Starter homes are designed to help people take their first step on the property ladder – but for the majority of families in need of an affordable home they are simply out of reach.
The national starter homes scheme offers first-time buyers a 20% discount on new starter homes, with discounted prices capped at £450,000 in London and £250,000 elsewhere.
Around 200,000 eligible homes will be built over the next five years.
But according to the Local Government Association (LGA), those most in need of affordable housing will still be priced out.
Analysis by estate agents Savills on behalf of the LGA found that discounted starter homes are out of reach for everyone in need of affordable housing in 220 council areas (67%).
They are also out of reach for 90% of people needing affordable housing in a further 80 (25%) council areas.
Savills worked out that a first-time buyer with average earnings and a 5% deposit looking to buy an average-priced home, a 20% discount would make it possible to buy a starter home in just 45% of English council areas.
Councils want the freedom to decide on the number, type and quality of starter homes built so they meet the needs of local communities.
Local authorities also need powers to provide affordable rented homes that will allow people to save towards a deposit, the LGA said.
LGA housing spokesman Peter Box said: “This new analysis shows that starter homes will be out of reach for the majority of people that are in need of an affordable home.
“Not everybody is ready to buy, and it is crucial that councils are still able to ensure there is a mix of homes that are affordable for those people that need them.”
He said the scheme would not work for every area, with fewer people benefitting in areas where the housing crisis is most acute.
“Councils must have the flexibilities to shape the number, location and types of starter homes to ensure that they meet local need, and the powers to secure vital investment in associated roads, schools, health and other community services that people will rely on.
“The private sector has a key role to play in solving the housing shortage, but it cannot build the 230,000 needed each year alone.
“Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists.”