Government to give social housing cheaper land

The government is to set in motion secret plans that could ultimately allow departments to dispose of land for less than market value if it was to be used for affordable housing.

The first step towards relaxing sell-off rules for has been taken by the Office of the Deputy Prime Minister.

Under this initial stage, land would still be sold at market values, but if regeneration agency English Partnerships wanted it there would be no requirement for a competitive bidding process that could ramp up prices.

Discussions are under way on a further step that would allow departments such as the Ministry of Defence and the Department of Health to sell land at a discount if it was to be used for affordable housing.

An ODPM source said: "It is no secret that public authorities such as English Partnerships have felt aggrieved about NHS Estates selling off land to Miller Homes rather than for affordable housing for its staff. It is also no surprise that ministers read this and ask what on earth is going on."

Another source said of the government moves to relax disposal policies: "It's an internal government battle which they want to keep out of the public gaze"

A Treasury spokesman said: "The present basic principle is that departments should get value for money at the best possible price. However, each case is considered on an individual basis to allow departments to consider the wider issues."

The news emerged as the sector digested the latest consultation paper to be issued by the ODPM, which covered the disposal of land by local authorities for less than market value.

The consultation document, entitled Local Government Act 1972: General Disposal Consent 2003, outlined government proposals to allow councils to sell land at up to £2m below its market value, for example to be used for affordable housing. The move, already widely expected, was welcomed by the sector.