'£20bn to house all key workers'

Solving the housing problems of London's key workers will require £20 billion of public funds and a shake-up of housing supply, a leading property consultancy has warned.

The firm says a massive public subsidy is needed to help the estimated 800,000 families unable to afford London prices.

However, according to Richard Donnell, head of residential research at FPDSavills, the crisis is only one of the many consequences of a market suffering from a severe shortage of homes.

The Government's Starter Home scheme has been the main policy to date, injecting £250 million over three years, with an average subsidy of £25,000 per family, helping around 10,000 key workers to buy. However, Mr Donnell-found £230 million of this had already been used in the first year. In London this is expected to help some 4,615 households, just over 0.5 per cent of those who cannot afford property worth £75,000.

Mr Donnell said: " According to our calculations, based on an analysis of all household incomes and using the Starter Home Initiative rate, it will cost up to £20 billion to help all of those priced out of the market."