Thousands of low-cost homes for local people are being planned in what would be the biggest building programme in the countryside for a generation.

The new homes are proposed as part of a review ordered by Gordon Brown. Under the scheme, dozens of market towns would have communities built next to them large enough to sustain their own shops, pubs and even schools. Planning rules would be also be changed to remove restrictions and allow residences for lower-income families to be built.

The proposals are an attempt to boost affordable homes in rural areas and find sites for Mr Brown’s target of three million extra homes by 2020.

The houses would enable teachers, farm workers or craftsmen living or working in villages, who have been unable to get on the property ladder after years of rising house prices, to own a home for the first time.

But they are likely to meet opposition from some countryside campaigners and could divide communities by weakening the hand of those opposing development in “gentrified” villages where house prices are beyond the reach of many local families.

The plans, set out in a briefing note seen by The Times, are being circulated as part of a review ordered by Mr Brown into affordable housing, which is being undertaken by Matthew Taylor, the Liberal Democrat MP for Truro and St Austell.

Although he is still consulting on the proposals, Mr Taylor is believed to have kept ministers informed of his thinking and to have won their backing to develop them in further detail.

In smaller villages, where local incomes tend to be lower and property prices higher than in towns, he suggests changing planning rules to allow more new homes to be reserved for people on limited incomes who live or work in the community.

His key proposal is to give powers to England’s 8,000 parish councils to identify sites for homes where demand for affordable housing is so high that they justify “exceptional” planning approval.

This procedure – under section 106 of the Town and Country Planning Act 1990 – can currently be used only by local authorities and is more commonly used to force developers to include social housing in bigger plots. It is seen as ineffective in small villages, where as few as 1,500 affordable houses are built a year under the process.

Because permission to build in such villages would normally be refused under planning restrictions, Mr Taylor suggests that sites could be bought for about £100,000 an acre, a fraction of the full market value of land for housing development. Homes built under the process, typically in plots of between four and a dozen, must be for local workers and must be sold at a price set by affordability criteria – such as three times joint average local earnings for couples – which he estimates would mean a three-bedroom house for £120,000 in many areas.

Deeds would specify that buyers of such homes could sell them only under similar conditions, with no right for owners to buy out their nonmarket status, which stripped many rural areas of their stock of council houses.

Another report on rural housing commissioned by Mr Brown two years ago, which was produced by a committee chaired by Elinor Goodman, the former television journalist, said 11,000 homes needed to be built every year in small villages to keep up with demand.

Mr Taylor also advocates a radical change to larger housing development near market towns, saying planners should design whole new communities beside existing settlements as an alternative to urban sprawl.

He calls for an end to “doughnut” housing in which developers add housing estates piecemeal to the edges of market towns, which he says often lack facilities and a sense of community.

Instead he proposes “eco-extensions” with shops and cafés of their own, linked to existing towns by public transport and cycleways and footpaths but with parks, woodland or small nature reserves added between them to enhance both communities.

The idea is modelled on Poundbury, the neo-Georgian extension beside Dorchester, Dorset, inspired by the Prince of Wales and designed to his traditionalist tastes.

It also echoes Mr Brown’s own plans for ten new “eco-towns”, built with the lowest possible environmental impact, for which the Government is preparing to announce its list of chosen sites, although these are separate settlements not linked to existing towns.

Signs are emerging, however, that so-called eco-housing can be just as unpopular with nearby residents as any other development and proposals for eco-towns have provoked a rash of opposition campaigns, including one involving Tim Henman, the tennis player, near his parents’ home in Oxfordshire.

Country life

11,000 the new homes needed each year in villages to meet demand

6% higher house prices in rural areas than towns

£17,400 average earnings in rural areas, compared with £22,300 in big urban areas

8.5 times average earnings needed to buy home in rural England

3,166 affordable rural homes a year funded by taxpayer

Source: Affordable rural housing commission 2006

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