From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to for wider content and updates from UK Finance.

Last updated: 2 May 2017

At a glance

  • Starter Homes was introduced by written ministerial statement and is now in effect.  
  • The scheme aims to introduce more newbuild starter homes into the housing market in England through a national exceptions site planning policy. The scheme’s original target was 100,000 starter homes over the next five years (2015 – 2020) however this has been increased to 200,000 under new conservative government.
  • The scheme will apply to first time buyers (FTBs) under forty at the time of purchase. There will be a discount of 20% of the open market value on the initial sale and the property cannot be re-sold or let at open market value for a period of five years.
  • The discounted price for a starter home should not be more than £450,000 in London and £250,000 elsewhere.
  • The government’s Productivity Plan, Fixing the Foundations, published after the summer budget 2015 extends the current exception site planning policy.  It strengthens the presumption in favour of Starter Home development, starting with unviable or underused land for retail, leisure and institutional uses.  The Plan allows communities to allocate land for Starter Home developments and intends that every reasonably sized housing site should include a proportion of Starter Homes.  
  • First time buyers interested in buying a starter home can register their interest.
  • The CML is working with the Department for Communities and Local Government and key stakeholders to develop the detail of the scheme.  We are actively engaged on this through the DCLG’s Starter Homes Technical Working Group which has been set up to take this forward.
  • Following the Autumn Statement 2016, the government announced that it is preparing a comprehensive set of housing measures to address the needs of people at different stages of their lives, to ensure a housing market that works for all. The Autumn Statement detailed investment of over £7.2 billion in housing - this will effectively double annual capital spending on housing.

CML position

Lenders are already actively helping more people, including FTBs, into home ownership and will continue to do so.

We are supportive in principle of schemes that aim to increase the supply of housing. However, many "unknowns" remain in relation to the detail of this scheme and we believe the target of 200,000 new homes within five years is challenging.

As government has now doubled the target number of new homes to be delivered under the scheme and announced that a reasonably sized housing sites should include a proportion of starter homes, the CML and lenders need to see proposed scheme rules at an early stage, so we can be clear they are workable for lenders, and to allow lenders interested in the scheme sufficient time to take it through their governance processes.

We would like DCLG to bring forward, as a priority, refined proposals for determining the open market value of Starter Homes, and for how these homes would be secured through planning obligations or other mechanisms. 

The CML and lenders have expressed concerns about the potential for the operation of the scheme, particularly the 5 year discount period, to result in market value distortions and changes in customer behaviour when the discount period is coming to an end.  We expect to engage further with government on these issues, but remain committed to working with government to ensure the scheme delivers as intended and is workable for lenders.  This includes ensuring government understands the challenges for lenders and customers when schemes and incentives are offered in combination. 

Why this is important for lenders

Under the Starter Homes scheme rules, lenders will need to:

  • Check whether mortgage customers meet the scheme rules and that the discounted price is being paid in those cases;
  • Consider how their existing newbuild policies relate to the scheme;
  • Assess the scheme’s impact on valuation, including possible locations of the starter homes;
  • Consider how the new scheme aligns with their existing lending policies on other government schemes, and their appetite to lend on a proposition which includes the possibility of a purchaser using the Help to Buy Equity Loan Scheme to buy a Starter Home. 

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