London house prices: You'll need to earn £77k each year to afford one of David Cameron's starter homes

 
Lauren Fedor
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The new rules are part of a wider "affordable homes" initiative (Source: Getty)

Housing groups have called out Prime Minister David Cameron's new plans to accelerate the building of discounted properties for first-time home buyers, saying the government's so-called starter homes will still be out-of-reach for most workers.

In his speech at the Conservative party conference in Manchester today, Cameron announced the government’s proposed “starter homes” initiative, which will be part of the wider “affordable housing” programme.

Touting the rule change as a move “from Generation Rent to Generation Buy”, Cameron said the Conservatives are "the party of home ownership".

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But housing charity Shelter said someone would need an annual income of £76,957 in London, or £50,266 in the rest of the country, to buy a starter home -- well above the average wages.

Shelter chief executive Campbell Robb said: "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."

“You don't solve an affordability crisis by getting rid of the few affordable homes we're building, yet that's exactly what this policy will do," he added.

“There's nothing wrong with helping people on to the property ladder, but the government has to invest in genuinely affordable homes to buy and rent for all of those on ordinary incomes who are bearing the brunt of this crisis."

In the run-up to the General Election, Cameron vowed to build 200,000 starter homes by the end of the decade.

The new, cut-price properties would be sold to first-time home buyers under the age of 40 at a 20 per cent discount to the market price.

The homes would not be means-tested, but property values would be capped at £450,000 in London and £250,000 elsewhere.

The British Property Federation (BPF), meanwhile, urged the Prime Minister not to write off the rental sector altogether.

BPF chief executive Melanie Leech said: “Politicians talk about Generation Rent as if it is something to be ashamed of, when this should not be the case."

“While we are not against owner occupation, and see starter homes as a welcome initiative, we are aware that such a policy is stoking demand for home ownership, rather than focusing on meeting supply," Leech said.

"Build to rent has enormous potential to deliver additional homes to the UK, and government must not overlook this in blind pursuit of making us a nation of homeowners.”

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