Plans by deputy prime minister John Prescott to build £60,000 homes for key workers have been criticised as “unrealistic” by the industry.

Prescott in Brighton: Proposals for low-cost homes surprised conference delegates and housebuilders alike
Prescott in Brighton: Proposals for low-cost homes surprised conference delegates and housebuilders alike

The chorus of disapproval comes as major housebuilders held an emergency meeting this week to discuss latest government policies.

Housebuilders have been equally taken aback by leaked changes to the planning policy guidance 3 (PPG3), which could lead to local authorities prescribing the size and type of dwelling being built.

The £60,000 proposal, which featured in a speech made by Prescott to the Labour Party Conference last Sunday, aims to unite two of the government’s policies – providing more low-cost homes and building on ex-public sector land sold off from departments such as the MoD.

The House Builders Federation said it would be “unworkable”.

Pierre Williams, HBF director of communications, said the industry could cover the construction costs of the housing but it would lack the sustainability criteria that the ODPM requires.

He said: “It may be possible to build a house for £60,000, but we are being asked to build sustainable communities. We would not be able to pay for the roads, schools, shops and hospitals needed.”

For £60,000 you can have walls and a roof, but what about the infrastructure?

Roger Humber, housing expert

Industry observers were baffled as to where the infrastructure money for the houses would come from. Housebuilders usually accept section 106 requirements to pay for infrastructure in return for profiting from the uplifting value of the land.

Housing expert Roger Humber said the plans would only work if the houses were built on plots that already had infrastructure.

He said: “For £60,000 you could have purely walls and roof, but what about the infrastructure? Is the public sector going to provide fully-serviced plots?”

Humber said there were potential problems of how to interest housebuilders in the work and how the homeowner would sell on the property if he did not own the land.

A spokesperson for the ODPM said that the £60,000 price was for a two-bedroom property, although the price would depend on whether it was London or the north. It is understood that more information will be released in the Strategic Review in December.

Concerning the detail of who would pay for the infrastructure, the spokesperson said: “These are obviously concerns we are going to have to address. Our policy aim is to get the cost of homes down.”

Industry reaction: How can Prescott's plans work?

The QS: Simon Rawlinson, partner, Davis Langdon
John Prescott can build his homes for £60,000, but I'd be sceptical about whether it links with other policies. You can build a 60 m2, two-bed flat for that price in the South-east – our cost model says a masonry-clad, four-storey apartment would cost £1050-£1375 per m2. But he'll have to build it on old MoD and DoH land, which may not be near transport or infrastructure. I'm not sure it fits with the 60% of homes on brownfield land target, as this increases the cost.

The architect: Ben Derbyshire, HTA Architects
From the design point of view, it is not so much of a problem. Good design doesn't have to be affordable, and if you have a one-bed, 50 m2 dwelling at £1000 per square metre, then it would cost £50,000 – below what Prescott is stating. The problem would come from the developer's profit: you'd have to involve registered social landlords and some kind of cross-subsidy to make it work. But you could certainly build them and make them well-designed.

The chief executive: Elliot Lipton, First Base Homes
We're excited the government is looking at providing more homes for first time buyers. It needs to work with English Partnerships to sort out infrastructure and we'll be interested to see the details. It does seem it won't be able to be funded by section 106's, so perhaps the government will look into creating publicly owned infrastructure as well as public land. We do contend, though, that you can create stylish housing that remains affordable.