New starter homes unaffordable, says Shelter

The Government's new wave of starter homes will not be affordable for many ordinary working families, according to analysis by Shelter.

The plans will see a relaxation of planning rules, with the aim of helping thousands of young people in England to buy their first home.

Under the Starter Homes scheme, properties must be offered for sale at a discount of 20% below market rates, with a maximum price of £450,000 in London and £250,000 outside the capital. Purchasers must be first-time buyers aged under 40 and may not sell or rent out the property within the following five years.

But Shelter said that the £450,000 limit in London equates to 11.5 times the average full-time London salary, while the £250,000 limit outside London is nine times the average full-time English salary.

The charity said that average-earning families will be priced out of these new "affordable" homes in 58% of local authorities by 2020.

Campbell Robb, chief executive of Shelter, said: "Today's announcement confirms our fears that Starter Homes costing up to £450,000 will be built at the expense of the genuinely affordable homes this country desperately needs.

"Our research has shown that these Starter Homes will too often only be 'affordable' for higher earners, not the millions of people working hard for an average wage who will be left stuck in expensive private renting."

Melanie Leech, chief executive of the British Property Federation, said that while the Starter Homes initiative is welcome, "such a policy is stoking demand for home ownership, rather than focusing on meeting supply".

She said that the Government should not overlook the idea of building homes to rent "in blind pursuit of making us a nation of home owners".

Unite general secretary Len McCluskey said the housing pledge "fools nobody".

He said: "We need to build at least 240,000 additional homes annually to keep up with the new households that are formed - last year only 140,000 were built.

"What is needed is genuinely affordable homes for all - closing the door to council house building is a grievous mistake by the Prime Minister, but one that ordinary people will continue to pay dearly for in the years to come."

At present, councils may stipulate that a certain proportion of properties in any development are affordable homes for rent.

But under the plans, developers in England will be allowed to meet the requirement by building properties for purchase under the Government's Starter Homes initiative.

The Conservatives pledged during the election to build 200,000 affordable homes by 2020.

Jon Sparkes, chief executive of charity Crisis, said: "These plans could be disastrous for thousands of households across England...

"We need radical moves to increase genuinely affordable supply and we must not abandon requirements for developers to build affordable homes to rent."

Friends of the Earth's head of policy Mike Childs said that the Government must avoid creating a "climate-wrecking urban sprawl".

He said: "Simply building more homes in the countryside won't solve the affordability crisis, but it will exacerbate the environmental one."

Lawrence Hall, spokesman for property website Zoopla, said the announcement was "positive news" for people trying to take their first step on the property ladder.

He said: "However, while 200,000 starter homes by 2020 sounds like an impressive figure in isolation, the UK needs this many new homes each year to address the housing supply shortage that has plagued the nation for some time and caused real issues for prospective home buyers."

Brian Berry, chief executive of the Federation of Master Builders (FMB), said a "more dynamic house building industry" is needed, to help deliver small scale housing developments across villages, towns and cities.

He said: "It will also mean attracting a new generation of talented workers into the construction industry to overcome current skills shortages and meet the expanding demand for its services."

Stewart Baseley, executive chairman of the Home Builders Federation said: "House builders are committed to delivering high quality, low-cost homes for a new generation of first-time buyers, if the policy environment allows them to."