was proposed by the government ahead of the General Election last year, which would see all first-time buyers under the age of 40 given a 20 per cent discount on starter homes.

However, those opposed to the bill argue that the homes are not really affordable, as only middle and higher income earners would be able to qualify for homes. 

Read more: Why Help to Buy, Starter Homes and other government initiatives won't boost housebuilding in the UK

Housing charity Shelter said someone would need an annual income of £76,957 in London, or £50,266 in the rest of the country, to buy a starter home – well above the average wages.

While the proposal would have helped some 200,000 first-time buyers, critics say it would stop up to two million people from getting onto the housing ladder, while reducing the availability of lower cost housing used for rent.

The first amendment to the bill would reduce the discount on a sliding scale if the property is sold during the first 20 years, meaning if it is sold after one year 19 per cent of the discount would be paid back, with 18 per cent paid back in the second year and so on.

The second amendment would allow councils to choose how many starter homes are built, rather than the government setting a target.

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That concern go back to February, when local governments warned Westminster that discounted starter homes will be unaffordable to the majority that need them unless the scheme is given more flexibility.

Housing minister Brandon Lewis said that the government would take stock of the amendments, but asserted that the government was committed to the policy.

"The housing bill will increase housing supply alongside home ownership and we are doing this with the biggest housebuilding programme since the 1970s to deliver the homes our country needs," Brandon said.

"The government believes it is wrong that a 30-year-old couple’s aspirations should be thwarted by having to wait until they are 50 to benefit from the full value of their starter home.

"We will listen carefully to the points made in the debate but our manifesto commitment to introduce starter homes at a 20 per cent discount for first-time buyers is unwavering."

The defeat also represents another example of the House of Lords flexing its muscles, having forced the government to backtrack on the Trade Union Bill and disability benefits.