Nearly two million families could lose their only chance of a home if developers are freed from the legal obligation to build houses at "affordable" prices, critics warned yesterday.
There are growing fears that the Government plans to scrap rules which currently force developers to set aside a proportion of all new-build schemes for affordable housing. Property firms have long lobbied for the regulations to be loosened, claiming they discourage new building projects.
A long-awaited review of the private rented sector, headed by Sir Adrian Montague, chairman of the 3i equity group, is expected to recommend this week that local authorities should have the power to waive the Section 106 rules, which put legally binding conditions on new planning permits.
The shadow Housing minister Jack Dromey added: "It would be fundamentally wrong to deprive local authorities of their ability to insist on affordable homes in mixed communities, putting beyond the reach of the millions who desperately need a decent home at a price they can afford their ability to realise their dreams."
David Orr, chief executive of the National Housing Federation, said: "The proposal to let local authorities reduce their affordable housing requirements in favour of market rented housing must be urgently reconsidered with 1.8 million UK families waiting for an affordable home," he said.
Housebuilding fell by 10 per cent in March to June of this year, compared with the preceding quarter, despite a high-profile government campaign to stimulate a sector which it was hoped would play a major role in reducing unemployment. Although the number of new homes completed in the year to June 2012 was 8 per cent up on the previous year, the number started was 10 per cent down.
The relaxation of Section 106 rules is expected to top a list of five recommendations from Sir Adrian's review. It will be music to ears of the Communities Secretary, Eric Pickles, well known as seeing Section 106 as slowing up the revival of housebuilding.
Last week, Mr Pickles announced he was dispatching a team of experts to give councils free advice on how to limit the impact of Section 106. He also announced that developers who entered into these agreements during the boom are now free to ask local authorities to reopen negotiations.
"Too much development is being stalled because of economically unrealistic agreements negotiated between councils and developers at the height of the boom. This results in no development, no regeneration and no community benefits at all," a Communities Department spokesman said.
Councils use Section 106 to force developers to make up to 45 per cent of houses "affordable", but Eric Pickles believes this is slowing the pace of housebuilding.