Housing Minister John Healey has today hailed the start of a new deal in housebuilding with the first Government-owned land being made available under the Public Land Initiative for much-needed new homes.

Mr Healey described this as a drive to make better use of Government-owned land to build more homes, to lower costs and to increase competition in housebuilding.

The Minister named the first three sites which, subject to planning permission, will deliver nearly 500 new homes - many of which will be made available for affordable rent or sale.

The Public Land Initiative is expected to deliver up to 1,250 homes overall.

Under the new deal, Government provides the public land but takes out the upfront costs and risks involved in site purchase and preparation as contractors pay for the land only once the completed homes are sold.

A panel of approved partners have been selected, reducing the contract bidding and procurement costs for public agencies that want to build homes this way. But in exchange for this reduced risk, developers take a smaller profit.

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Some of the biggest names in the construction industry have not been house-builders before - but Mr Healey sees this new initiative as a way to inject more innovation and competition into housebuilding by encouraging them to enter the industry.

The Public Land Initiative could create up to 1,700 jobs and apprenticeships - with workers expected on the first of these sites within the next few months.

Two of the first three sites are owned by the Homes and Communities Agency - with more sites being considered. The third is owned jointly by the Regional Development Agency One North East, Newcastle City Council and with the delivery being led by City Development Company 1NG.

The first three sites to be made available under the Public Land Initiative will be:

• Bentley, Doncaster - 178 homes are planned for this site, of which 47 will be affordable. Subject to planning permission, work is expected to start this summer
• Kingsmead South, Milton Keynes - this site will deliver 200 homes, of which 60 will be affordable. Work is expected to start this autumn
• East Bank, Ouseburn, Newcastle - a joint venture between ONE North East, Newcastle City Council and 1NG, this will deliver between 90 and 100 town houses and larger apartments, 22 of which will be affordable. Work is due to begin in May.

"We have to innovate and test new ways of funding and building the homes we need. So I'm offering a New Deal for public-private housebuilding, with new partnership terms in which companies take a smaller profit because Government takes more of the risk by lowering costs and increasing competition in housebuilding."

(CD/GK)