The government’s plan to help 200,000 first-time buyers on to the property ladder could be out of reach for the majority of families in need of affordable housing in many parts of the country, warns the Local Government Association.
The body, which represents local councils across England and Wales, said that analysis by Savills had revealed that starter homes prices are out of reach for all people in need of affordable homes in 220 council areas and more than 90% in a further 80 council areas.
People in need of affordable housing are defined as those who would have to spend 30% of their household income to rent or buy a home.
In the Autumn Statement last year, Chancellor George Osborne pledged to build 200,000 starter homes with 20% discounts for under-40s by the end of the current parliament. The government has earmarked £2.3 billion for private developers, with property values capped at £450,000 in London and £250,000 in the rest of the country.
For the average earner with a minimal deposit of 5% looking to buy a property, a 20% discount would make it possible to borrow enough to buy a starter home in just 45% of all council areas in England. This includes all average priced homes in the North East of England, 95% of the North West and 90% of the East Midlands.
Councillor Peter Box, LGA Housing spokesman, said: “The shortage of houses in this country is a top concern for people who are finding that buying their first house is increasingly out of reach. Councils support measures to boost home ownership and starter homes are one of the ways this can be achieved.
“This new analysis shows that starter homes will be out of reach for the majority of people that are in need of an affordable home. Not everybody is ready to buy, and it is crucial that councils are still able to ensure there is a mix of homes that are affordable for those people that need them.
“In some places, such as the North-East and Midlands, the scheme will give people better chance to get on the housing ladder. However, a national scheme will not work for every area and fewer people will benefit from Starter Homes in areas where the housing crisis is most acute.”
The discounts would be funded by exempting developers from paying Section 106 contributions towards affordable rented housing and community infrastructure levy contributions.
The government has suggested that should 100,000 starter homes be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built.
The LGA is urging the House of Lords to back amendments to the Housing and Planning Bill that will allow councils to continue to ensure a mix of affordable homes based on local needs.
“Councils must have the flexibilities to shape the number, location and types of starter homes to ensure that they meet local need, and the powers to secure vital investment in associated roads, schools, health and other community services that people will rely on,” said Box.
“The private sector has a key role to play in solving the housing shortage, but it cannot build the 230,000 needed each year alone. Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists,” he added.