Councils should have the choice about the mix and type of affordable homes as part of a new development rather than being forced to adopt a central government regulation over starter homes, LGA Lib Dems warned.
Under proposed government plans, developers will have to ensure starter homes make up 20 per cent of any new large housing development – of 10 units or more - they build.
In its response to the Government's consultation on the policy, the LGA is calling for:
- Any national requirement for starter homes to be set at no more than 10 per cent. This would allow councils to negotiate a mix of other types of affordable housing with developers.
- Councils to be given the flexibilities to negotiate this starter homes requirement down further if able to demonstrate it may reduce the overall number of new homes built in their local area.
- Councils to be able to include other products promoting home ownership in meeting the starter homes requirement.
Council leaders have long argued that developers must play a central role in providing more affordable homes as part of developments, but are warning that a blanket national policy could lead to a "housebuilding postcode lottery" with developers turning their back on building in some towns and cities across the country.
New analysis for the LGA, by estate agent Savills, reveals that new housing developments in around one third of local areas had 5 per cent or less affordable homes fully funded by the developer in 2014/15, with housebuilders arguing that a greater percentage would force them to abandon schemes as financially unviable.
Despite discounts, the LGA has previously warned that starter homes will be out of reach for all people in need of affordable housing in the majority of council areas across England.
Housebuilders will be able to build and sell starter homes below price caps. However, the LGA said doing so would make schemes even less financially viable for developers in many areas and it will therefore be incredibly difficult for them to meet the national 20 per cent starter homes requirement in those areas.
This will leave those communities at risk missing out on desperately-needed homes as a result.
The LGA has argued for councils to have the local discretion to determine the mix of different housing options that are needed by their local communities, and for robust and transparent viability assessments that are more responsive to local conditions.
Cllr Keith House LGA Lib Dem Housing spokesman, said:
"Forcing all developers to make sure 20 per cent of the homes they build are starter homes could create a damaging housebuilding postcode lottery across the country.
"Although housebuilders will be able to build and sell starter homes below price caps and offer bigger discounts, our analysis shows it is unlikely to be financially viable for them to do so in at least a third of council areas.
"There is a risk that housebuilders will not consider some large housing developments in those areas as a result.
"This could see people not only losing out on starter homes being built in their communities but also missing out on thousands of other new homes being built alongside them.
"The shortage of houses in this country is a top concern for people across the whole country. No community should miss on new homes because of a blanket national policy. To avoid this, the national requirement for starter homes as part of any new development should be lowered to 10 per cent. The Government also needs to hand councils the power to lower this further it there is a genuine risk that it will lead to fewer homes being built as a result
"In our view, councils should have the freedom to determine the mix of different housing types in line with the needs of their local communities.."