Local Housing Companies unveiled by CLG

The government has announced new proposals aimed at allowing thousands of first-time buyers and key workers to take their first steps on the housing ladder.

New Local Housing Companies (LHCs) were unveiled earlier today by Housing minister Yvette Cooper, which will allow local authorities to offer financial deals to potential buyers.

Under the scheme local authorities will offer surplus public land to the LHC, who would then work with homebuilders to agree a development plan.

The scheme will allow councils to maintain partial control over land sold to developers, in turn encouraging homebuilders to provide more social housing.

Previously local authorities had little control over land once it had been sold, and were consequently unable to influence its development.

It is thought the percentage of social housing built in new developments could be doubled to an average of 50 per cent under the scheme.

Uniling the plans, Ms Cooper said: "We urgently need to build more homes for first-time buyers and families.

"That is why we are investing £10.2 billion to increase affordable and social housing.

"But government cannot deliver this alone.

"This is a new way to help councils to do their bit to support new homes for key workers and families in their areas."

Today saw the presentation of guidance for establishing LHCs in a number of local authorities which have shown interest in the scheme.

These include Leeds, Sheffield, Nottingham, Newcastle, Bristol, Plymouth and Manchester.

It is hoped by taking the land cost out of the building equation, developers will provide equivalent investment and the necessary construction skills.

The plans have been cautiously welcomed by some in the industry.

"The government has a number of plans to help first-time buyers through the English Partnership scheme, HomeBuy and now this. Properties available within these schemes are generally earmarked for those in the south-east of England and for key workers," said Helen Adams of FirstRungNow.com

"We would like to see other measures put in place to make one and two bedroom properties across the country less attractive to buy-to-let investors as well as stamp duty relief for first-time buyers."

"First-time buyers are the life-blood of the housing market and need all the help they can get in a market that is being 'driven' by buy-to-let investors to first-time buyers' detriment."