NEARLY 400,000 first-time buyers and families on low incomes will be able to have a stake in their own home over the next five years under measures announced by John Prescott yesterday.

After growing evidence that first-time buyers are being priced out of the market, the Deputy Prime Minister revealed plans to help 15,000 people to buy starter homes costing about £60,000 on 100 former hospital sites.

Under the scheme, buyers will pay for the construction costs of the homes, 60 per cent of the market price, while the Office of the Deputy Prime Minister will own the land, worth 40 per cent.

Another 65,000 people, including key workers such as teachers, nurses and policemen, will be helped to buy homes under existing schemes over the next five years.

A further 300,000 council and housing association tenants will be able to buy a minimum 50 per cent stake in their home and get discounts worth up to £16,000 on the equity bought. Officials expect that over time up to 150,000 of these tenants will then buy their homes.

As disclosed in The Times, social housing tenants will be able to build up equity until they can buy their house outright. But the Homebuy scheme, expected to cost between £3 million and £20 million a year, is voluntary and tenants will have to get their housing association to agree to the sale. Housing associations and local councils can veto the plan and they will also have first refusal on any sales.They will be required to spend sale receipts on new homes or refurbishing existing ones. Officials have calculated that for every two houses sold to tenants under the scheme, the assocation will have money to build one.

Although more people in social housing will have the chance to buy their home by building up equity, Mr Prescott has successfully resisted pressure from Alan Milburn and the Prime Minsiter to extend the existing Right to Buy scheme which has bigger discounts and less protection for housing stock.

Publishing his five-year plan for housing, Homes For All, Mr Prescott also announced an ambitious building programme for private and public sector housing. This includes plans to build 10,000 new social homes every year by 2008 representing a 50 per cent increase on current rates. He also confirmed plans to build 1.1 million new homes by 2016 in four areas in the South East — Milton Keynes and the south Midlands, Ashford in Kent, the Thames Gateway, and a strip from Peterborough to London.

These areas are already covered by planning guidance which means that all new developments have to have at least 30 buildings per hectare. But yesterday Mr Prescott expanded this density guidance to areas in the South West, the East, Northamptonshire and the East Midlands. He also confirmed new powers to protect the greenbelt. At the same time the South East of England Regional Assembly announced its own detailed plans to build up to 640,000 homes over the next 20 years, but these fall 80,000 short of Mr Prescott’s growth plans.

Disclosing the plans in the House of Commons Mr Prescott said: “There are many people who want the opportunity to own a home. By offering more people the chance to own or buy a share in their home, we will widen opportunity and narrow the wealth gap between those with housing assets and those without.”

But Caroline Spelman, the Conservative local government spokesman, said that Britain was suffering from “a housing crisis which has spiralled out of control and is largely of this Government’s making”. Edward Davey, the Liberal Democrat spokesman, said: “Families struggling to find affordable housing have been forgotten in this manifesto war.”

Adam Sampson, director of Shelter, said that £60,000 for homes on public land was still prohibitively expensive. “Shelter believes that some of the public land used for this initiative must be earmarked for new homes for social renting.”

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