The Starter Home programme will provide homes to buy at a minimum 20% discount to the market value. Prime Minister David Cameron has said 200,000 of these homes will be built over the next five years, with planning rules changed so they are included in affordable home quotas. Prices will be capped at £450,000 in London and £250,000 elsewhere for first time buyers.
But following an examination by estate agents Savills, the Local Government Association said the scheme was unlikely to help people in areas where housing was least affordable.
Prices will be out of reach for all people in need of affordable housing in 220 council areas (67% of authorities), the research found. People in need of affordable housing are defined as those who would have to spend 30% of their household income to rent or service a mortgage.
For people on average incomes with a 5% deposit, the 20% discount would make it possible to borrow enough to buy a starter home in just 45% of 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.
The average earner living in 85% of London boroughs, 49% of council areas in the south East and 40% in the South West would need a deposit greater than 20% to be able to buy an average priced home, even with the full discount.
LGA housing spokesman Peter Box said the housing shortage is a top concern for people who are finding that buying their first property is increasingly out of reach.
“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,” he added.
“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.”
Box called for councils to be given greater flexibility to determine the number, location and types of starter homes to meet local need.
The 20% discount will be funded by exempting developers from paying section 106 contributions towards affordable rented homes and to Community Infrastructure Levy contributions.
The LGA highlighted government figures suggesting 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. Councils may also need additional powers to secure vital investment in associated roads, schools, health and other community services.