David Cameron's starter homes will make life even harder for the poor

Britain has a shortage of homes and, in particular, a shortage of affordable homes. This makes it extremely unfortunate that David Cameron's flagship announcement on housing was to divert investment away from the little social housing that is being built and replace it with starter homes that ordinary families cannot afford.

The prime minister's conference speech reaffirmed the government's commitment to starter homes. These will be new-build homes, sold at 20% below their market value, to first-time buyers. In London they will be priced as high as £450,000. And before readers outside of the capital laugh at what counts as "affordable" in London, trust me, no one within the M25 thinks this is affordable either.

What the "discount" will actually mean in practice remains to be seen, but analysis by Shelter found that a 20% discount on average house prices would still leave 58% of the country unaffordable for families on average earnings.

Families on the national living wage will be priced out entirely – starter homes are only likely to be affordable in 2% of the country. And most households on a single income will also find that starter homes are a non-starter.

A 20% discount sounds generous, so why are starter homes out of reach for the majority of ordinary households? The answer lies in the huge gulf that has emerged between incomes and house prices. According to the Office for National Statistics (ONS), average house prices are now 8.8 times local earnings and the gap has risen everywhere over the past decade.

To fix this we need to build 250,000 homes a year for people in all income groups. And this must include houses for social rent and shared ownership for households for whom homeownership just isn't affordable – even with a 20% discount.

Unfortunately starter homes will directly force developers to stop building homes that people on low and middle incomes can actually afford. Developers are obliged to build affordable homes as part of a new development through Section 106 agreements. This is why even some of the most expensive schemes include homes that are affordable for people on low incomes and currently section 106 contributes to around 37% of all new social rent.

The government now intends to change the definition of affordable housing to include starter homes. This will help a narrow section of people who can't quite (yet) afford the full market price on a development but can afford the starter home next door. In doing so, it will pull up the ladder on people who can only afford social rent or shared ownership.

At Shelter this worries us as it will make it harder for low-income families to access safe, secure and genuinely affordable housing. Instead they'll remain trapped in the private-rented sector, paying high rents, vulnerable to cuts to housing benefit, battling poor conditions and at risk of moving every six months.

But it should also concern the government; the driving force behind this is a wish to turn Generation Rent into Generation Buy. As my colleague has explained, social housing is in fact a great springboard into home ownership. Low rents enable families to save for a deposit, before moving on or accessing the far greater discounts offered with Right To Buy. Starter homes are an expensive diversion from the real solutions.

Kate Webb is deputy head of policy at Shelter (http://www.shelter.org.uk/). Follow her at @KateBWebb.