Labour promises to build new estates

Plans to give thousands of families a first step up the housing ladder are being unveiled today.

New estates of starter homes will be offered to low-income workers on a part-buy, part-rent basis. More controversially, the Government will signal new planning laws to squeeze more homes on to land in London and the South-East.

The laws will restrict developments which are not dense enough - banning developers from "wasting" scarce land by building too many executive homes with large gardens and big gaps between properties.

The proposals, which will be a key part of Labour's general election campaign, were being announced by John Prescott as part of his five-year plan for housing. At its centre is expected to be a plan to build new first-time buyers' estates using surplus government land, such as obsolete London hospital sites. In a radical new idea, the state will continue to own the land but homes built on it will be sold to people priced out of the regular housing market.

Owner-tenants will be able to cash in on rising property prices if they sell and move on.

Unusually, they will not be charged ground rent to begin with. After a few years they will have to pay a monthly levy that will grow over time.

The levy would recoup some cash when families have had a chance to settle, and encourage them to move if they can afford to go into the regular housing market, freeing the home for a new first-time buyer.

In a second initiative, tenants of councils and housing associations will be able to buy a part-share in their property while continuing to pay rent.

Unlike the Conservative plan to let families buy their rented homes outright, the Deputy Prime Minister is insisting they must sell back to the council or housing association if they move. His thinking is that if house prices rise, families who sell will make enough profit for a deposit on a private house, and the social housing stock will not be broken up.

The scheme will only be introduced where landlords agree to it. One variation being considered would allow people to gradually build up a share of equity in their home simply by paying slightly more rent.

Mr Prescott will next month unveil designs for a basic starter home that could cost only ?60,000 each to build, in an effort to relieve the acute shortage of affordable housing in the Home Counties.

Labour is anxious to escape its image of being hostile to private home ownership. It was reported at the weekend that Gordon Brown may cut stamp duty for first-time buyers in his pre-election Budget. Mr Prescott is said to have defied pressure from No 10 to allow housing association tenants a full right to buy their homes.

The Tories are promising a Bill in the Commons for a right to buy and challenged Labour to back it. Shadow housing minister John Hayes said Labour plans were too little too late.

He said: "Many people are in a far worse position now than in 1997. The Government has slashed right-to-buy discounts, frozen stamp duty thresholds, and been responsible for council tax hikes of 70 per cent."