David Cameron vows to scrap requirement to build affordable homes for rent

David Cameron will promise to sweep away planning rules that require property developers to build affordable homes for rent in a bid to increase the building of homes for first-time buyers.

In a bid to shift from generation rent to generation buy, Cameron will say in his speech at the Conservative party conference on Wednesday that he hopes his new starter homes proposal can unblock housebuilding in the UK by abolishing demands that developers provide a certain amount of affordable housing to rent in new developments.

The change is critical to the government reaching its challenging target of building 200,000 starter homes over this parliament and has been long demanded by private sector developers.

In one of his central policies due to be unveiled in his closing speech, Cameron will say: “For years politicians have been talking about building what they call affordable homes but the phrase was deceptive. It basically means ones that were only available for rent. What people want are homes they can actually own.“When a generation of hardworking men and women in their 20s and 30s are waking up each morning in their childhood bedrooms, that should be a wake-up call for all of us. We need a national crusade to get houses built. That means banks lending, government releasing land and, yes, planning being reformed.”

In the key reform, ministers will change the definition of affordable housing to include not just properties for rent, but starter homes, as part of the government’s programme to build low-cost homes for first-time buyers so long as they are under 40 years old. It will mean developers will have fulfilled their obligations to a council if they build homes for purchase.

Under the scheme, houses must must be 20% below the market rent and capped at £450,000 inside London and £250,000 outside.

The initiative is designed to secure 200,000 homes for new buyers by the end of the parliament, one of the key election pledges of the Tory election campaign. Officials said the changes to the planning rules will mean it is possible to lever in billions of private sector development in low-cost housing.

Conservative officials pointed to surveys showing 86% of people in England and Wales want to buy, rather than rent, but Whitehall officials prevent this.

In future, councils, as part of the section 106 agreements they strike with developers, will be instructed to be flexible between rented and owner-occupied properties.

The scheme is likely to be popular with developers, who prefer building homes for purchase as they immediately receive income on the property’s sale, unlike a rented property that involves a much slower rental income stream spread over as long as 20 years.

Government officials said there is a massive untapped demand for low-cost homes to buy, which the market is prevented from providing due to current state rules and section 106 agreements.

In its productivity plan published immediately after the summer budget, the government also set out plans to order councils to deal with planning requests much more quickly.

The proposals are likely to be included in the housing bill, expected next month. The bill will include provision for statutory registers of brownfield land.