My Lords, I thank the noble Lords, Lord Kennedy and Lord Beecham, for Amendments 38 and 39, and the noble Baroness, Lady Bakewell, and the noble Lord, Lord Shipley, for Amendment 46. I will address them together.
I am very clear that starter homes are a new product. They are a manifesto commitment designed to serve a pressing new need. Clause 2 sets out the key parameters: a starter home is available to first-time buyers,
under 40—the very gap that the noble Earl, Lord Lytton, referred to—at a minimum discount of 20% of market value and are subject to a price cap.
The proposed amendments would replace the minimum 20% discount on the open-market value with affordability criteria based on average local household income. Any discount would remain in perpetuity. This amendment would remove the 20% discount on local market values. I cannot support that as 20% is a minimum discount and, if they wish, councils would be free to negotiate with developers for a higher discount if that was best for the area. There is evidence that they do that at the moment for affordable housing.
Much was said at Second Reading and on Tuesday about the affordability of starter homes. Research on affordability by Shelter and Savills for the Local Government Association was based on median house prices in each region. I question whether first-time buyers access the market at average house prices, as I pointed out the other day. Starter homes will be valued to align with local house prices for first-time buyers aged under 40. We are working with the sector and professional bodies to ensure that a transparent process is agreed for valuation.
The noble Lord, Lord Kerslake, talked about the Shelter report, which is not out yet—he must be a very important person, as I have not seen it yet. I will be interested to see it when it is published but I must point out that we all agree that London is expensive. I do not think that anybody denies that. In response, I would point out that we estimate that starter homes will be accessible to those with a gross household income of £45,500 in the south-east, as I added up badly yesterday, and of £39,500 in the east of the country.